Tuesday, April 4, 2017

Dindinger v. Allsteel: The Equal Pay Act and Economic Conditions

With today being Equal Pay Day, I thought I'd highlight the Eighth Circuit's decision in Dindinger v. Allsteel, Inc., No. 16-1305 (Apr. 3, 2017). In this case, a jury found in favor of three female plaintiffs on their pay discrimination claims, but the defendant argued on appeal that it was entitled to a new trial because the district court "incorrectly instructed the jury that Allsteel could not rely on economic conditions to establish its affirmative defense that a factor other than sex justified the pay discrepancies between the plaintiffs and their male comparators."

The district court provided the following instruction:
Allsteel cannot rely upon market forces or economic conditions as a factor other than sex to justify any pay differential complained of by [the plaintiff]. These market forces and economic conditions include downsizing, reductions in force, restructuring, and economic downturns. If the pay differential complained of by [the plaintiff] was based in any part upon her sex, market forces and economic conditions cannot justify perpetuation of that differential. It is not a defense under the Equal Pay Act that a woman may be paid less than a man in the same position simply because the woman is willing to accept less pay, or because the man demands more pay.
In my view, this is a confusing jury instruction because, as the defendant points out, it appears to mix up the reliance on market forces that might lead an employer to pay a woman less because she is a woman with economic conditions that might lead an employer to pay a particular individual, whether a man or a woman, less because of the employer's particular economic circumstances. The first is impermissible. Equal pay protections were enacted to address failures in the market that resulted in employers paying women less than men simply because they are women. The latter is likely permissible in some circumstances. For example, if an employer has to replace a worker who retired, it may not have the finances to pay a replacement the same salary that it paid the individual who retired. Such a change in the employer's economic circumstances could be a permissible reason for paying the new person less than the person he or she replaced.

The appeals court upheld the instruction because, regardless of whether economic conditions could justify a pay differential between employees of the opposite sex, the defendant had presented no evidence that economic conditions caused the pay discrepancies at issue in this case. While an economic downturn caused layoffs, the restructuring of job duties, and pay freezes, Allsteel presented no evidence that these measures caused the plaintiffs to be paid less than male employees:

No evidence suggested that the layoffs and job restructuring had any effect on the wages of the plaintiffs or their male comparators. And to the extent the merit-based pay raise freeze affected wages, the evidence demonstrates that it did not cause the plaintiffs to be paid less than their male comparators, but merely held pre-existing wage differentials in place.
As suggested by the court's analysis, if an employer sets a wage rate based on discrimination, it cannot later rely on economic circumstances to justify the failure to correct it.

Although Dindinger involves a claim under the Equal Pay Act, the same principles apply to Title VII of the Civil Rights Act of 1964. The Lilly Ledbetter Fair Pay Act, which was the first legislation signed by President Obama, establishes that each paycheck based on an underlying discriminatory pay-setting decision violates Title VII, no matter how long ago the pattern of discrimination began.

This blog reflects the views solely of its author. It is not intended, and should not be regarded, as legal advice on how to analyze any particular set of facts.