The Role of Salary History in Pay Discrimination

By Kathleen Jennings (kjj@wimlaw.com)

A recent decision form the Eleventh Circuit of Appeals shows us that an employer cannot rely on salary history as a defense to a claim that it paid a female employee consistently less money than a male predecessor in the same position. (Bowen v. Manheim Remarketing, Inc., 11th Cir., No. 16-17237 (2/21/18)).

Manheim hired Qunesha Bowen as an automobile detailer, and three years later, the assistant general manager promoted her to arbitration manager. Bowen replaced a male arbitration manager. Manheim paid that male predecessor $46,350 during his first year as arbitration manager, but the assistant general manager and general manager set Bowen’s starting salary at $32,000. Bowen’s salary did not reach $46,350 until her sixth year as arbitration manager.

Bowen offered documents and testimony showing that, although she was an effective arbitration manager, her salary for a few years was below the minimum salary for arbitration managers and it was consistently well below the midpoint salary for arbitration managers. In response, Manheim asserted that factors other than sex—prior salary and prior experience—justified the pay disparity between Bowen and her male predecessor. The predecessor worked for Manheim for six years before his promotion to arbitration manager, he had prior managerial and mechanical experience, and he earned $46,350 per year at Manheim before the promotion. In contrast, Bowen worked for Manheim for only three years before her promotion to arbitration manager, she had limited prior managerial and mechanical experience, and she earned around $26,000 per year at Manheim before the promotion.

The District Court granted summary judgment to Manheim, but the Eleventh Circuit reversed that decision. The Eleventh Circuit held that a jury could find that Manheim failed to satisfy its heavy burden of showing that sex provided no basis for the disparity. The Court noted that Manheim did not simply pay Bowen’s male predecessor a much greater starting salary; it set the predecessor’s salary near the midpoint of the compensation range for arbitration managers but consistently set Bowen’s salary at the bottom of the range. A jury could find that prior salary and prior experience alone do not explain Manheim’s disparate approach to Bowen’s salary over time. Most notably, the Court stated that once Bowen established herself as an effective arbitration manager, prior salary and prior experience would not seem to justify treating her different than the predecessor.

There was some especially damaging evidence of sex discrimination at Manheim that was offered in the form of an affidavit form Manheim’s human resources manager, Mikiya Peoples. Peoples’ affidavit testimony established that sex-based pay disparities were common at Manheim, that the managers refused to remedy the disparities, and that the managers repeatedly exhibited an unwillingness to treat women equally in the workplace.

The role of salary history in perpetuating gender discrimination in pay is being hotly debated. To date, California, Oregon, Massachusetts, Delaware, New York City, San Francisco, and Puerto Rico have all enacted laws banning employers from asking about a job applicant’s salary history. Know the law of your jurisdiction before you ask candidates about salary history.

Kathleen Jennings, Principal is a principal in the Atlanta office of Wimberly, Lawson, Steckel, Schneider, & Stine, P.C. She defends employers in sexual harassment and other employment litigation and provides training and counseling to employers in employment matters. She can be contacted at kjj@wimlaw.com.

©2018 Wimberly Lawson

The materials available at this blog site are for informational purposes only and not for the purpose of providing legal advice. You should contact your attorney to obtain advice with respect to any particular issue or problem. Use of and access to this Web site or any of the e-mail links contained within the site do not create an attorney-client relationship between Wimberly Lawson and the user or browser. The opinions expressed at or through this site are the opinions of the individual author and may not reflect the opinions of the firm or any individual attorney.

Workplace Romance is not Dead

By Kathleen Jennings (kjj@wimlaw.com)

With Valentine’s Day coming up in less than a week, it is a natural time for companies to review their workplace dating/relationship/fraternization policies. If your company does not have one, it is time to implement one in light of the #MeToo movement and increased awareness of all things harassment. If your company does have one, take the time to review it. Is it clear? Logical? How is it working?

Some employers have taken the step of banning all workplace dating as a way to prevent potential sexual harassment complaints. That seems a bit harsh, especially considering that a lot of people spend most of their time at work, and therefore, are likely to meet potential dates there. As a practical proposition, managing workplace romance does not necessarily mean prohibiting workplace romance. Employers may risk losing valuable workers if they do so. Furthermore, the stronger the prohibition, the more likely people will keep these relationships secret. And the employer who doesn’t know about these relationships runs a greater risk of sexual harassment complaints if the romance turns sour. If romances are prohibited, the employer does not really know what’s going on: a year after a consensual relationship breaks up, some employee walks into the office and says, “I’m being sexually harassed by my supervisor.” Employers should try to manage these relationships in a way that maintains a productive, happy workforce on the one hand, and doesn’t overly intrude into the employees’ private lives, on the other hand.

Facebook and Google have taken an interesting approach. Their policies allow an employee to ask a co-worker out one time. If they are turned down, they don’t get to ask again. Ambiguous answers such as “I’m busy” or “I can’t that night,” count as a “no.”

The relationships that do need to be banned or very carefully managed are those between supervisors and subordinates. Those are the relationships that are most likely to result in claims of harassment or favoritism. Even if both parties willingly enter into the relationship, if things end badly, the subordinate may later claim that he or she was coerced into the relationship by the person who had more power. Ugly.

Pro tip: Workplace romance happens. Therefore, a company should have a written policy in place that clearly spells out what types of behaviors and relationships are allowed and prohibited in the workplace. An effective policy can minimize the danger and damages of discrimination, harassment, and wrongful discharge lawsuits, as well as suits alleging an invasion of privacy.

Kathleen Jennings, Principal is a principal in the Atlanta office of Wimberly, Lawson, Steckel, Schneider, & Stine, P.C. She defends employers in sexual harassment and other employment litigation and provides training and counseling to employers in employment matters. She can be contacted at kjj@wimlaw.com.

©2018 Wimberly Lawson

The materials available at this blog site are for informational purposes only and not for the purpose of providing legal advice. You should contact your attorney to obtain advice with respect to any particular issue or problem. Use of and access to this Web site or any of the e-mail links contained within the site do not create an attorney-client relationship between Wimberly Lawson and the user or browser. The opinions expressed at or through this site are the opinions of the individual author and may not reflect the opinions of the firm or any individual attorney.

Do You Know the Effect of the New Tax Law on the Tax Deductibility of Harassment Settlements?

By Kathleen Jennings (kjj@wimlaw.com)

I am not a tax lawyer, but I do need to concern myself with the general tax consequences of settlements of litigation that I handle on behalf of our clients. So I was fascinated to learn of in a little-known provision of the Tax Cuts and Jobs Act of 2017, a/k/a the new Tax Law (which was signed into law on December 22, 2017), that changes the tax consequences to employers of settlements in sexual harassment and sexual abuse cases. What does the New Tax Law change? It now prohibits tax deductions to companies for sexual harassment settlements that are confidential.

Under Section 13307 of the Tax Cuts and Jobs Act, employers no longer receive a business deduction for “(1) any settlement or payment related to sexual harassment or sexual abuse if such settlement or payment is subject to a nondisclosure agreement, or (2) attorney’s fees related to such a settlement.” In plain English, this means that if an employer requires an employee to sign a nondisclosure agreement as a condition of a sexual harassment settlement, or the settlement agreement contains a confidentiality provision, then the employer cannot claim the settlement payment, nor the corresponding attorney’s fees as a business deduction. This provision applies to amounts paid or incurred after December 22, 2017.

Because the New Tax Law was hastily put together without anything in the way of public hearings, there are issues that will need to be resolved, such as:

  • What constitutes a “confidentiality provision?”
  • Can the parties separate out portions of a settlement payable to sexual harassment from those payable to other allegations to minimize the tax consequences?
  • Is the bar on deducting attorney’s fees “related to such a settlement or payment” to be read literally as meaning that only the fees relating to the settlement process are not deductible — as opposed to the fees incurred in all other aspects of the litigation that came before settlement?

One big question is whether this change in the tax law will act as a disincentive to employers to settle harassment cases. Companies may now balance the costs (including attorneys’ fees) of a trial (which will be tax deductible) against the lost tax deduction of a confidential settlement.

In all, this new law appears to be a heavy-handed approach to the recent publicity regarding sexual harassment and abuse and the #MeToo movement. Most of the time, companies insist upon confidentiality of settlements of harassment and other employment claims not to cover up bad behavior, but to prevent other employees and former employees from showing up to the company’s door with their hands out for money. And confidentiality benefits those employees who do not want to attract a bunch of newfound friends and relatives who also have their hands out for money.

Kathleen Jennings, Principal is a principal in the Atlanta office of Wimberly, Lawson, Steckel, Schneider, & Stine, P.C. She defends employers in sexual harassment and other employment litigation and provides training and counseling to employers in employment matters. She can be contacted at kjj@wimlaw.com.

©2018 Wimberly Lawson

The materials available at this blog site are for informational purposes only and not for the purpose of providing legal advice. You should contact your attorney to obtain advice with respect to any particular issue or problem. Use of and access to this Web site or any of the e-mail links contained within the site do not create an attorney-client relationship between Wimberly Lawson and the user or browser. The opinions expressed at or through this site are the opinions of the individual author and may not reflect the opinions of the firm or any individual attorney.

 

 

 

Once again, Retaliation is the Most Frequently Filed Charge With EEOC

By Kathleen Jennings (kjj@wimlaw.com)

The EEOC released its fiscal year 2017 charge data, and once again, retaliation tops the list as the most frequently filed charge. Next on the list are are race, disability, and sex. Specifically, the charge numbers show the following breakdowns by bases alleged, in descending order:

  • Retaliation: 41,097 (48.8 percent of all charges filed)
  • Race: 28,528 (33.9 percent)
  • Disability: 26,838 (31.9 percent)
  • Sex: 25,605 (30.4 percent)
  • Age: 18,376 (21.8 percent)
  • National Origin: 8,299 (9.8 percent)
  • Religion: 3,436 (4.1 percent)
  • Color: 3,240 (3.8 percent)
  • Equal Pay Act: 996 (1.2 percent)
  • Genetic Information: 206 (.2 percent)

[These percentages add up to more than 100 because some charges allege multiple bases].

84,254 workplace discrimination charges were filed with the EEOC nationwide during fiscal year (FY) 2017. This is down from 91,503 charges of workplace discrimination filed in fiscal year 2016.

The EEOC also received 6,696 sexual harassment charges and claims that it obtained $46.3 million in monetary benefits for victims of sexual harassment. We expect the number of sexual harassment charges to increase in 2018 due to increased public awareness of sexual harassment.

Why is retaliation the most filed charge? For starters, it is very difficult to prevent an employee from claiming that he or she has been retaliated against after he or she has made a complaint or filed a charge of discrimination or harassment. From that point forward, that employee is likely to perceive anything bad that happens as retaliation for making that complaint or filing that charge, even if it isn’t. Any writeup, any poor performance evaluation, change in schedule, or even something as seemingly minor as moving an employee’s desk, even if completely justified, will be perceived as retaliation if it occurs after the employee has made a complaint or filed a charge.

Although an employer often cannot prevent an employee from alleging retaliation, it can take measures to build a strong defense to such a claim. Document the reasons for the action. Do not let a supervisor who is accused of harassment or discrimination be the sole decisionmaker for actions taken against the employee who made the complaint. At a minimum, add a level of review by another supervisor or manager or an HR professional. If there is a concern that an action may be considered retaliation, consult with legal counsel.

Kathleen Jennings, Principal is a principal in the Atlanta office of Wimberly, Lawson, Steckel, Schneider, & Stine, P.C. She defends employers in sexual harassment and other employment litigation and provides training and counseling to employers in employment matters. She can be contacted at kjj@wimlaw.com.

©2018 Wimberly Lawson

The materials available at this blog site are for informational purposes only and not for the purpose of providing legal advice. You should contact your attorney to obtain advice with respect to any particular issue or problem. Use of and access to this Web site or any of the e-mail links contained within the site do not create an attorney-client relationship between Wimberly Lawson and the user or browser. The opinions expressed at or through this site are the opinions of the individual author and may not reflect the opinions of the firm or any individual attorney.