When you promote someone into a position, do you have to pay him what you paid his predecessor? As with so many things – it depends. Can you pay less if the promotee has less experience and a lower prior salary than the predecessor? Maybe. However, if the new promotee is a female replacing a male make sure you can defend any pay differential under both the Equal Pay Act (EPA) and Title VII. In Bowen v. Manheim Remarketing, the Eleventh Circuit examines just such a pay disparity and concludes that a reasonable jury could find that it was based on sex.

Background

Qunesha Bowen worked for Manheim for three years as a car detailer. In 2005, Manheim promoted her to arbitration manager and gave her a hefty raise — about $6,000 (around 23 percent) —which was about $14,000 below her male predecessor’s salary. She did not catch up to her predecessor’s salary for six years. When she learned of the disparity, she sued for sex discrimination under the EPA and Title VII.

Manheim moved for summary judgment explaining that the pay differential between Bowen and her predecessor was not based on sex. In establishing both its affirmative defense under the EPA and its legitimate nondiscriminatory reason under Title VII, Manheim argued that the predecessor’s longer experience with the company (six years versus Bowen’s three years), prior management and mechanical experience (which Bowen lacked), and his $46,350 salary prior to promotion (as compared to Bowen’s $26,000) justified the pay differential. For her part, Bowen offered evidence that her performance was good, her pay was at the bottom of the pay range and, importantly, testimony from a company Human Resources manager who had reviewed company pay records and concluded that female employees were paid less than their male counterparts. The HR manager also reported conversations she had with Bowen’s supervisors (who set her pay) that suggested a bias against women. For example, she reported that Bowen’s general manager said he would be a “laughing stock” if he hired a female assistant general manager and he would never have a woman work as a mechanic.

The District Court granted summary judgment in favor of Manheim, finding that the company showed the pay disparity was based on “factors other than sex” and no reasonable jury could conclude it was sex discrimination.

Eleventh Circuit Reversal

In a fairly succinct opinion, the Eleventh Circuit reversed, finding sufficient evidence to let a jury decide whether Bowen’s salary was lower than her predecessor’s because of her sex. The court noted that not only was Bowen’s salary significantly lower than her predecessor’s, it was significantly lower than the salary range midpoint:

Manheim did not simply pay Bowen’s male predecessor a much greater starting salary; it set the predecessor’s salary near the midpoint of the compensation range for arbitration managers but consistently set Bowen’s salary at the bottom of the range. A jury could find that prior salary and prior experience alone do not explain Manheim’s disparate approach to Bowen’s salary over time. Once Bowen established herself as an effective arbitration manager, prior salary and prior experience would not seem to justify treating her different than the predecessor.

The court also noted that in proving its affirmative defense under the EPA, Manheim had to prove that none of its decision-makers were influenced by sex bias and the HR manager’s testimony provided evidence that Bowen’s managers took sex into account in personnel matters. The court further found that Bowen offered sufficient evidence from which a jury could find that sex was “a motivating factor” for the pay disparity.

Takeaways

As always, in reviewing an order on summary judgment, we have to remember that the court must consider the facts in the light most favorable to the plaintiff. We don’t know what the disputed facts will show and what the jury will conclude. With that said, here are some things that this decision made me think about:

  • Keep an eye on your pay ranges. If you have established pay ranges, be sure to compare everyone in a particular job or department. Make sure you can explain why someone is at the bottom of the range while their coworkers are at the middle.
  • Keep a close eye on pay comparators – particularly if comparators are different sexes. While Title VII requires a plaintiff to establish intentional discrimination, under the EPA a plaintiff only needs to establish a pay disparity with one male comparator and then the employer bears the burden to prove that the disparity is based on a factor other than sex and the decision-makers were not influenced by sex. The Eleventh Circuit makes it clear in this decision that a decision-maker’s comments about any personnel matter can be relevant.
  • Don’t discount a predecessor as a comparator. In this case, Bowen pointed not to a coworker but to a predecessor as her comparator, and the court said that was fine. If there are good reasons to pay a new person less than a predecessor, you can do it, but be careful. For example, if you pay Jane less than her predecessor, Bob, because he had been doing the job for three years, make sure that when Jane hits her three-year anniversary her pay looks a lot like Bob’s did (or that you have concrete reasons that it doesn’t—like her documented performance).
  • If Human Resources (with or without legal counsel) is going to look at pay differentials, think about how you will use or react to any unpleasant conclusions. If the audit reflects that women are paid less than men, take concrete steps to address the differences and do it quickly. You may want to perform such audits with legal counsel so that the results can be privileged.
  • Don’t forget that pay claims are a gift that keeps giving. This case was filed in 2015 – almost 10 years after Bowen’s promotion. While she can only go back a couple of years on her backpay, she was still able to challenge the 2005 decision because every paycheck renewed her statute of limitations (per the Ledbetter Fair Pay Act).

Pay disparities can crop up any time, and you have to be vigilant. Sometimes you have to pay someone more for a job than the predecessor because they won’t take it otherwise. On the other hand, sometimes you can replace someone with a less expensive employee. If either happens, make sure you have thought about how you can defend a discrimination claim.