Dive Brief:

• An Omni Hotel employee will get a second chance at her pay bias claim because the employer failed to explain why she was paid less than the three men who held the job before she did, the 5th U.S. Circuit Court of Appeals ruled (Lindsley v. TRT Holdings, Inc.; Omni Hotels Management Corp., No. 20-10263 (5th Cir., Jan. 7, 2021)).
• The employee worked for Omni Hotels for 16 years, rising from server to food and beverage director. In that position, her starting salary was more than $11,000 less than her predecessor's starting salary. It also was roughly $6,000 and $4,000 less than the starting salaries of the two previous directors. 
• She sued, alleging gender discrimination and a district court granted summary judgment for the employer, finding that the plaintiff failed to show that her job was the same as the men in question. On appeal, the 5th Circuit disagreed. "It is undisputed that she was paid less than all three men who preceded her as food and beverage director of the Omni hotel in Corpus Christi, Texas," the appeals court said. "If there is a good explanation for that disparity, Omni is required to put one forth if it wishes to prevail in this litigation," it continued, sending the case back to the lower court.

Dive Insight:

The court noted that "pay disparities can of course exist for any number of reasons, including disparities that are rational in relation to value added or driven by the pool of labor available. But what we do not accept are pay disparities due to the employee's race or sex."

Pay inequality issues across gender and racial lines are seeing increased attention amid the coronavirus pandemic and its disproportionate impact on women and nonwhite individuals. Pay audits conducted on a regular basis can help employers discover and rectify discriminatory pay practices, experts say.

If a disparity is discovered, employers should determine first whether those subject to the difference in pay are performing equal or substantially similar work, Liz Washko, a shareholder at Ogletree, Deakins, Nash, Smoak & Stewart, previously told HR Dive. She explained that the reference to "equal work" applies to the federal Equal Pay Act, while the reference to "substantially similar" work is applicable under some state pay equity laws.  

If the work is equal or substantially similar, Washko said, the employer should find out if there is a legitimate justification for the pay disparity such as meaningful differences in education, experience, training or performance; if there is no such justification, a remedy could include an adjustment in pay.

Employers also may need to be aware that many states and localities have prohibited employers from asking applicants pay history questions because reliance on prior pay is thought to perpetuate wage disparities.