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Second Circuit Holds Evidence of Equal Work for Unequal Pay Not Required for Title VII Compensation Claims

The Second Circuit has held that employees who allege they were underpaid on the basis of their sex, in violation of Title VII of the Civil Rights Act, are not required to first establish an Equal Pay Act claim but rather need only prove that the employer discriminated with respect to compensation because of sex.

In Lenzi v. Systemax, Inc., No. 18-979, 2019 WL 6646630 (2d Cir. Dec. 6, 2019), Danielle Markou (née Lenzi) alleged, among other things, that Systemax paid her less than they paid similar male employees, and retaliated against her when she raised concerns about her pay. Markou, Vice President of Risk Management at Systemax, alleges that she was paid “significantly less” than other male department heads who, like Markou, reported to the company’s CFO. “In fact, while Systemax (with limited exception) paid Markou’s male executive-level peers salaries that exceeded the market rate for their respective positions, it paid Markou at a below-market rate.” Shortly after Markou expressed concerns about her pay, the CFO demoted her and required that she take vacation time if she left the office for any reason, even to get a coffee. A few months later, Markou disclosed to the CFO that she was pregnant. The CFO then conducted an internal audit of Markou’s expense reports, emails, and other possible violations of corporate policy. While the audit was underway, emails and a memorandum were placed in Markou’s personnel file to show that her job performance was below expectations, despite having previously received positive performance reviews. Markou was asked to resign, but when she declined, she was placed on administrative leave. She was fired five days later.

Markou filed suit against Systemax alleging claims under various federal and state discrimination laws, including Title VII of the Civil Rights Act of 1964. Systemax filed a motion for summary judgment, which the district court granted because it claimed that Markou failed to provide comparator evidence to show “that the positions held by her purported male comparators are substantially equal to her position,” and that even if she had shown comparator evidence, she had failed to show discriminatory intent.

The Second Circuit reversed, holding that Title VII Pay Discrimination claims do not require a showing of unequal pay for equal work. While the Equal Pay Act requires comparator evidence, Title VII does not. The Circuit stated, “[w]e write to clarify that, to establish a prima facie pay discrimination claim under Title VII, a plaintiff need not first establish an [Equal Pay Act] violation—that is, that she performed equal work but received unequal pay. Rather, all Title VII requires a plaintiff to prove is that her employer discriminated against her with respect to her compensation because of her sex. . . . By its plain terms, Title VII makes actionable any form of sex-based compensation discrimination. Thus, a claim for sex-based wage discrimination can be brought under Title VII even though no member of the opposite sex holds an equal but higher paying job, provided that the challenged wage rate is not based on seniority, merit, quantity or quality of production, or any other factor other than sex.”

The Second Circuit then held that Markou had made a sufficient showing of discriminatory intent, illustrated by the fact that her male peers were paid more than she was and at an above-market rate, coupled with deposition testimony that the CFO made derogatory statements about women.

In sum, the Lenzi case establishes that Title VII claims regarding disparate treatment in compensation do not require internal comparators, but rather simply require a showing of discriminatory intent, for which external market data and other indicia of discrimination may be used. This decision has implications for female executives like the plaintiff in Lenzi, who may bring claims regarding disparate treatment in compensation under Title VII, as opposed to the Equal Pay Act. Female executives may find it easier to provide prima facie evidence of discrimination under Title VII because they will not need to provide comparator information regarding men in similar positions.

Bottom Line

Employers, in conducting pay equity audits and addressing pay equity issues, should be aware that a pay equity issue may be found to exist even in the absence of another employee being employed in the same or “equal” job. Otherwise, according to the Second Circuit, “a woman who is discriminatorily underpaid could obtain no relief – no matter how egregious the discrimination might be – unless her employer also employed a man in an equal job in the same establishment.” This issue may have particular applicability in the senior executive ranks where, as here, there is a single department head for each department such that no two people technically hold the same or “equal” job.

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