By: Matthew J. Gagnon

Seyfarth Synopsis: It has been nearly a decade since some states began enacting changes to their equal pay statutes that appeared to some to differentiate those statues from the federal Equal Pay Act (“EPA”) in significant ways. Although those changes garnered plenty of press and speculation from commentators, the courts themselves have been rather slow to address those differences. Almost a decade on, there are still very few cases that interpret those state-level changes as differing in any meaningful way from the federal standards. A recent decision from the Second Circuit may herald the beginning of a change in this dynamic, albeit still quite incremental, cautious, and slow.

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This is the first in a series of posts examining the new and developing trends in equal pay litigation identified in Seyfarth’s yearly publication, Developments in Equal Pay Litigation, 2024 Update

One of the most critical issues facing employers in today’s equal pay litigation landscape is whether and to what extent certain state laws have changed the legal standards governing key provisions of a plaintiff’s prima facie case and an employer’s defenses. Beginning with California in 2015, some states made what looked to some like fairly significant changes to their equal pay statutes (e.g., New York, Illinois, New Jersey, Massachusetts, Washington; the list is ever growing). Some commentators and plaintiffs’ lawyers have argued those changes introduced a different set of standards into equal pay litigation, especially as they relate to determining what counts as “equal” or “substantially similar” work for purposes of identifying appropriate comparators, and the factors employers may rely upon as an affirmative defense.

The courts have generally not gone along. Most decisions that have come out since those changes were enacted continue to interpret the new state statutes in a manner that is consistent with federal law. In 2023, one Appeals Court finally did find a difference between state and federal law, but not in a way that many expected.

Recent Decisions in the Second Circuit

In Eisenhauer v. Culinary Institute of America, 84 F.4th 507 (2d Cir. 2023), which was an important case for several reasons (see here and here), the Second Circuit addressed a relatively narrow distinction between the federal and New York equal pay laws. In that case, a female professor at a college and culinary school alleged she was paid less than a male professor who managed a similar course load. The employer argued that the plaintiff and her comparator had been hired at different salaries, and that that pay disparity increased over time due to the sex-neutral terms of a compensation plan that gave the same percentage increase to professors’ salaries each year. The plaintiff argued that the plan could not be used by the employer as a “factor other than sex” affirmative defense because the resulting pay disparity was not connected to any differences between her and her comparator’s job. The Second Circuit framed this question as asking whether the federal EPA requires an employer to show that the factor is job-related, i.e., related to the job in question.

The Second Circuit acknowledged that it had earlier held that a facially sex-neutral job-classification system alone may only constitute a “factor other than sex,” when it is rooted in legitimate business-related differences in work responsibilities and qualifications for the particular positions at issue. But the Eisenhauer court clarified that this requirement was only applicable to job-classification systems: “[A] job-relatedness requirement is necessary to ensure that a job-classification system is not a pretext for sex discrimination,” because, “Jobs are, after all, the principal feature of job-classification systems.” Id. at 516-17 (emphasis in original). More generally, the Second Circuit concluded that there is no job-relatedness requirement for the “factor other than sex” defense under the federal EPA because that requirement appears nowhere in the EPA’s text and would conflict with the statute’s plain meaning.

But, according to one argument, the same is not true for the New York EPA. The court held that when the New York legislature amended the New York equal pay statute, it added a provision that required a “factor other than sex” to be “job-related with respect to the position in question,” among other things. See N.Y. Lab. Law 194(1)(iv). The Second Circuit remanded the case back to the district court to reconsider its decision in light of the different standards under the federal and New York statutes, despite the fact that the district court had found in favor of the employer even after applying the more stringent job-relatedness standard to the federal EPA. According to the Second Circuit, the district court erred when it applied this same standard to analyze the “factor other than sex” defense under the state and federal statutes.

But in another recent case, which was decided by a court in the Second Circuit after EisenhauerEdelman v. NYU Langone Health System, No. 21-cv-502(LJL), 2023 WL 8892482 (S.D.N.Y. Dec. 26, 2023), the court arguably made no distinction between the state and federal laws with respect to other aspects. In particular, the court appeared to rely on the same analysis to determine whether plaintiff and her comparator performed “equal” (the federal language) or “substantially similar” work (the state language).

The court first acknowledged the change wrought by Eisenhauer, noting that it must now “analyze a plaintiff’s ‘[NY EPA] claim as altogether distinct form her [federal] EPA one.’” Id. at *7 (quoting Eisenhauer, 84 F.4th at 525). And in fact, the court was careful to apply a slightly different standard to analyze the employer’s “factor other than sex” affirmative defense under New York law, noting that “New York law specifies that such a factor must ‘be job-related with respect to the position in question and . . . be consistent with business necessity.’” Id. (quoting NYLL § 194(1)(iv)(B)). But when it considered the plaintiff’s prima facie case, the court arguably made no effort to distinguish between the New York EPA and the federal EPA. After citing a long line of precedent, which mostly predated the New York’s ostensible change to a “substantially similar” standard, the court concluded that “the evidence at trial establishes that Plaintiff did not perform equal work to [comparator] because their positions did not require substantially equal effort.” Id. Notably, the court came to the same conclusion under the NY EPA going so far as to hold that the “equal work inquiry” is “’critical’ for unequal pay claims under the [NY EPA].” Id. at *10 (quoting Woods-Early v. Corning Inc., 2023 WL 4598358, at *4 (W.D.N.Y. July 18, 2023)).

Implications For Employers

When read together, it could be argued that these two cases recognize only the faintest glimmer of daylight between the federal and New York equal pay statutes. If so, they are significant because they are among the very few cases that do. The implications for employers could be profound. If a court were to hold, for example, that “substantially similar” work is somehow different from “equal” work,  plaintiffs’ counsel might use that to argue that some of the new state-level statutes actually lower the burden on a plaintiff to establish a prima facie case.

Many class cases founder on the “equal” work requirement because it is difficult to show, on a class-wide basis, that many different employees all perform the same job. If plaintiffs’ counsel were able to argue successfully that some state statutes have relaxed that standard, that could open the floodgates of equal pay class action litigation. For now, most courts are still arguably interpreting these provisions the same way under either the state or federal statutes. Employers should not take their eye off this ball. Just one errant decision by a court anywhere in the country could have a massive impact on employers with a nationwide footprint.

These and other trends impacting equal pay litigation are discussed in much greater detail in Seyfarth Shaw’s yearly report, Developments in Equal Pay Litigation, 2024 Update. We highly recommend that report to any employer facing equal pay litigation, or to those who just want to know more about it so they can avoid such lawsuits in the future or keep abreast of changes in the law. We look forward to continuing to share our analysis of these issues.

By: Yoon-Woo Nam, Alexandra R. Hassell, and Christopher DeGroff

Seyfarth Synopsis: The U.S. Equal Employment Opportunity Commission (EEOC) recently released its 2023 Annual Performance Report and a new dashboard highlighting resolved cases. Compared to the prior fiscal year, the EEOC contacted substantially more potential claimants and filed a great number of merits lawsuits in 2023. It also released a new tool called “EEOC Explore” to track litigation statistics across the country.

EEOC Litigation Lurches Forward In Fiscal Year 2023

The EEOC released its Annual Performance Report for fiscal year 2023 that quantified the results of its enforcement of federal anti-discrimination statutes. The report showed a jaw-dropping increase of the EEOC’s contacts with potential claimants by over 600,000 in FY 2023 (rising 25% over FY 2022). The EEOC also secured over $440.5 million for claimants with charges and claims against private and public employers last year, which is a substantial increase from FY 2022. And these figures may increase further in FY 2024 – the EEOC’s strategy to prioritize systemic discrimination charges led to the filing of 50% more merits lawsuits compared to FY 2022. Chair Burrows emphasized that under her tenure, the EEOC will focus its resources, which included the hiring of nearly 500 attorneys, investigators and other personnel, to respond to an increased demand from discrimination complainants in the workplace. The EEOC also has committed to renewing its scrutiny of reasonable accommodations for pregnant workers in FY 2023, following the passage of the recently enacted Pregnant Workers Fairness Act, and the EEOC began accepting related charges by the end of June 2023.

While the Annual Performance Report does not break out its enforcement metrics against private sector employers, the EEOC makes clear that it will prioritize contact with private sector workers as evidenced by its campaign of hosting community outreach programs across the country.

EEOC Explore – A Data Dashboard

The EEOC also released a new Data Dashboard, which highlights selected resolved cases from the past five fiscal years in recognition of the 60th anniversary of the Civil Rights Act of 1964. The EEOC expanded its library of data visualizations of aggregated charge data, workforce demographic data and limited employer-reported pay data that it plans to supplement in the future.

For example, the EEOC’s visualization concerning Charges filed in all regions shows a notable spike in retaliation claims:

Implications for Employers

Employers ignore EEOC filing trends at their peril. By understanding the strategic priorities reflected in the report, employers can better position themselves to avoid the anticipated increase of EEOC charges by staying current on federal anti-discrimination laws, particularly the Pregnant Workers Fairness Act, and maintaining vigilance in their response to requests for accommodation in the workplace.

Employers should also use EEOC Explore to review Charge and Litigation statistics (i) by state and (ii) type of claim made to keep abreast of litigation trends in the states where their employees work to ensure compliance with all federal, state and local laws in those areas.

By: Matthew J. Gagnon

We are pleased to announce the publication of the latest edition of Developments in Equal Pay Litigation, available as an eBook here. This report contains our annual analysis of trends and developments in the relentlessly dynamic body of law that is the equal pay litigation and legislation landscape. It was released along with Seyfarth’s 50 State Equal Pay Reference Guide, Global Pay Equity Desktop Reference, and Pay Transparency Wage Range Disclosure Compendium reports. We hope our readers will find these resources useful as a guide to these developing legal issues, here and around the world.

Developments in Equal Pay Litigation is intended primarily to be a guide to litigation trends. The first section discusses recent developments in equal pay legislation at both the federal and state level, with an emphasis on the different legal risks they pose to employers operating in many jurisdictions. The second section is the heart of the book; it contains an in-depth analysis of recent decisions from the federal and state courts concerning pay discrimination, including substantive trends and developments in the legal theories and defenses advanced by plaintiffs and employers. The third section discusses significant developments in federal regulation and enforcement of equal pay issues as driven by the EEOC, for whom pay discrimination continues to be a top enforcement priority.

Some of the cutting-edge issues discussed in more detail in this book are:

  • An analysis of how courts are interpreting the new state-level equal pay statutes and how they may differ (or not) from the federal Equal Pay Act and Title VII;
  • How courts are navigating the growing debate over the “one-comparator” rule; i.e., whether an employee can establish a prima facie case of wage discrimination by pointing to just one comparator, despite other evidence that might undercut an inference of discrimination;
  • New theories that attempt to expand the scope of equal pay liability, including efforts to undermine some of the more common arguments employers use to explain a wage disparity in accordance with the statutorily-defined affirmative defenses;
  • The implications for equal pay litigation of the Supreme Court’s Bostock decision, which held that Title VII prohibits discrimination on the basis of sexual orientation and gender identity; and
  • A new section added this year that may be of great concern to many employers: recent case law that addresses maintaining attorney-client privilege over equal pay audits and internal investigations.

Our goal is to provide analysis and commentary regarding these and other developments so that corporate counsel, human resources professionals, and other decision makers have the up-to-date guidance they need to make informed decisions regarding equal pay issues, including a solid background in the types of issues that often come up in equal pay litigation.

In the coming weeks, we will also publish a series of posts that address in more detail what we regard as some of the more significant developments discussed in this book. We look forward to continuing this conversation with you!

Author: Seyfarth Shaw LLP

Each year, our team at Seyfarth analyzes every EEOC case filing—as well as EEOC-related legal decisions from around the country—to compile the definitive A-Z desk reference for “everything EEOC.” As we turn the page into 2024, we are pleased to announce the publication of Seyfarth Shaw’s 2024 Edition of its EEOC-Initiated Litigation Report.

This year’s Report comes amidst a surge in EEOC lawsuit filings following notable personnel changes at the Commission. In the last Fiscal Year alone, the EEOC launched a 52% increase in merit filings, going from 95 cases in FY 2022 to 144 in FY 2023, with no signs of slowing down in the near future. Not coincidentally, the Senate confirmed a Biden-appointed Commissioner in FY 2023, giving the EEOC its first Democratic majority in years, and a new General Counsel. Seyfarth’s 2024 Report examines the forces underlying this dramatic increase in litigation activity, in addition to other recent trends important for employers, such as:

  • The balance of power shift to a Democratic majority, which includes the confirmation of a new Commissioner and a new General Counsel;
  • The EEOC’s adoption of a new Strategic Enforcement Plan identifying the Commission’s substantive goals for the next five years;
  • The Commission’s implementation of a new strategic blueprint for how the EEOC intends to achieve its substantive goals;
  • Assessing and forecasting the nature of the claims asserted in EEOC lawsuits, as well as an overview of claims most commonly alleged in charges filed by workers themselves;
  • Demystifying the EEOC’s litigation approach, including analyses by geography, legal theories, and industries;
  • A detailed tutorial on EEOC case resolution, including a study of EEOC conciliations, Consent Decrees, informal settlement agreements, and an EEOC trial recap.  We also dive into the EEOC’s resurgence of using publicity and the media to advance its agenda.
  • To read about these trends in more detail, access the entire Seyfarth 2024 EEOC-Initiated Litigation Report HERE.

Stay tuned to the Workplace Class Action Blog for more EEOC analysis, as the Seyfarth team continues to track and report on all EEOC activity. For more information on the EEOC or how the Commission’s activity affects your business, contact the Report’s editors – Christopher DeGroff and Andrew Scroggins – or a member of Seyfarth’s Complex Discrimination Litigation Group.

By: Michael Jacobsen, Connor Bateman, and Yoon-Woo Nam

Seyfarth Synopsis: For the final blog in this series regarding the legacy of TransUnion LLC v. Ramirez (“TransUnion”), the Workplace Class Action blog closes its survey of federal Circuit Courts with key rulings from the Ninth, Tenth, Eleventh, and D.C. Circuits.

TransUnion at a Glance

Among other things as we have discussed, the U.S. Supreme Court held in TransUnion that every class member must have Article III standing in order to recover individual damages, as well as that an informational injury that causes no adverse effects cannot satisfy Article III.

The Ninth Circuit’s Analysis

Van v. LLR, Inc.

Case Background

In Van, the plaintiff filed a putative class action on behalf of more than 10,000 purchasers against a marketing clothing retailer for allegedly charging sales tax based on the location of the retailer rather than the location of the purchaser, leading to the overpayment of sales taxes. After the U.S. District Court for the District of Alaska certified the class, the defendant appealed on the grounds that the defendant had provided a discount to purchasers in an amount equal to or greater than the amount of the allegedly improperly assessed sales tax, such that those customers did not suffer any injury from the alleged sales tax practice.

The Court’s Decision

The Ninth Circuit reversed in light of the individualized issue that the defendant invoked—at least some class members lacked meritorious claims because they had received a discount to offset the allegedly improperly assessed sales tax. While the district court dismissed the evidence as de minimis, the Ninth Circuit noted that the plaintiff still had to show that a class-member-by-class-member assessment of the individualized issue would be unnecessary or workable. The Ninth Circuit also noted that since TransUnion expressly held open the question of “whether every class member must demonstrate standing before a court certifies a class,” the district court might need to address this issue on remand.

That epilogue is now hot off the press. Just last month, the district court ruled that the individualized question of standing predominates over purportedly common questions of law and fact, rendering class certification impracticable. Under TransUnion, the court reasoned, the putative class members who paid an improper sales tax, but received a discount in an amount equal to or greater than the tax, did not suffer any injury in fact.

The Tenth Circuit’s Analysis

Laufer v. Looper

Case Background

As Seyfarth’s ADA Title III blog reported in greater detail here, in Laufer, the plaintiff sued motel owners alleging that their online reservation systems failed to provide necessary information about accessibility in violation of the ADA. The plaintiff alleged that she intended to visit the defendants’ online reservation system in the near future but not actually book a room at the motel. The U.S. District Court for the District of Colorado dismissed the complaint for lack of Article III standing.

The Court’s Decision

On appeal, the Tenth Circuit concluded that the plaintiff had not sufficiently alleged an injury in fact. Citing TransUnion, the court noted the plaintiff failed to allege that she had any interest in using the information obtained from the online reservation system beyond bringing the lawsuit. She had no plans to visit the city where the motel was located and never attempted to book a room there. Thus, the court held she had not suffered an informational injury sufficient to establish standing.

The Eleventh Circuit’s Analysis

Green-Cooper v. Brinker International, Inc.

Case Background

In Green-Cooper, the plaintiffs filed a putative class action against a restaurant owner in the U.S. District Court for the Middle District of Florida after learning that their credit card information and personally-identifiable information had been compromised in a data breach. The defendant appealed following certification of the plaintiffs’ proposed classes.

The Court’s Decision

The U.S. Court of Appeals for the Eleventh Circuit began its class certification analysis with TransUnion’s reminders that “every class member must have Article III standing to recover individual damages” and those who do not have standing must eventually be removed from the class. Further, if a class member’s standing hinged on individualized issues, those issues may predominate over common questions, and class certification may be inappropriate. In an effort to avoid that problem, the district court had defined the classes to include only individuals who “had their data accessed by cybercriminals” during the defined period. The Eleventh Circuit, however, noted that merely having data “accessed” by a cybercriminal is likely insufficient to establish standing. Thus, the classes as defined could include individuals without standing. Accordingly, the Eleventh Circuit remanded the case so that the district court could either redefine the classes or analyze whether the classes as defined satisfied the predominance standard under Rule 23(b)(3). Several weeks ago, however, the defendant went up the chain, filing a petition for certiorari seeking a holding from the U.S. Supreme Court that no class could be certified in the case given individualized issues of damages and injury. Further developments certainly will be worth watching.

The D.C. Circuit’s Analysis

Saline Parents v. Garland

Case Background

In Saline Parents, the plaintiffs were an unincorporated association and six individuals who filed suit in the U.S. District Court for the District of Columbia in response to various actions taken by the federal government to address a spike in harassment and threats of violence against school administrators, board members, teachers, and staff. According to the plaintiffs, a memorandum by the attorney general and actions taken in response to that memorandum reflected unlawful attempts “to use federal law enforcement resources to silence parents and other private citizens” who object to certain school policies. After the case was dismissed for lack of standing, the plaintiffs appealed.

The Court’s Decision

The U.S. Court of Appeals for the District of Columbia Circuit affirmed, finding that the plaintiffs failed to establish an “injury in fact.” Instead of providing evidence of a “regulatory, proscriptive, or compulsory” exercise of government power, the plaintiffs claimed only that their activities were being “chilled by the mere existence of governmental investigation.”  In other words, the plaintiffs could not illustrate any concrete threats of enforcement from the government or that the government “focused on them or their peaceful activities,” nor could the plaintiffs offer “anything to show that the Government labeled them in any way, let alone impugned their reputations.” Thus, the court held that the plaintiffs could not establish a concrete injury sufficient to support standing.

Implications For Employers

Employers who find themselves defending against complex litigation in these jurisdictions (or elsewhere) can utilize each of these rulings respectively and should be aware of them accordingly. Van and Green-Cooper, however, are especially notable for demonstrating how Article III standing principles as the U.S. Supreme Court articulated in TransUnion can impact the Rule 23 analysis. Hence, employers should take note of these cases in particular in crafting their strategies to narrow proposed classes or, better yet, defeat class certification altogether. 

By: Michael Jacobsen, Chris Kelleher, and Yoon Woo-Nam

Seyfarth Synopsis: As reported here, for the two-year anniversary of the U.S. Supreme Court’s rulings regarding Article III standing in TransUnion LLC v. Ramirez (“TransUnion”), the Workplace Class Action blog is providing a survey of how each of the federal Circuit Courts have applied the Supreme Court’s teachings. In our prior installment, we analyzed how the First, Second, Third, and Fourth Circuit Courts of Appeals have interpreted TransUnion. Now, we discuss rulings from the Fifth, Sixth, Seventh, and Eighth Circuits that employers should keep in mind.

TransUnion at a Glance

In TransUnion, the Supreme Court reinforced that Article III standing requires a “concrete harm,” even when there is a statutory violation, and that “an injury in law is not an injury in fact.” In addition, the Supreme Court held that plaintiffs must demonstrate standing with respect to each claim asserted and each form of relief they seek (e.g., injunctive relief and damages).

The Fifth Circuit’s Analysis

Braidwood Management, Inc. v. Equal Employment Opportunity Commission

Case Background

In a twist, it was employers that filed the class action lawsuit in Braidwood Management, Inc., seeking a declaratory judgment that the EEOC’s guidance interpreting statutory prohibitions on sex discrimination to include sexual orientation and gender identity violated the First Amendment and Religious Freedom Restoration Act and that Title VII did not prohibit discrimination against bisexual employees or sex-neutral rules of conduct that exclude practicing gay, lesbian, and transgender individuals from employment. On summary judgment, the U.S. District Court for the Northern District of Texas ruled the employers had standing to bring the action. 

The Court’s Decision

On appeal, the U.S. Court of Appeals for the Fifth Circuit analyzed whether the alleged “injury” to the employers was sufficiently “concrete and particularized” and “actual or imminent” such that they had standing to bring suit against the EEOC. This was a close question because the EEOC took no enforcement action against the employers, and the employers did not allege that there were any applicants or current employees engaged in the type of behavior they considered to be objectionable. In its analysis, the court found that the employers could demonstrate a cognizable injury in a pre-enforcement challenge only if they established that: (1) they had an intention to engage in a course of conduct arguably affected with a constitutional interest and proscribed by statute; and (2) there was a credible threat of prosecution. The court held the employers had standing because their policies facially violated the EEOC’s guidance, the EEOC refused to declare that it would not enforce Title VII against them, and the EEOC had brought an enforcement action against a similar violator.

The Sixth Circuit’s Analysis

Simpson-Vlach v. Michigan Department of Education

Case Background

In Simpson-Vlach, parents of children with disabilities alleged that the defendants, state and local education agencies and agency employees, violated the Individuals with Disabilities Act and Americans with Disabilities Act when schools switched to remote instruction during the Covid-19 pandemic. The plaintiffs sought declaratory and injunctive relief on behalf of a putative class, including the appointment of special monitors to make recommendations regarding compensatory education, for example. The U.S. District Court for the Eastern District of Michigan dismissed the case, finding that the plaintiffs lacked standing, and the plaintiffs appealed.

The Court’s Decision

The Sixth Circuit affirmed. Citing TransUnion, the court emphasized that the relief sought must redress the harm alleged. The court also noted that a potential class representative must demonstrate individual standing vis-à-vis the defendant and cannot acquire standing merely by bringing a class action. Since the plaintiffs sought declaratory and injunctive relief, they accordingly were required to plead either a future injury that is “certainly impending” or presents a “substantial risk of occurrence” or a past injury that presents “continuing, present adverse effects.” The court held the plaintiffs failed to properly allege such harm resulting from the prior switch to remote instruction because they did not allege ongoing impact by the defendant’s conduct. Further, their allegations with respect to potential future harm were too general to establish that the threatened injury was “certainly impending,” rather than merely possible.

The Seventh Circuit’s Analysis

Helbachs Café LLC v. City of Madison

Case Background

In Helbachs Café LLC, the plaintiff brought suit under 42 U.S.C. § 1983, claiming that the defendant city and county retaliated against it in violation of the First Amendment for posting a sign protesting the public health department’s Covid-19 mask mandate. The U.S. District Court for the Western District of Wisconsin granted summary judgment for the defendants, and the plaintiff appealed.

The Court’s Decision

Before it could determine the substantive outcome of the case, the Seventh Circuit had to address standing, stating that a concrete injury must be more than a bare claim that a statutory violation occurred. The court also observed, however, that the U.S. Supreme Court has not addressed whether, if the asserted violation is an act of retaliation, that act alone would be a sufficiently concrete injury-in-fact. The court noted that Justice Thomas’s dissent in TransUnion suggests that it would be, reasoning that where a law recognizes a private right, a plaintiff asserting a violation of that right need not separately allege harm from that violation to have standing because the offending act imports a harm to the party. Ultimately, the court determined that it need not decide this question because the record indicated that the plaintiff suffered additional concrete injury (loss of its lease), thereby conferring standing. As such, whether an act of retaliation alone would be a sufficiently concrete injury-in-fact remains an open question in the Seventh Circuit, and one that employers should watch.

The Eighth Circuit’s Analysis

Ojogwu v. Rodenburg Law Firm

Case Background

Under the Fair Debt Collection Practices Act (“FDCPA”), a debt collector must have the consent of the consumer or a court with jurisdiction to communicate directly with the consumer in connection with the collection of any debt. In Oiogwu, the plaintiff consumer debtor filed suit after a judgment creditor mailed a garnishment summons of a judgment to him directly without his consent. The U.S. District Court for the District of Minnesota entered judgment for the plaintiff and awarded him damages and fees, and the defendant creditor appealed.

The Court’s Decision

The U.S. Court of Appeals for the Eighth Circuit reversed and remanded with directions to dismiss the complaint because the plaintiff lacked standing. The court concluded that the alleged violation of the FDCPA—the defendant’s transmittal of a copy of a garnishment summons—did not cause tangible injury to the consumer. The plaintiff’s receipt of the summons did not impose a tangible obligation on him that constituted a concrete, particularized, actual, or imminent injury as the U.S. Supreme Court explained in TransUnion is required for standing. Rather, the court held that the plaintiff’s alleged “damages in the form of fear of answering the telephone, nervousness, restlessness, irritability, [and] other negative emotions” constituted intangible injuries that were insufficient to establish a concrete injury in fact. Indeed, the court reasoned that the mailing benefited the debtor by giving him timely notice and an opportunity to claim an exemption or satisfy the garnishment.

Implications For Employers

Companies should be aware of the growing body of law regarding standing in the wake of TransUnion. Simpson-Vlach and Oiogwu provide insights into the potential defenses employers may assert, including when defending large scale litigation. Plaintiffs must establish a concrete injury-in-fact, and they must establish standing for each form of relief they seek. On the other hand, Braidwood Management, Inc. is an example of employers demonstrating standing while on the offensive. Finally, employers should keep an eye on further developments regarding the question that the Seventh Circuit pondered in Helbachs Café LLC of whether retaliation by itself can constitute a sufficiently concrete injury to confer standing.

By: Christine M. CostantinoTaylor Iaculla, and Andrew Scroggins

Seyfarth Synopsis: One of the most anticipated employment cases of the term was recently argued before the United States Supreme Court. In Muldrow v. City of St. Louis the Court requested the parties address the issue: Whether Title VII of the Civil Rights Act of 1964 prohibits discrimination in transfer decisions absent a separate court determination that the transfer decision caused a significant disadvantage.

Background

Plaintiff Jatonya Muldrow is a sergeant in the St. Louis Police Department. After initially being employed as a patrol detective, she was promoted to the Department’s Intelligence Division, where she remained for nine years. While in the Intelligence Division, her work included at various times public corruption and human trafficking cases, serving as head of the Gun Crimes Intelligence Unit, and overseeing the Gang Unit. For the last year, she also was deputized as a Task Force Officer to work with the Federal Bureau of Investigation (FBI) with the same privileges as an FBI agent.

In 2017, an interim police commissioner was appointed who implemented various personnel changes with respect to numerous officers, including Muldrow. Muldrow was laterally transferred to a position in which she supervised officers on patrol, reviewing and approving arrests, responding to “Code 1” calls for service for crimes such as homicides, robberies, assaults, and home invasions, and performing other related administrative responsibilities. While as a result of the lateral transfer her schedule, uniform, vehicle and other aspects of her job changed she did not claim that the changes themselves caused her a significant disadvantage. Less than two weeks after her transfer, Sergeant Muldrow filed a charge with the EEOC, alleging the transfer was motivated by sex discrimination.

The Lower Court Decisions

The district court granted summary judgment to the City on the ground that Muldrow failed to show an element of her prima facie claim: namely, her involuntary transfer was not an adverse employment action because it did not result in any change in salary or benefits, her responsibilities did not significantly change, and she expressed only a preference for one job over another. (Notably, Muldrow failed to offer evidence to prove that other aspects of the transfer, like the change in hours, duties, and dress code were disadvantageous.)

Mulrow appealed to the Eight Circuit Court of Appeals. The appellate court affirmed the lower court’s decision, reasoning that a lateral transfer, without proof of harm resulting from the transfer, is not an actionable adverse employment action under Title VII. The court of appeals further cautioned that to hold otherwise would permit minor personnel decisions to form the basis of discrimination suits.

Muldrow then petitioned the U.S. Supreme Court for review. The Court agreed to hear the case for the narrow purpose of answering the question: Does Title VII prohibit discrimination in transfer decisions absent a separate court determination that the transfer decision caused a significant disadvantage?

Muldrow’s Arguments to the Supreme Court

Muldrow argued that Title VII is broadly applicable, prohibiting any decision based on sex or other protected characteristics that affects a “term, condition, or privilege” of employment. She maintained that the plain language of the statute supports this reading, based on the lack of qualification employed by Congress. In her view, job transfers, regardless of whether they cause “significant damage,” directly impact the terms or conditions of employment and are actionable when motivated by a protected characteristic. Muldrow relied on legislative history to support this position, stating Congress intended to rid the workplace of all discrimination, so efforts to limit claims solely to those disadvantaging an employee would “def[y] its text and history.”

Muldrow also argued against importing concepts from hostile work environment and retaliation standards that may impose a heightened harm requirement. Doing so, in her view, has caused the lower courts to ignore the impact of terms, conditions, or privileges of employment such as professional opportunities, working conditions, or those that are stigmatizing and send a message of inferiority or exclusion.

Muldrow’s arguments were supported, both on brief and at oral argument, by the Department of Justice.

The City of St. Louis’s Arguments to the Supreme Court

The City of St. Louis argued that the Court should continue 30 years of precedent that Title VII discrimination claims based on a job assignment or transfer require a material, objective harm.

The City presented several textual arguments. Under Section 703(a)(1) of Title VII, it is unlawful for an employer to “fail or refuse to hire or to discharge any individual, or otherwise to discriminate against any individual with respect to his compensation, terms, conditions, or privileges of employment.” The requirement to “discriminate against” suggests that the individual must demonstrate an actual harm, not just differential treatment. In addition, the same section provides the explicit examples of “failure to hire” and “discharge,” which describe decisions that are facially harmful, so the same notion of harm should be read into deciding whether other terms, conditions, or privileges of employment are discriminatory. And elsewhere in the statute, Congress granted a private right of action to those “aggrieved,” again suggesting that a showing of harm is required.

The City also presented the practical argument that the requirement to show an adverse employment action is to separate “meritorious cases from trivial personnel actions,” which preserves judicial resources. As many prior decisions have observed, Title VII was not intended to act as a “general civility code,” and despite Muldrow’s protests, the harm requirement is not so high as to bar plaintiffs with legitimate claims. (A number of amicus briefs were submitted in the case as well. In a brief in support of the City of St. Louis filed by the Society for Human Resources Management, SHRM noted that the traditional approach to Title VII – denying recourse for mere personal preferences as opposed to changes that include an objective showing of material harm – avoids enmeshing courts in non-material personnel actions best addressed by HR officials. SHRM further noted that the traditional judicial approach to Title VII has been followed by the vast majority of courts, follows Title VII’s statutory language, is faithful to the statutory text, and serves the doctrine of constitutional avoidance. Seyfarth attorneys represented SHRM in the Supreme Court.)

Oral Argument

On December 6, 2023, over the course of nearly two hours, the Justices posed tough questions all around. And though the Supreme Court certified a narrow question – whether Title VII prohibits discrimination in transfer decisions absent a separate court determination that the transfer decision caused a significant disadvantage – the Justices’ questions and responses ranged beyond that issue and frequently touched upon other types of employment actions that might provide the basis for litigation.

Muldrow staked out her position from the outset that “differential treatment” and “worse treatment” are coterminous – in other words, a decision based on discrimination is an injury, and it is irrelevant whether the decision resulted in some additional objective harm. Many of the Justices appeared to agree with the premise.

Justice Gorsuch, for example, observed that in other areas of the law, the Court has concluded that it is enough to show that discrimination has occurred and it is not necessary to inquire into the severity or effects of the discrimination.

Chief Justice Roberts and Justices Thomas, Alito, and to some degree Justice Kavanaugh did not disagree that discrimination in the workplace is an injury. However, all seemed to be searching for an avenue to exclude acts that might be considered “trivial” or just workplace “unpleasantness.” To that end, both Justices Alito and Kavanaugh asked at different points in the argument whether it is true that “not everything that happens in the workplace falls into Title VII.” Both Muldrow and the government agreed with that point. However, no clear line of demarcation was articulated by the parties or the Justices.

Next Steps

Questions raised by the Supreme Court Justices during oral argument suggest that changes may be coming to the long standing interpretation by several courts of Title VII as it concerns the element of injury. Will Plaintiffs be required to plead and prove an adverse employment action to state a claim and ultimately prevail under Title VII?

Until the Supreme Court issues its decision, human resources executives and in house counsel should be aware that even employment related actions that do not result in a material negative change in an employee’s terms and conditions of employment may be covered by Title VII, including decisions relating to: unfavorable performance evaluations that do not result in any appreciable job detriment, job criticisms not culminating in adverse action, performance improvement plans, employee monitoring, decisions rescinded before they become effective, undesired job assignments, minor job restructurings, delays in job transfers, employer dress and grooming policies that have no effect on job opportunities, unfair accusations, changes in schedules, supervisors or location of assignment, and, of course, lateral transfers involving no material harm.

Seyfarth will continue to monitor these developments. Should you have any questions, please contact a Seyfarth attorney.

By: Rachel V. See

Seyfarth Synopsis: Following President Biden’s comprehensive Executive Order on AI, the White House announced the formation of the “US AI Safety Institute” within the Commerce Department’s technology arm, the NIST.  The Institute has been directed to develop technical guidance used by regulators, such as the EEOC, considering rulemaking and enforcement on discrimination related to AI. The White House has also released for public comment draft guidance relating to the federal government’s use of AI. These standards contain an expansive scope of AI applications in the employment space that are considered presumptively “rights impacting” and thus require certain government agencies to conduct an impact assessment and other minimum risk-management practices. Critically, these definitions and practices are likely to be held out as practices that should also be adopted by private-sector employers.

On Monday, October 30, President Biden signed a comprehensive Executive Order addressing AI regulation across a wide range of industries and issues. Our prior management alert discussed how the EO set forth President Biden’s vision for America to continue leading in AI innovation while also addressing risks associated with the use of AI, and highlighted provisions in the EO we identified as particularly relevant to employers using AI.

Now just a few days later, there already are further developments with significant implications for employers paying attention to enforcement and litigation efforts in this area.

1. The new US AI Safety Institute within NIST 

    On November 1, the White House announced the formation of the “US AI Safety Institute” within the National Institute of Standards and Technology. NIST. According to the White House, the new AI Safety Institute will develop “technical guidance that will be used by regulators considering rulemaking and enforcement on issues such as … identifying and mitigating against harmful algorithmic discrimination”.

    Put another way, the tech gurus at NIST will be helping enforcement agencies such as the EEOC in their enforcement efforts on AI. Thus, the EEOC will be able to tap the technical expertise of some of the federal government’s leading experts on AI risk as the EEOC attempts to scale up its AI enforcement efforts.

    We anticipate that the new NIST group will be working towards guidance and other documents that directly address the use of AI-powered employment screening tools. NIST’s core function, as its name implies, centers around crafting technical standards. President Biden’s Executive Order directs NIST to “establish guidelines and best practices, with the aim of promoting consensus industry standards, for developing and deploying safe, secure, and trustworthy AI systems,” as well as “launching an initiative to create guidance and benchmarks for evaluating and auditing AI capabilities”. While The October 30 Executive Order emphasized that broad mandate, the recent unveiling of the AI Safety Institute on Wednesday and its emphasis of technical assistance leading to enforcement highlights the Biden Administration’s attention to the government’s role as the enforcer of existing civil-rights laws.

    We believe that even if the EEOC does not immediately adopt the NIST group’s recommendations formally as enforcement guidance or mandatory requirements for employers, it may still endorse them as practices that AI developers and deployers should aspire to follow.

    2. Implications for Employers of the Draft Guidance on the Federal Government’s Use of AI

    Also on November 1, the White House’s Office of Management and Budget (OMB) issued draft guidance to the federal government regarding the government’s own use of AI. (The White House’s fact sheet is a good summary.)  Public comments are being accepted through December 5. We expect prompt issuance of the final memo, due to the significant momentum present.

    In our summary of President Biden’s Executive Order from Monday, we predicted that the way the Federal government thinks about AI risk will influence the way private companies think about AI risk. Employers should pay particular attention to how these government-wide AI risk management efforts will influence the EEOC’s thinking on AI risk and risk management, as well as how they may shape the EEOC’s own use of AI.

    OMB’s draft guidance purports to speak solely to the federal government’s own use of AI, and disclaims that it applies to federal agencies’ own regulatory efforts. However, past experience suggests that the federal government will ultimately decide that the AI risk management “best practices” it applies to itself should also be adopted by private-sector AI deployers. Moreover, federal agencies will be purchasing many types of AI systems from private-sector developers, and so the government’s own purchasing requirements will influence the development of systems that are sold to both the government and private industry.  

    In its draft guidance to the federal government, the White House is essentially requiring federal agencies to take certain minimum risk-management steps for “safety-impacting AI” and “rights-impacting AI”. Importantly for employers using AI in hiring, the draft OMB guidance has a very broad definition of what employment-related AI applications are presumed to be “rights impacting” and thus subject to the memo’s minimum risk management processes. Its definition of “rights impacting” applications includes those related to:  

    G. Determining the terms and conditions of employment, including pre-employment screening, pay or promotion, performance management, hiring or termination, time-on-task tracking, virtual or augmented reality workplace training programs, or electronic workplace surveillance and management systems; 

    Under the draft OMB memo, agencies cannot use “rights impacting” systems after August 1, 2024 without first taking these steps: 

    1. Complete an impact assessment.
    2. Test the AI for performance “in a real world context”.
    3. “Independently evaluate the AI”. 

    To continue using such systems, the agency must on an ongoing basis 

    4. Conduct ongoing monitoring and establish thresholds for periodic human review.

    5.  Mitigate emerging risks to rights and safety.

    6. Ensure adequate human training and assessment.  

    7. Provide appropriate human consideration as part of decisions that pose a high risk to rights or safety. 

    8. Provide public notice and plain-language documentation through the AI use case inventory.  

    The “impact assessment” requirement could vary from a simple review to a complex evaluation.

    Importantly, the OMB memo’s discussion of impact assessments includes the directive that, as part of the impact assessment, agencies should assess the quality and appropriateness of relevant data, including the data the AI was trained on. This data assessment is in addition to requiring agencies to assess disparate impact. Specifically, the OMB memo requires agencies to ensure that training data “is adequately representative of the communities who will be affected by the AI, and has been reviewed for improper bias based on the historical and societal context of the data”. We note that this process-focused mandate to use adequately diverse data sources goes beyond the results-focused analysis required by Uniform Guidelines on Employee Selection Procedures of 1978, the standards discussed in the EEOC’s technical assistance issued in May 2023 about the applicability of Title VII to AI.

    Employers using AI should note that the minimum requirements set forth by OMB’s draft memo also go beyond the pre-deployment bias audit requirements required by New York City’s Local Law 144, whose enforcement began in July 2023. (Additionally, the scope of employment-related AI applications presumed by OMB’s draft guidance to be “rights affecting” extends well beyond the New York City law’s narrow definition of “automated employment decision tool”.)  

    We’re already seeing movement on one of these points. In her remarks earlier in October 2023, EEOC Chair Burrows emphasized the need for AI to be trained on diverse data sources.

    3. President Biden’s Executive Order emphasizes enforcement efforts

    We expect that EEOC leadership will want to be an active participant in the meeting that will be convened by the Department of Justice by the end of January 2024, in which the heads of Federal civil rights offices will meet “to discuss comprehensive use of their respective authorities” to address potential civil-rights harms arising out of the use of AI. President Biden’s Executive Order specifically mentions the potential harm arising out of “issues related to AI and algorithmic discrimination” and directs the civil rights offices and independent agencies, like the EEOC, to increase their coordination on issues related to AI and algorithmic discrimination.

    President Biden’s Executive Order also directs the agencies to increase their outreach efforts to external stakeholders, in order “to promote public awareness of potential discriminatory uses and effects of AI”. Increased federal government outreach efforts in this realm are highly likely to encourage workers who feel they have experienced unlawful discrimination to file a charge with the EEOC, who will investigate it.

    With respect to the EEOC, President Biden’s directives align with the EEOC’s ongoing emphasis on its enforcement priorities.  In April 2023, EEOC Chair Charlotte Burrows joined the heads of three other federal agencies in a press release touting the agencies’ “commitment to enforce their respective laws and regulations to promote responsible innovation in automated systems.” Additionally, in May 2023, all EEOC personnel were requested by EEOC Chair Charlotte Burrows to attend an AI training about how front-line staff could “identify AI-related issues in [their] enforcement work”. And as discussed previously on the Workplace Class Action Blog, in August 2023 the EEOC entered into a settlement with the iTutor Group overa lawsuit that many have called the EEOC’s “first-ever” artificial intelligence discrimination in hiring lawsuit, even though the underlying technology being used simply asked job applicants for their date of birth and was configured to automatically reject female applicants age 55 or older and male applicants age 60 or older. (To be clear, automatically rejecting older job applicants, when their birthdates are already known, does not require any sort of artificial intelligence or machine learning.)

    And in September 2023, the EEOC’s new Democratic majority approved the EEOC’s Strategic Enforcement Plan in a 3-2 party-line vote. The approved SEP instructs EEOC personnel and clarifies for the public the issues the commission will prioritize in its enforcement, outreach and other efforts. The first listed priority in the SEP is a focus on discriminatory recruitment and hiring practices, with a particular emphasis on the use of technology, AI, and machine learning used in job advertisements, recruiting, and hiring decisions.

    4. Upcoming guidance from OFCCP about Federal Contractors’ Use of AI

    President Biden’s Executive Order directed that within a year, the Secretary of Labor shall publish guidance to federal contractors regarding “nondiscrimination in hiring involving AI and other technology-based hiring systems.” 

    Employers not directly subject to OFCCP’s audits should still pay close attention to what the Department of Labor does here, because there is always the potential for the Department of Labor’s guidance to be held out as a broader standard that employers everywhere might incorporate in their practices, and enforcement standards articulated by the Department of Labor against federal contractors are likely to be used by the EEOC in its own enforcement efforts.

    Implications for Employers

    President Biden’s Executive Order on AI is a far-reaching order that tasks multiple federal agencies with seeking to harness the power of AI, both for the government and the American economy as a whole, while also working to manage risks associated with AI. There is a strong enforcement component to actions set in motion by the Executive Order, and employers should expect the EEOC’s activity in this area to continue to increase. Moreover, employers should be prepared for heightened coordination on AI issues between the EEOC and its peer civil-rights enforcement agencies, as well as with NIST on technical issues and standards. Finally, the ways that the federal government thinks about assessing AI risk, establishing minimum AI risk management practices, and implementing various AI risk management frameworks will likely be held out as exemplary practices that the private sector will be encouraged to adopt.

    We will continue to monitor these developing issues, and Seyfarth plans to provide additional updates as we dive more deeply into President Biden’s comprehensive EO on AI and the actions it set in motion.  For additional information, we encourage you to contact the author of this article, a member of Seyfarth’s People Analytics team, or any of Seyfarth’s attorneys.

     

    By: Danielle Kays and Kristin Stokes

    Seyfarth Synopsis:  While the plaintiffs’ bar has aggressively pursued class actions under the Biometric Information Privacy Act (“BIPA”) in recent years, these cases soon may be rivaled by the influx of class actions brought under the Genetic Information Privacy Act (“GIPA”), 410 Ill. Comp. Stat. Ann. 513/1, et seq.  After GIPA’s 1998 enactment, only two cases were brought under the statute in nearly 25 years; however, in 2023, over 40 GIPA class action complaints have been filed in Illinois courts.

    What is the Illinois Genetic Information Privacy Act (GIPA)?

    GIPA was intended to facilitate voluntary and confidential genetic testing by providing protection from discriminatory use or disclosure of such information.  In the employment context, GIPA bars employers from directly or indirectly acquiring “genetic testing or genetic information” from a prospective or current employee.  See 410 ILCS 513/25(c)(1).  In 2008, GIPA was amended to more closely conform to a later, federal analog—the Genetic Information Nondiscrimination Act (“GINA”).  Both GINA and GIPA prohibit employer discrimination because of “genetic information” including: information about an individual or family member’s genetic test, request for genetic services, or manifestation of a disease or disorder.  See 45 CFR 160.103.  GIPA provides for a private right of action to “any person aggrieved by a violation of this Act . . . .”  410 ILCS 513/40.

    This sudden influx of GIPA class actions likely are the result of steep statutory damages and a broad private right of action.  While monetary damages are limited under GINA, GIPA contemplates no statutory cap and provides for damages of $2,500 per negligent violation or actual damages, whichever is greater.  Moreover, an employer may be liable for $15,000 per intentional or reckless violation.  410 ILCS 513/40(a).  GIPA even provides for significantly greater statutory damages than popular class action vehicle, BIPA.  See 740 ILCS 14/20.

    Current litigation also may be fueled by a recent decision in the case Bridges v. Blackstone Group, Inc., No. 21-cv-1091, 2022 WL 2643968 (S.D. Ill. 2022), establishing a broad class of possible claimants. In Bridges, plaintiffs brought a class action, alleging that Blackstone violated GIPA when it acquired Ancestry.com.  The complaint was ultimately dismissed for failure to state a plausible violation of GIPA.  Bridges, 2022 WL 2643968 at *2.  However, the court first addressed whether the plaintiffs were “aggrieved persons” for purposes of bringing a claim. See 410 ILCS 513/40.  The court adopted the Illinois Supreme Court’s definition of “aggrieved person” under BIPA.  Accordingly, “an individual need not allege some actual injury or adverse effect, beyond violation of his or her rights.”  Bridges, 2022 WL 2643968 at *2 (citing to Rosenbach v. Six Flags Ent. Corp., 129 N.E. 3d 1197 (Ill. 2019)).

    Relatedly, genetic information and post-offer medical exams recently crossed the radar of the EEOC.  Last month, the EEOC settled a case for alleged unlawful post-offer medical exams that required applicants to divulge family history of cancer, diabetes, and heart disease.  See EEOC Press Release, Dollar General to Pay $1 Million to Settle EEOC Disability and GINA Lawsuit, https://www.eeoc.gov/newsroom/dollar-general-pay-1-million-settle-eeoc-disability-and-gina-lawsuit (Oct. 19, 2023).

    Perhaps spurred by the breadth of potential claimants, and in the wake of several Illinois Supreme Court plaintiff-friendly BIPA decisions (Cothron v. White Castle and Tims v. Black Horse) and the first BIPA jury verdict (Rogers v. BNSF Railway Co.), plaintiffs firms have doggedly filed more than 40 GIPA class actions pending in Illinois courts.  Utilizing nearly identical format, these complaints allege that large employers and companies solicited, requested, or required employee disclosure of genetic information.  Specifically, these cases pursue generous statutory damages for GIPA violations arising out of required pre-employment physical exams, interviews, and questionnaires seeking family medical history.

    Implications for Employers

    In light of trending GIPA class actions, Illinois employers should exercise caution when requiring employees to submit to physical exams, inquiries, or screenings.  Although courts have yet to resolve many legal defenses to these claims, targets of GIPA lawsuits may be vulnerable to significant exposure as plaintiffs allege that they are not required to prove actual injury.  Businesses should review current hiring policies and procedures for compliance with this state genetic privacy law.

    For more information about the GIPA and how genetic information laws may affect your business, contact the authors Danielle Kays and Kristin Stokes, your Seyfarth attorney, or Seyfarth’s Workplace Privacy & Biometrics Practice Group.

    By: Matthew J. Gagnon

    Seyfarth Synopsis: On October 17, 2023, the Second Circuit issued the eagerly-awaited decision in Eisenhauer v. Culinary Institute of America. The court clarified that the federal EPA never required employers to show that a “factor other than sex” must be related to the job in question, contrary to arguments by many plaintiffs and commentators. This was a notable appeal because it raised several critical issues, any one of which could have changed the contours of equal pay litigation dramatically. The Second Circuit chose to leave most of those issues undecided, and instead took the opportunity to clarify a thirty-year-old decision, and its thirty years of precedent.


    On October 17, 2023, the Second Circuit issued its eagerly-awaited decision in Eisenhauer v. Culinary Institute of America, No. 21-2919-cv (2d Cir. 2023). This decision clarified an important issue regarding an employer’s “factor other than sex” affirmative defense under the federal Equal Pay Act (“EPA”). This appeal was notable due to the several weighty issues it raised regarding the course and conduct of equal pay litigation. Even the EEOC had jumped into the mix, filing an amicus brief on the plaintiff’s behalf relating to two of those issues. Ultimately, however, most of those issues were left undecided, as the Second Circuit focused its energies on clearing up a confusing history of case law regarding the affirmative defenses available under the federal EPA.

    Background

    The plaintiff in Eisenhauer, a female professor at a culinary school, alleged she was paid less than a male professor who managed a similar course load. That salary disparity existed because plaintiff and her comparator were hired at different salaries, which then increased over time according to the sex-neutral terms of a compensation plan. Under that plan, all faculty members received the same percentage increase in their salaries each year. The result was that the pay disparity between the professors only grew over time. The Second Circuit addressed itself to an issue that was not much discussed by the district court: does the federal EPA require an employer to show that the factor it is relying upon to establish its “factor other than sex” affirmative defense is related to the job in question?

    The Second Circuit held that no such requirement exists under the federal EPA. To be clear, the district court found in favor of the employer even applying the more stringent standard the Second Circuit held was in error, i.e., the district court appeared to hold that the ”factor other than sex” relied upon by the employer was in fact job related: “The parties appear to agree, and the evidence shows, that the disparity between the initial salaries was due to non-discriminatory, business-related reasons.” Id. at *7.

    But the Second Circuit noted that the plaintiff had brought equal pay claims under both the federal and state-level equal pay statutes, and that the district court had decided the two claims under the same standard—as most courts do for most purposes. The Second Circuit clarified that these two statutes are different with respect to a job-relatedness requirement applicable to the “factor other than sex” defense. When the New York legislature amended the New York equal pay statute, it added a provision that required a “factor other than sex” to be “job-related with respect to the position in question,” among other things. N.Y. Lab. Law 194(1)(iv). The federal EPA, on the other hand, allows for “any other factor other than sex,” without qualification, which the Second Circuit held means exactly what it says: “to establish the EPA’s ‘factor other than sex’ defense, a defendant must prove that the pay disparity in question results from a differential based on any factor except for sex. . . .  The requirement that a ‘factor other than sex’ be job related appears nowhere in the EPA’s text and, in our view, conflicts with the statute’s plain meaning.” Eisenhauer, 2023 WL 6815280, at *6.

    The court’s clarification of this point is welcome news. As the Second Circuit explained, decisions from the Second Circuit and other circuits have given some litigants the mistaken impression that the federal EPA’s language says more than it does. Much of the court’s decision was spent clarifying and distinguishing its own earlier decision, Aldrich v. Randolph Central School District, 963 F.2d 520 (2d Cir. 1992), which was as guilty as any other in introducing this misunderstanding into the case law. As the Eisenhauer court acknowledged, “[t]he term [factor other than sex] has sowed needless uncertainty and confusion among our sister circuits.” Eisenhauer, 2023 WL 6815280, at *5. Among those is the Ninth Circuit, which—according to the Second Circuit—erroneously found in its famous decision, Rizo v. Yovino, an ambiguity in these unambiguous words, which led it to misapply canons of statutory construction and, ultimately, to read a “job-relatedness” requirement into the federal EPA where none belonged.

    The Second Circuit remanded the decision back to the district court to reconsider its decision in light of the different standards under the federal and New York EPA statutes. As noted above, the district court decided both claims under the arguably higher standard articulated by Aldrich, i.e., that the employer “bears the burden of proving that a bona fide business-related reason exists for using the gender-neutral factor that results in a wage differential in order to establish the factor-other-than-sex defense.” Eisenhauer, 2023 WL 6815280, at *3 (quoting Aldrich, 963 F.2d at 525). It concluded that the employer met its burden to establish this affirmative defense even under that standard, so it is hard to see how it would come to any different conclusion under the New York EPA, even with a job-relatedness requirement.

    As important as this issue is, the Eisenhauer decision is also notable for the issues it left undecided. The district court had held that the plaintiff had established a prima facie case of wage discrimination because she had identified one male comparator who earned more than her, even though there were other male employees who earned less than her, and other female employees who earned more. The defense argued that the presence of those other comparators negated any inference of discrimination. While the district court agreed that the identification of a single comparator may be insufficient to prove discrimination as a matter of fact at trial, it nevertheless held that the plaintiff could establish a prima facie case based on the existence of just one comparator at the summary judgment stage. Moreover, the court declined to even consider the existence of other, countervailing comparators before trial, holding that those were questions exclusively for the jury. (We previously blogged about this “one comparator rule” and its many practical difficulties here.)

    The district court decision also touched upon another issue currently bedeviling equal pay litigants: how does burden shifting work under the EPA? Some courts have held that the burden shifts only once; it shifts to the employer when the employee establishes a prima facie case, and that is where it remains. Other courts have held that the burden shifts back to the employee to prove pretext if the employer successfully establishes its affirmative defense. The district court in Eisenhauer appeared to apply the latter framework, holding: “Because Defendant has articulated a legitimate, non-discriminatory reason for the pay disparity, the burden would now shift to Plaintiff to establish that that reason was a pretext for discrimination.” Eisenhauer v. Culinary Inst. of Am., No. 19-cv-10933(PED), 2021 WL 5112625, at *9 (S.D.N.Y. Nov. 3, 2021). Because the plaintiff had failed to establish pretext, the district court ruled in favor of the employer. (See our analysis about this issue and its ramificationshere.)

    Both of these questions were important enough to attract the attention of the EEOC, which filed an amicus brief with the Second Circuit in support of the plaintiff. Some might even add to this list of issues the district court’s highly questionable holding that it was not allowed to even consider the existence of other comparators at the prima facie stage, because that issue is exclusively the province of the jury. A decision on any one of these three issues could have had a profound impact on equal pay litigation. The Second Circuit held them for another day.

    Implications for Employers

    While Eisenhauer left many weighty questions unanswered, it clarified that the “factor other than sex” defense under the federal EPA does not contain any job-relatedness requirement. This alone made the decision worth the wait, given the vast confusion that has crept into the case law on this point.

    Moreover, there is at least a chance one of the other issues raised by the lower court may eventually be resolved in this matter. When the Second Circuit remanded the case, it did so with explicit instructions. If the district court decides to retain supplemental jurisdiction over the state law EPA claim, it must decide whether the plaintiff had established a prima facie case under the New York law by identifying a single male comparator who earns more than her, while ignoring other comparators who would complicate any inference of discrimination. The Second Circuit explained in a footnote the disagreement that exists on this issue under the federal EPA, but left it to the district court to decide this as a separate issue under the New York law: “should the District Court decide to invoke its supplemental jurisdiction over [plaintiff’s] [NY EPA] claim on remand, it must determine whether a single male comparator is sufficient to establish a prima facie case under [the NY EPA].” Eisenhauer, 2023 WL 6815280, at *9 n.83. EPA litigants will just have to wait and see whether this questionable proposition gains new life under New York law. Seyfarth will, of course, keep our readers updated on any developments.