LABOR AND EMPLOYMENT LAW
By KATIE PRATT
This article examines the law governing pay equity and offers suggestions for Colorado businesses to maintain compliance with these laws.
Much has been written and said about the #MeToo Movement and its implications for employers around die nation and in Colorado. Questions abound regarding how to handle sexual harassment allegations in the workplace in light of new emphasis on rooting out gender bias and abuse at work. Another long-simmering and related issue also merits attention by Colorado employers in light of existing laws and new state law trends: It has been widely reported that women earn less money than men for the same work. According to the U.S. Bureau of Labor Statistics, in 2016 full-time working women earned just 82 cents of every dollar earned by their male colleagues, across all professions.1
Several factors impact this disparity, and discussion of all of them is beyond the scope of this article. However, examples from the legal profession are illustrative of the problem. Across all positions in the legal field as of 2014, women earned 57% of every dollar earned by a man.2 For full-time female lawyers, the median pay in 2014 was 77.4% of the pay earned by their male counterparts.3 The gender pay gap between male and female lawyers persists regardless of whether the female takes time for family responsibilities or has no children.4
Female attorneys are also significantly more likely to take inactive status than their male counterparts over time. The accompanying charts demonstrate the precipitous decline of female lawyers actively engaged in the practice of law over time as compared to their male counterparts. The evidence shows that female lawyers consistently earn less than male lawyers and tend to leave the legal field earlier in their careers.
It is timely for businesses across Colorado— including in the legal profession—to evaluate their compliance with existing equal pay laws, examine laws that may be enacted in die future, and implement changes to their compensation structures if they discover pay disparities that cannot be explained by a legitimate factor. Increased focus on issues that systemically impact women in die workplace—including pay equality—is unlikely to recede anytime soon.
This article examines existing law, evaluates legal trends for legislation in Colorado and around die country, and makes practical suggestions for Colorado businesses to increase their awareness of and compliance with equal pay laws.
Federal Laws Addressing Equal Pay
In 1963, Congress passed the Equal Pay Act (EPA), which requires equal pay for equal work by men and women. The EPA amended the Fair Labor Standards Act, which now applies broadly to the majority of employers in the United States.8 The EPA makes it illegal for employers to discriminate "between employees on the basis of sex by paying wages to employees in such establishment[s] at a rate less than the rate at which he pays wages to employees of the opposite sex. . . ."9 The EPA provides four affirmative defenses that allow an employer to argue that the differential is based on a legitimate factor other than gender.10 Unlike Tide VII cases, a plaintiff suing under die EPA is not required to show intentional discrimination and is not required to file a charge of discrimination before proceeding with such a claim.11
Title VII also makes it unlawful to discriminate in die terms of compensation based on a worker's gender. However, the requirement of filing a charge of discrimination applies to such claims as does the familiar Tide VII disparate treatment analysis. In 2007, the U.S. Supreme Court decided Ledbetter v. Goodyear Tire & Rubber Co., in which die plaintiff had asserted both EPA and Tide VII theories.13 By the time the case came before the Supreme Court, only the Tide VII claim remained and the plaintiff had not timely filed a charge of discrimination.14 The Court's decision effectively limited die time period within which an aggrieved person was permitted to bring a claim alleging unfair pay practices under Tide VII.15
Congress responded by passing the Lilly Ledbetter Fair Pay Act of 2009, which allows an aggrieved person to sue for back pay "for up to two years preceding die filing of the charge, where die unlawful employment practices that have occurred during the charge filing period are similar or related to unlawful employment practices with regard to discrimination in compensation that occurred outside die time for filing a charge."16 With respect to discrimination in compensation claims, a cause of action accrues for limitations purposes when the discriminatory compensation decision or other practice is adopted, when the worker "becomes subject to a discriminatory compensation decision or other practice," or when the worker "is affected by application of a discriminatory compensation decision or other practice, including each time wages, benefits, or other compensation is paid, resulting in whole or in part from such a decision or other practice."17 In practice, this means "each paycheck issued pursuant to a discriminatory pay structure creates an independent, actionable employment practice."18
Courts are also issuing decisions aimed at gender equality in pay practices. For instance, in April 2018, in Rizo v. Yovino the U.S. Court of Appeals for the Ninth Circuit concluded that a worker's prior salary could not be considered "a factor other than sex" for purposes of evaluating whether a pay differential is lawful under the EPA.19 In that case, the plaintiff was hired as a math consultant by the Fresno County Office of Education.20 Roughly three years after she was hired, she learned that her male colleagues— some of whom were hired after her—were compensated at higher salary steps.21 The County acknowledged that the plaintiff was paid less than her male colleagues, but contended that the discrepancy was based on each employee's prior salary history and argued that basis was a "factor other than sex."22 The Ninth Circuit disagreed.23
In reaching its conclusion, the Ninth Circuit relied on two related Supreme Court cases. In Corning Glass Works v. Brennan, the Supreme Court rejected the notion that employers can justifiably pay women less than men because women are less expensive to employ.24 In that case, the defendant argued that women would be willing to accept lower salaries because they would not be able to find higher salaries elsewhere.25 The Supreme Court emphasized that "Congress declared it to be the policy of the [EPA] to correct" the "unfair employer exploitation of this source of cheap labor."26
In City of Los Angeles Department of Water and Power v. Manhart, the Supreme Court considered whether an alleged cost differential between employing women and men could be a permissible factor other than sex.27In that case, the employer contended that women were more expensive to employ than men, which it claimed was a legitimate reason to pay them less.28 The Supreme Court rejected that reasoning.29 As the Ninth Circuit noted, the catchall exception may legitimately apply to a wide variety of job-related factors, such as the time of day an employee works or the amount of heavy lifting involved in a given job.30 But it does not encompass every reason that may simply be good for a business's bottom line. Accordingly, the Ninth Circuit concluded that relying on salary history—either alone or in combination with other factors—was not a legitimate factor other than sex for purposes of justifying paying women less than their male colleagues.31
The Ninth Circuit's decision in Rizo is in tension with decisions from several other circuits. For example, the Seventh Circuit has repeatedly emphasized that an employee's prior salary is a permissible factor other than sex for purposes of setting one's rate of compensation.32 Courts in the Second, Sixth, and Eleventh Circuits have found that past wages are a factor other than sex if the employer has an "acceptable business reason" for using past wages to set current wages.33
The Tenth Circuit, however, found that genuine issues of material fact precluded the entry of summary judgment in an EPA and Title VII case, Mickelson v. New York Life Insurance Co.34 In Mickelson, the plaintiff presented sufficient evidence to call into question the employer's proffered reasons for the pay disparity between male and female life insurance professionals.35 The Tenth Circuit emphasized the different burdens of proof applicable to Title VII claims as opposed to EPA claims;36 EPA claims require a plaintiff to show a prima facie case of discrimination "by demonstrating...