Seyfarth Synopsis: On March 29, 2019, in Ahad v. Board of Trustees of Southern Illinois University, et al., Case No. 15-CV-3308 (C.D. Ill. Mar. 29, 2019), Judge Sue E. Myerscough of the U.S. District Court for the Central District of Illinois decertified a collective action under the Equal Pay Act involving a group of female physicians. Although Plaintiff alleged that she and a class of female physicians employed by Defendants were paid less than male counterparts for similar work under Defendants’ centralized Compensation Plan, the Court found that the individual physicians who opted-in to the collective action had specialized practices, job duties, and compensation that required too many individualized inquiries, and as a result, they could not maintain a collective action. The decision is an important read for all corporate counsel focused on equal pay compliance and litigation.

Background

In October 2015, a physician employed by Southern Illinois University and SIU Physicians & Surgeons, Inc. (“Defendants”) brought a class and collective action against Defendants alleging that she and other female faculty physicians working for Defendants were paid substantially lower compensation than male physicians for the same or similar work, in violation of the Equal Pay Act and Illinois Equal Pay Act, Title VII, and the Illinois Human Rights Act. Central to the claims of Plaintiff and the three other physicians opting-in to the litigation (“Plaintiffs”) were contentions that all female faculty physicians were required to perform similar core duties, and that all were compensated based on the use of a centralized “Compensation Plan” administered by Defendants. Initially, the Court conditionally certified Plaintiffs’ Equal Pay Act claim as a collective action under § 216(b) of the Fair Labor Standards Act, but later denied Plaintiffs’ Rule 23 motion for class certification under the Illinois Equal Pay Act, Title VII and the Illinois Human Rights Act, for failure to show commonality and typicality of claims.

Defendants subsequently moved to decertify the collective action under § 216(b), arguing that Plaintiffs were not similarly-situated, that individual inquiries predominated the litigation, and that Plaintiffs had not identified a common policy or practice responsible for the alleged unequal pay.

The Court’s Ruling

The Court agreed with each of the Defendants’ contentions, and ordered decertification of the collective action. While Plaintiffs argued that the Court should view their positions with a high level of generality in that all members of the collective action performed core duties of administration, teaching, research and service, the Court agreed with Defendants’ argument that in decertification proceedings, it is proper to examine more closely the similarities and differences in job titles and duties, work locations, supervision, and compensation.

Applying this level of scrutiny, the Court found that the four Plaintiffs each worked in different medical disciplines, such as bariatric surgery, colon and rectal surgery, family practice and osteopathy. Each Plaintiff also worked in one of several faculty positions in one of two different departments, each with its own duties, and each requiring different time commitments in the areas of administration, teaching, research, and service. Furthermore, each department was supervised by a different department chair responsible for hiring and compensation decisions.

The Court also found that compensation decisions were based on a variety of rated factors particular to medical specialty, position, department, and whether the employee served as an assistant professor, associate professor, professor, or director. Individual compensation decisions also were affected by productivity, including the ability to take on Medicare and Medicaid patients.

The Court concluded that under these circumstances, the individual inquiries required to sustain or defend claims of pay discrimination under the Equal Pay Act demonstrated that Plaintiffs were not similarly-situated, thereby warranting decertification.

Moreover, the Court opined that Plaintiffs failed to identify a common policy or practice responsible for the alleged unequal pay. While Plaintiffs pointed to Defendants’ Compensation Plan as a gender neutral, “single” or “centralized” process for setting and adjusting compensation, the Court observed that department chairs were given discretion under the Compensation Plan to make compensation recommendations based on a variety of objective and individualized factors, such as salary survey data, funding sources, background and qualifications, and market factors. Although Plaintiffs noted that the Dean of Southern Illinois University and CEO of Southern Illinois University Physicians & Surgeons, Inc. were responsible for the administration of the Compensation Plan, the Court concluded that Plaintiffs failed to establish that the discretion shown by these high-level individuals caused a disparate impact disfavoring women in pay.

Finally, the Court, following Wal-Mart v. Dukes, 564 U.S. 338 (2011), ruled Plaintiffs’ statistical evidence of disparate impact unhelpful, because it “does not and cannot show whether a common cause existed regardless of the statistically significant showing of pay disparities based on gender.” Id. at 25.

Implications For Employers

The decision in Ahad underscores the importance of tying employee compensation decisions to objective, measurable criteria, that are utilized and documented in the exercise of properly delegated managerial discretion. To minimize the risk of unequal pay problems, employers are well served to review their position descriptions, hiring and compensation tools and training, and compensation decisions for both for disparate impact and for success in obtaining and retaining talent.