Male Successor’s Alleged Greater Ability to Negotiate over Salary Not a Defense to Equal Pay Act Claim
Apay disparity between a female employee and her male successor was not justified, as a matter of law, by a company’s claim that he was better able to negotiate over salary, a federal court has held. Dreves v. Hudson Group (HG) Retail, LLC, No. 2:11-cv-4 (D. Vt. June 12, 2013).
The plaintiff, a general manager of Hudson Group stores at Burlington International Airport, alleged the employer violated the federal Equal Pay Act when it terminated her and paid a higher salary to her male successor. According to the employ- er, the higher salary was justified because:
- after its initial offer, the male successor negotiated a higher salary;
- the male successor had more than six years of management experience with the employer;
- the cost of living in Burlington, Vermont, was greater than the male successor’s previous location; and
- the male successor needed to be induced to move his family to the area.
The plaintiff moved for summary judgment on her claims, which the court granted. The court held that, when a plaintiff has established a prima facie case of an Equal Pay Act violation, a defendant’s “factor-other-than-sex” defense cannot be grounded on the male successor’s alleged ability to negotiate a higher salary. A defense also may not be based on a company’s alleged need to induce the successor to agree to employment, unless the employer can show the inducement is based on a valid business purpose, the court said. For example, the employer can offer an inducement to a potential employee who has better qualifications or greater experience than the claimant.
The court concluded the employer in this case lacked a valid defense as it did not show that the inducement to the male successor based on his family circumstances was related to any unique characteristic of his position, his qualifications, experience or abilities, or any exigent circum- stances associated with the employer’s opera- tions.
This case highlights the difficulties retailers can face in attracting talent or making a decision regarding compensation of salaried employees. Companies must base compensation decisions, including initial offers, starting salaries and raises, on valid business purposes to avoid potential liability under federal equal pay requirements.