I know I just wrote about pay discrimination two weeks ago. You can find that post here. So why are we back on that topic now? Well, I mentioned last time that the issue is not going away, and I meant it! The EEOC and the Office of Federal Contract Compliance Programs (OFCCP) have joined forces and are sharing information with each other, making private and government lawsuits an increasing possibility. The OFCCP can audit your pay practices and give you a “passing” grade — or not– and employees can still sue you and possibly win. You can settle a private lawsuit with your employees and the OFCCP can still audit your pay practices. What’s going on here and what’s an employer to do? If you’re looking for at least some clarity, read on…
(image from humanresourcestoday.com)
Let’s start with one piece of possible good news. Suppose some of your employees — or ex-employees–sue you, alleging pay discrimination. Suppose you settle the case. Now suppose you are also a federal contractor, and the OFCCP selects your company for an audit –and focuses on your pay practices. Can you settle the OFCCP case? Well, sure. But can you tie that settlement with the one you reached recently in connection with the private lawsuit? The answer for a long time was assumed to be “no”, but now, the answer might be at least a “may be”. It just happened this week, in Pan v Qualcomm Inc. S.D. Cal., No. 16-01885. Let’s take a closer look.
Between 2013 and 2014 the OFCCP conducted audits of two of Qualcomm’s functional units. The OFCCP found “statistically significant pay disparities” between male and female engineers beginning in May 2011. According to the OFCCP, men were paid at “significantly greater” rate than women, who were “equally or more qualified”, and issued a notice of violation this past February. Often, during a OFCCP audit involving employee interviews about pay, those employees who believe that they are paid less based on sex or race will hire a lawyer and file a private lawsuit, which is what happened here.
This past July, 3,300 current and former female Qualcomm employees filed a class action lawsuit alleging pay discrimination. One day later, the parties reached and filed with the court a $19.5 million settlement. The judge granted preliminary approval of the settlement in December, and a motion for final approval was filed in February. Last month, the OFCCP and Qualcomm entered into a Conciliation Agreement (settlement), which “incorporates relief expected to be provided” in Pan. Currently this result is unusual.
Why might the OFCCP have been willing to accept such a result? The OFCCP said that the Pan settlement would “provide an effective remedy for the female engineers identified by the OFCCP”. (Reading between the lines, I’m thinking that the significant dollar amount helped things along considerably.) Also, tying these two cases together now ensures that both the OFCCP and the plaintiffs’ counsel will be monitoring compliance with the settlement(s), which would certainly be attractive to both the OFCCP and the plaintiffs’ counsel. From Qualcomm’s perspective, it’s a way of more neatly resolving two separate cases at the same time. That might be about as close to a win-win as one can hope for under these circumstances.
While an employer might be able to use a private settlement to resolve a OFCCP audit, the reverse may not be true, however. In other words, if you are a government contractor, and the results of an audit of your pay practices are good, you may not be able to use those results as evidence in a private lawsuit. An Iowa furniture maker just learned that the hard way, in Dindinger v. Allsteel, Inc. , 2017 BL 107720, 8th Cir., No. 16-1305, 4/3/17. The case went to trial, and ended in a judgment of $204,000 to three female managers, who alleged pay discrimination, and another $270,000 award in attorneys’ fees.
The OFCCP had conducted an audit of Allsteel’s pay practices in 2012, and issued a notice of compliance. The court would not admit these findings into evidence, because it reasoned that the results would have been “unfairly prejudicial” at trial. (Then again, is anything ever fairly prejudicial– just sayin’…) The court also reasoned that OFCCP findings would add little or nothing to the case, since it allowed Allsteel to offer evidence about the audit process in general, the type of data collected and analyzed and company officials’ conclusions based on that data. The court also rejected Allsteel’s attempt to use economic conditions to defend the pay differences. Even assuming that economic conditions could defend pay discrepancies between men and women, the court noted that Allsteel offered no evidence that the last recession, resulting in layoffs and pay freezes caused female managers to be paid less than male managers.
OK, how do we tie everything together? If you reach a settlement in a pay discrimination case that seems to address substantially all the same issues in a pending OFCCP audit you may be able to resolve both matters simultaneously. If you do well in a OFCCP audit, that’s great, but it may not help you dismiss or settle a lawsuit. So what’s the bottom line for employers looking to avoid pay discrimination suits or OFCCP findings of violations? It gets back to monitoring your compliance with affirmative action requirements (if you’re a federal contractor) along with the Equal Pay Act, Title VII and any applicable state laws. That, of course, means you need to know those laws or hire or retain someone who does. FYI, to learn some basics, you can catch my live webinars on pay equity laws, or on affirmative action compliance. Of course, you should also make sure to consult with your trusty employment counsel! OK, let’s wrap up this discussion — for now.
Contents of this post are for educational/informational purposes only, are not legal advice, and do not create an attorney-client relationship. Consult with competent employment counsel in the state(s) in which you employ people with your specific questions.
Are you a N.J. employer/business owner? Join the new LinkedIn group, New Jersey Business Litigation Forum, run by my friend and colleague, Gene Killian. Click here for more info.
Before choosing an attorney, you should give this matter careful thought.
The selection of an attorney is an important decision.
If you find this communication to be
inaccurate or misleading, you may report it to the Committee on Attorney Advertising
Hughes Justice Complex, CN 037, Trenton, NJ