Equal pay for equal work is the refrain long associated with the laudable goal of ensuring that female employees' salaries are on an equal footing with those of male employees, all else being equal. At the federal level, employees seeking to enforce their rights generally had two avenues of pursuing these claims in court: they could seek redress under the Equal Pay Act of 1963 (the Equal Pay Act) or under Title VII of the 1964 Civil Rights Act (Title VII) and its framework for sex-based pay disparity claims.

For the past several years, courts in the Second Circuit applied the Equal Pay Act standard to both Equal Pay Act claims and Title VII claims. The Equal Pay Act requires a plaintiff to show they are paid less than another employee of the opposite sex that is in a job that is substantially the same and requires equal skill and responsibility under working conditions that are similar. By conflating the Equal Pay Act's "equal pay for equal work" standard with Title VII, plaintiffs seeking to establish a gender-based pay disparity claim faced a legal standard that amounted to distinction without a difference.

This situation changed on Dec. 6, 2019, when a panel of three Second Circuit judges unanimously held, in what the court described as a clarification of the law, that a Title VII plaintiff need not establish that he or she performed "equal pay for equal work" using the Equal Pay Act standard. See Lenzi v. Systemax, 944 F.3d 97, 104 (2d Cir. 2019). Instead the court held that "all Title VII requires [is that] a plaintiff [] prove that her employer 'discriminate[d] against [her] with respect to [her] compensation … because of [her] … sex.'" See Lenzi, 944 F.3d 97 at 110; 42 U.S.C. §2000e-2(a)(1). In making this ruling, the Second Circuit likely made it easier for plaintiff attorneys to bring gender-based pay discrimination claims under Title VII.

This article reviews the standard for bringing a Title VII gender-based pay discrimination claim in the Second Circuit prior to the Lenzi ruling and discusses the Second Circuit's clarification of the law in Lenzi. Finally, the article provides some insights for employers given the ruling in Lenzi.

Background

In 1963, Congress passed the Equal Pay Act, which was the first federal law designed to combat gender-based pay discrepancies. In order to state a claim under the Equal Pay Act, an employee has to establish that (1) the employer pays different wages to employees of the opposite sex; (2) the employees perform equal work on jobs requiring equal skill, effort, and responsibility; and (3) the jobs are performed under similar working conditions. See, e.g., E.E.O.C. v. Port Auth. of New York & New Jersey, 768 F.3d 247, 255 (2d Cir. 2014). Title VII similarly provides a mechanism for employees to bring gender-based discrimination claims based on pay and benefits. However, the laws have some key differences.

The key difference, and the issue that was addressed by the Lenzi court, is that under the Equal Pay Act, an employee must prove that the employee's job is substantially equal to that of a higher-paid opposite sex counterpart, and that the employee and the counterpart work in the same establishment. See Lenzi, 944 F.3d 97 at 109-11. In contrast, Title VII has no such requirement, and therefore may provide a "lighter lift" for an employee seeking to prove that their employer violated Title VII. Id.

Prior to Lenzi, district courts in the Second Circuit "routinely" conflated the requirements for bringing an Equal Pay Act claim with a Title VII claim by relying on the Second Circuit's prior statement in Tomka v. Seiler that "[a] claim of unequal pay for equal work under Title VII … is generally analyzed under the same standards used in an [Equal Pay Act claim.]" 66 F.3d 1295, 1312 (2d Cir. 1995); see also Mauze v. CBS, 340 F. Supp. 3d 186, 206 (E.D.N.Y. 2018); Heap v. County of Schenectady, 214 F. Supp. 2d 263, 270-71 (N.D.N.Y. 2002); Dinolfo v. Rochester Tel., 972 F. Supp. 718, 722 (W.D.N.Y. 1997).

By imposing the Equal Pay Act's more stringent standard on Title VII claims, federal courts in the Second Circuit made it more difficult for employees alleging gender-based pay discrimination to bring claims against their employers.

The paradigmatic example of gender-based pay discrimination that was precluded prior to the Lenzi court's clarification was when an employer hired a woman for a unique position—one for which there are no comparators performing "substantially equal work"—but paid her less than the employer would if a man held the same position. See Lenzi, 944 F.3d 97 at 110. Under the Equal Pay Act's standard, that employee would have no means of seeking restitution under the act, because without any employee performing "substantially equal" work in the same establishment, she could not make out a prima facie case. Id.

By conflating the Equal Pay Act standard with the standard required under Title VII, district courts in the Second Circuit were de facto leaving an employee in this scenario without any means of seeking redress under either the Equal Pay Act or Title VII.

'Lenzi v. Systemax'

In Lenzi, a female former vice president of risk management, Danielle Markou, sued her employer, Systemax, as well as the chief executive officer and chief financial officer, for violations of various laws include the Equal Pay Act and Title VII. See Lenzi, 944 F.3d 97 at 102. With regard to her claims of gender-based pay discrimination under the Equal Pay Act and Title VII, Markou alleged that the defendants paid her less than they would have had she been a man. Id. To prove her claims, Markou provided statistical evidence that Systemax paid her below the market rate for her position while at the same time paid her male peers above market rates for their respective positions. Id. at 111-12.

The district court held that Markou failed to carry her initial burden under either the Equal Pay Act or Title VII because she did not "demonstrate that the positions held by her purported comparators are substantially equal to her position." See Lenzi v. Systemax, Case No. 14-cv-7509, Dkt. No. 65 at 42-49 (E.D.N.Y. March 9, 2018). As support for this conflation of the Equal Pay Act and Title VII standards, the lower court referred the general proposition from Tomka that "[a] claim of unequal pay for equal work under Title VII … is generally analyzed under the same standards used in an [Equal Pay Act claim.]" Id.

The Second Circuit rejected this line of reasoning and instead clarified that a Title VII plaintiff need not show that the position of a comparator is substantially equal to the plaintiff's, as is required under the Equal Pay Act. See Lenzi, 944 F.3d 97 at 109-11. While the court recognized that in prior decisions it suggested that gender-based discrimination claims under Title VII are "generally analyzed under the same standard" as Equal Pay Act claims, the court noted that the acts have different legal burdens and one law should not be interpreted in a way that undermines the other. Id.

The court clarified that "one way an employer [can] discriminate against an employee because of her sex is to pay her less than her male peers who perform equal work." Id. at 110. However, "it by no means follows that this is the only way in which an employer might achieve its discriminatory purpose." Id. The court went on to say another way of discriminating against female employees might be '"hir[ing] a woman for a unique position' but then pay her less than it would 'had she been male.'" Id. As the court noted, "grafting the [Equal Pay Act's] equal-work standard onto Title VII would mean 'that a woman who is discriminatorily underpaid would obtain no relief … unless her employer employed a man in an equal job in the same establishment, at a higher rate of pay.'" Id.

Importantly, the court found that "[s]uch a rule finds no support in the text of Title VII and would be inconsistent with Title VII's broad remedial purpose. Accordingly, the court held that "Title VII does not require a plaintiff alleging pay discrimination to first establish … that she received less pay for equal work." Id.

Takeaways for Employers

The Second Circuit's decision in Lenzi clarified prior Second Circuit precedent regarding the standard for bringing gender-based pay discrimination claims, making claims under Title VII easier for plaintiffs. By ruling that Title VII claims do not require a plaintiff to proffer evidence of a comparator within the same organization earning more money while doing substantially equal work, employees may be emboldened to bring more Title VII claims on weaker sets of facts in the Second Circuit.

Employers with employees in the Second Circuit should be aware of the potential for more substantial liability for gender-based pay discrimination claims. Unlike the Equal Pay Act, under Title VII employees can recover not only lost wages, but also punitive and compensatory damages.

Employers should consider reviewing their compensation practices to ensure consistency across all positions not only with respect to internal pay, but also by comparing the pay of women in unique positions to men in those same positions in other organizations.

Christopher R. Dyess is a litigator at Schlam Stone and Dolan. His practice focuses on resolving commercial disputes for businesses and individuals as well as counseling clients on a variety of legal issues including issues that arise in the employment law context.