Circuit issues important ruling on equal pay discrimination under Title VII (and other issues)

The Second Circuit tackles a couple of issues under Title VII in this case: what evidence makes out a prima facie case of pregnancy discrimination, and when can a Title VII claim discrimination on the basis of pay disparities? This case is good news for plaintiffs.

The case is Lenzi v. Systemax, Inc., issued on December 6. Plaintiff was Director of Risk Management who repeatedly complained she was not compensated like other male department heads. In April 2013, plaintiff made a business trip to California, submitting an expense report that raised suspicions for her supervisor, Reinhold, who thought plaintiff wanted reimbursement for a personal detour during the business trip. Plaintiff gave management her side of the story, insisting the expenses were legitimate. Meanwhile, on May 31, 2013, plaintiff told defendant's general counsel, Lerner, that she was pregnant. Ten days later, she told Reinhold she was pregnant in the course of explaining the last thing she wanted to do while pregnant was to extend a business trip while she suffered from morning sickness and "complete exhaustion." On June 13, 2013, Reinhold directed the company to conduct an internal audit of the expense report, the first time the company had ever done such a thing. The report expanded to include a review of plaintiff's emails and other possible violations of corporate policy. Lerner than placed a memo in plaintiff's file stating her job performance was deficient, even though she had previously received positive reviews. The audit report contained a misleading finding (having to do with comedian Howie Mandel) and she was fired that day, June 26, 2013.

We got two issues here: does plaintiff have a prima facie case of pregnancy discrimination? And although the Equal Pay Act squarely addresses this issue, can she also sue for pay discrimination under Title VII?

The district court said plaintiff cannot make out a prima facie case, but the Court of Appeals (Kearse, Pooler and Wesley) says the district court got it wrong. A prima facie case under Title VII is not hard to prove, and plaintiff easily shows she was fired under circumstances creating an inference of pregnancy discrimination, prohibited under Title VII. After all, she was fired shortly after telling management that she was pregnant; that sequence always supports a prima facie case. Plus, we got the first-of-its kind audit report which took on a life of its own and examined other areas of plaintiff's performance. From the plaintiff's standpoint, she was terminated under fishy circumstances. That's a prima facie case under Title VII.

The harder question is the pay discrimination claim. In the district court, plaintiff agreed with defendant's proposition that, like EPA claims, pay discrimination claims under Title VII require the plaintiff to show that her comparators held positions substantial equal to their own. That is not actually not the law, and the Court of Appeals excuses that lapse in judgment by plaintiff to square away this issue once and for all. The holding is that Title VII pay discrimination cases are not held to the same narrow standards under the EPA.

As it happens, a number of district courts in the Second Circuit have in fact held that pay discrimination claims under Title VII and the EPA are decided identically. But the Second Circuit says for the first time that "a Title VII plaintiff alleging a discriminatory compensation practice need not establish that she performed equal work for unequal pay. By its plain terms, Title VII makes actionable any form of sex‐based compensation discrimination." While a plaintiff can still prove her Title VII claim by showing that comparable men doing the same work received higher pay (the EPA model), she can also win under Title VII if the employer hired a woman for a unique position in the company but paid her less than had she been a man. Under the EPA, there is no claim, because there  are no male comparators. That result would not follow under Title VII. The Court reasons: "grafting the EPA’s equal‐work standard onto Title VII would mean 'that 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, at a higher rate of pay.' Such a rule finds no support in the text of Title VII and would be inconsistent with Title VII’s broad remedial purpose, which counsels against “interpretations of Title VII that deprive victims of discrimination of a remedy, without clear congressional mandate.”

The Court of Appeals also holds that plaintiff has proffered enough evidence of discriminatory intent in violation of Title VII. A chart details plaintiff's title and experience with other male department heads, along with their salaries. Plaintiff earned less money than the men; while she had fewer years' experience than the men, she was still paid less than the market value for her position, and the men earned more than the market rate. Plaintiff also has evidence that Reinhold is a sexist jerk, commenting on womens' bodies, circulating stereotypical things about women, commenting on the women he'd like to have sex with, and commenting on plaintiff's clothing in a sexual way. Under the test set forth in Henry v. Wyeth Pharm., Inc., 616 F.3d 134 (2d Cir. 201), these are not stray remarks but relevant to prove discriminatory intent, as "Markou’s deposition testimony was not that Reinhold made one or two stray comments about women that might suggest a discriminatory motive. Rather, Markou’s testimony suggests that Reinhold’s comments were pervasive—that he consistently made remarks about his sex life and about women. Moreover, Reinhold held a senior role at the company; he was Systemax’s CFO." The Second Circuit does not apply the Henry factors very often, so if you handle these cases, pay attention.

Finally, the Court of Appeals says plaintiff makes out a Title VII retaliation, again reversing the district court's analysis. While the district court said plaintiff did not engage in protected activity, the record shows that she wrote an email complaining about the pay disparity as compared with her "peers." While the district court said the "peers" reference means plaintiff was not comparing herself with men, in fact, during a face-to-face meeting with Reinhold, plaintiff said "she wanted to be treated similarly to the males." She also referenced men in other conversations complaining about unfair compensation. Read in context, the email permits an inference that plaintiff was complaining about gender discrimination, even if, "standing alone, Markou's email may well be insufficient to establish that she engaged in protected activity."