How an HR Director can doom an employer’s defense to a discrimination claim

After learning about the pay disparity with her male predecessor, the female manager sued the company under the Equal Pay Act (EPA) and Title VII of the Civil Rights Act (Title VII). The employer filed a Motion for Summary Judgment, which the District Court granted. The female employee appealed to the Eleventh Circuit Court of Appeals (controlling in Florida) which reversed the ruling, allowing the female’s lawsuit to move forward.

Labor & Employment law - Employers only

Law Office of David Miklas, P.A.

The following are the facts from a recent court case that impacts Florida employers.  After an employee worked for a business for three years she was promoted to a manager position, replacing a male manager. The male manager whom she replaced was paid $46,350 during his first year as manager, the company set the female’s starting salary at $32,000. Her salary did not reach $46,350 until her sixth year as manager.

The Appellate Court noted that the female employee offered in support of her claims, among other things, (1) documents and testimony about her performance and salary history and (2) affidavit testimony from the employer’s human resources manager.

The female employee offered documents and testimony showing that, although she was an effective manager, her salary for a few years was below the minimum salary for the same type of managers and it was consistently well below the midpoint salary for those type of managers.

The company’s HR Director described interactions with company general managers and her investigations into sex-based disparities at the business:

• When the female was promoted to manager, the HR Director approached the female’s supervisor about the pay disparity between the female and her male predecessor. The supervisor explained that the predecessor was more experienced than the woman manager. However, he also acknowledged that the predecessor had trained the female manager for the position and that she was fully capable of performing the position’s duties.

• Comments from an employee survey that the HR Director conducted indicated that (1) female employees were treated differently than male employees, (2) female employees were denied particular positions, and (3) a “good ole’ boy” system existed at the company.

• The HR Director’s survey results prompted the HR Director to conduct an investigation into sex-based disparities at the business. She gathered all of the company’s job postings and examined who applied and who interviewed for posted positions. Based on that review, she concluded that the company was excluding women from certain positions. Discussions with the company’s general manager bolstered this conclusion. While discussing a female employee’s application for an assistant general manager position, the general manager told the HR Director that he would not hire a woman as an assistant general manager. According to the general manager, the company would be “the laughing stock” of the community if it made such a hire. the general manager also once told the HR Director that he would never allow a female to work as a mechanic.

• Following the survey, the company’s corporate office directed the general manager to confer with it when setting employee compensation, but he failed to follow that directive.

• Comments from an employee survey that the HR Director conducted indicated that female employees were paid less than male employees.

• The survey results prompted the HR Director to investigate pay disparities at the company. She instructed the company’s payroll administrator to run reports comparing women’s and men’s pay and prior pay increases. This investigation revealed that women were paid similarly but that their pay was “thousands of dollars less than men’s pay for the same jobs.”

• The HR Director reported her findings about sex-based pay disparities to the general manager, but he refused to address the disparities.

• The HR Director spoke to a corporate representative about her pay-disparity findings. The representative told her to draft a formal report with her allegations and findings. The HR Director then reviewed payroll data for all female and male employees. She specifically discussed the female manager at issue with the corporate representative, noting that she was “severely underpaid” compared to her male predecessor.

• The corporate representative met with the general manager to discuss the HR Director’s report, but the general manager told the representative that he “did not see a problem,” and he was unwilling to take corrective action. Consequently, the corporate office required the company to provide female employees “equity increases” in their pay.• A new general manager took over, but sex-based discrimination continued to exist at the company. Indeed, the new general manager harassed female employees by groping them and smacking their buttocks. On one occasion, he told the female HR Director to serve as a receptionist so that customers would return and say, “Where’s that pretty little black girl that was working here last week?”

On another occasion, the new general manager attempted to replace a female employee with a male, but the corporate office told him that doing so would be illegal. The new general manager responded, “Why can’t we just pay a fine?”

The Appellate Court noted that the female manager relied primarily on the human resource director’s affidavit to show sex bias. The Appellate Court determined that a jury could conclude that the female manager is entitled to relief under the Equal Pay Act because the evidence supports a finding that she has made a prima facie case and that the company failed to establish an affirmative defense in response. Second, a jury could conclude that she is entitled to relief under Title VII because the evidence supports a finding that her sex “was a motivating factor for” the pay disparity between her and her male predecessor.

As a reminder to Florida business owners, an employee establishes a prima facie case under the Equal Pay Act if she shows that her employer paid different wages to employees of opposite sexes for equal work on jobs requiring equal skill, effort, and responsibility, and which were performed under similar working conditions.  Once an employee makes such a showing, the employer can avoid liability only if it proves by a preponderance of the evidence that the wage differential was justified by a seniority system, a merit system, a system which measures earnings by quantity or quality of production, or some factor other than sex.

The Appellate Court was clear in stating, “[p]roving this affirmative defense can be difficult; the employer’s ‘burden is a heavy one.’ The employer ‘must show that the factor of sex provided no basis for the wage differential. Further, the employer must show that none of the decision-makers, whether in middle or upper management, were influenced by [sex] bias.  If the employer satisfies its burden, the [employee] must offer evidence showing that the employer’s nondiscriminatory reason for the wage differential is pretext.” Bowen v. Manheim Remarketing, 2018 U.S. App. LEXIS 4099, at *7-8 (11th Cir. Feb. 21, 2018).

The Court ruled that the female manager was entitled to proceed to trial on her Equal Pay Act claim. Specifically, she has established a prima facie case by pointing to the pay disparity between her and her male predecessor, and although the company has identified nondiscriminatory reasons for the disparity, a jury could find that the company has failed to satisfy its heavy burden of showing that sex provided no basis for the disparity.

The Court explained that although the company may successfully raise the affirmative defense of “any other factor other than sex” if it proves that it relied on prior salary and experience, a reasonable jury could find that the company has failed to make such a showing. The Company did not simply pay the male predecessor a much greater starting salary; it set the predecessor’s salary near the midpoint of the compensation range for managers but consistently set her salary at the bottom of the range. Also, once the female established herself as an effective manager, prior salary and prior experience would not seem to justify treating her different than the predecessor.

The Court also noted that the general managers were influenced by sex bias. “The evidence indicates that they took sex into account when considering personnel matters. [The HR Director’s] affidavit testimony establishes that sex-based pay disparities were common at [the company], that the managers refused to remedy the disparities, and that the managers repeatedly exhibited an unwillingness to treat women equally in the workplace.

Regarding the Title VII claim, the Court noted that disparate pay is an adverse employment action under Title VII, and the female employee offered evidence from which a jury could find that her sex was a motivating factor for the pay disparity.

This case demonstrates how evidence from a company’s own HR Director can be used to damage the employer’s defense. If a company is going to hire an HR Director, it probably should not ignore recommendations the HR Director makes concerning discrimination and unfairness.

If you need any assistance with handling discrimination or pay issues, or in conducting an investigation into alleged harassment, please email the Law Office of David Miklas, P.A. or call us at 1-772-465-5111.

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