Dive Brief:

• Baltimore-based Jerry’s Chevrolet and its affiliate, Jerry’s Motor Car, settled a U.S. Equal Employment Opportunity Commission lawsuit alleging they paid a female employee less than a male employee for doing equal work and fired her for complaining about the lower pay, the EEOC announced Nov. 30 (EEOC v. Jerry’s Chevrolet, Inc., No. 21-02464 (N.D. Md. Sept. 27, 2021)).
• The employee worked as a warehouse dispatcher, according to court documents. Per the complaint, she discovered that a male dispatcher was being paid almost $800 more per month than she was being paid. Also, the dealership allegedly paid him, but not her, a monthly bonus. She complained to the HR director, who allegedly told her that he’d look into it. He fired her a week later; the dealerships reportedly said she was overheard using sexually graphic language during a break.
• The EEOC sued the dealerships, alleging they violated the Equal Pay Act and retaliated against the employee in violation of Title VII of the Civil Rights Act of 1964. Pursuant to a consent decree, the dealerships agreed to pay more than $62,000; implement a policy that creates a way for employees to report unequal pay; and adopt procedures to handle their complaints, the EEOC said. Jerry’s did not provide a comment before press time.

Dive Insight:

Addressing discriminatory pay disparities is one of the EEOC’s top priorities, then-Commissioner, now-EEOC Chair Charlotte A. Burrows pointed out during a 2019 American Bar Association conference. If the disparities aren’t caught and corrected, they could add up to a significant financial loss over a lifetime, she explained.

To get pay equity right, employers must have a firm understanding of the laws involved, Burrows said. At the federal level, there are several. First is the Equal Pay Act, which prohibits employers from paying unequal wages to men and women who perform jobs that require substantially equal skill, effort and responsibility and are performed under similar working conditions, according to EEOC guidance. 

Title VII, the Age Discrimination in Employment Act and the Americans with Disabilities Act together prohibit pay discrimination on the basis of sex, race, color, religion, national origin, age or disability, the guidance explains. Employers can generally defend federal pay disparity claims by proving the difference was based on seniority, merit, earnings by quantity or quality of production, or a factor other than the employee’s protected status, experts previously told HR Dive.

In addition, Executive Order 11246 prohibits pay discrimination by federal contractors. Earlier this year, tech company Esri and LinkedIn paid substantial sums to settle allegations by the U.S. Department of Labor’s Office of Federal Contract Compliance programs that their pay practices violated the executive order.

The recent surge in pay transparency laws also puts pressure on employers to provide pay equity. These laws require employers to list pay ranges in job postings, and they’ve prompted some organizations to implement procedures that ensure employees are paid fairly for performing the same job, taking factors like geography and performance into account.

Procedures that clearly demonstrate how raises are earned and that provide checks and balances can keep employers on the right track, an attorney previously told HR Dive. When there are variations, employers need to have documentation explaining why, the attorney said; employers also can keep job descriptions accurate and conduct pay analyses.

Magoosh, which provides standardized test preps, takes a different approach. It doesn’t allow job seekers to negotiate their salaries or benefits; in a 2015 blog post, the CEO explained that nixing negotiations reinforces the idea that compensation is merit-based and helps shrink pay inequities.

But the EEOC suit isn’t just about allegations of unequal pay. It also may serve as a reminder for employers to carefully evaluate whether they have a legitimate reason to terminate someone who engaged in protected activity, such as complaining about unequal pay.

In particular, employees can’t be disciplined because they’ve engaged in such activity. But they can be disciplined for poor performance, improper behavior or otherwise violating an employer’s rules, EEOC guidance explains. If a manager recommends adverse action in the wake of an employee’s protected activity, “the employer may reduce the chance of potential retaliation by independently evaluating whether the adverse action is appropriate,” the guidance advises.

This is for at least two reasons: First, suspiciously close timing between the employee’s protected activity and their firing can be evidence of retaliation, the guidance says. Here, the employee was fired five days after she complained about unequal pay, according to the lawsuit.

Second, employers can defend a retaliation claim by showing they treated similarly situated employees who didn’t engage in protected activity similar to the employee who did. But here, the EEOC alleged that a few weeks before the employee was fired, ostensibly for using sexually graphic language, a male employee was reprimanded, but not terminated, for viewing pornography at his desk.