Federal Court Upholds Salary Negotiation Defense as “Factor Other Than Sex”

On December 2nd, 2021, Judge Lawrence E. Kahn of the U.S. District Court Northern District of New York (Court) upheld an employer’s salary negotiation defense, which stated that the negotiations constituted a “factor other than sex” that excused waged disparities. Earlier, the Equal Employment Opportunity Commission (EEOC) had asked the court to reject this defense. Ultimately, the Court determined that an employer’s “salary negotiations” claim is a legitimate defense to Equal Pay Act (EPA) claims. Previously, the EEOC released updated COVID-19 guidance to help avoid discrimination claims related to the pandemic.

Background of the Case

A female accepted a job as a superintendent at a school district in New York in July 2016. Meanwhile, a male superintendent, a comparable employee, had been serving in the same position for less than ten years. However, the male superintendent was paid more and received more benefits than the female superintendent. Originally, the EEOC brought forward a claim of possible discrimination and violation of the EPA following an initial investigation. Subsequently, to prove a breach of the EPA, a plaintiff must establish a prima facie case by satisfying three elements:

1. The employer pays different wages to employees of the opposite sex.
2. The employees perform equal work on jobs requiring equal skill, effort, and responsibility.
3. The jobs are performed under similar work conditions.

Correspondingly, the defendant may offer a reason for the difference in compensation. In order to rebut the prima facie case, the plaintiff must show that the difference in compensation results from:

1. A seniority system;
2. A merit system;
3. A system which measures earnings by quantity or quality of production; or
4. A differential based on any other factor other than sex.

Furthermore, to establish the last defense, the defendant must demonstrate it had “a legitimate business reason for implementing the gender-neutral factor that brought about the wage differential.”

The U.S. District Court Upholds Salary Negotiation Defense

Indeed, in United States Equal Employment Opportunity Commission v. Hunter-Tannersville Central School District, the EEOC argued that the defendant’s salary negotiation defense was legally insufficient. Basically, they argued that negotiating a higher salary is not related to job performance. Nonetheless, the Court was not persuaded by the EEOC’s argument. In summary, the Court denied the EEOC’s motion to strike. Alternatively, the Court upheld the salary negotiation defense, stating that such a negotiation constitutes a “factor other than sex”. Therefore, an employer may rely upon such a defense against an EPA claim.