Thinking About The Equal Pay Act on Equal Pay Day

Equal Pay Day, April 4, 2017, symbolizes how far into the year women, on average, must work to earn what men earned in the previous year. In fact, Asian American Women’s Equal Pay Day is on March 7th, Black Women’s Equal Pay Day is on July 31st, Native American Women’s Equal Pay Day is September 25th, and Latina Women’s Equal Pay Day is not until November 2, 2017.  Sadly, no matter how you slice the numbers, more than 50 years after President John F. Kennedy signed the Equal Pay Act (“Act”) into law, the gender wage gap still exists.

While there is no single cause for the gender pay gap, one frequently cited factor is that women both negotiate for pay raises less often than men, and that when they do negotiate they can be less successful or face backlash from being perceived as too aggressive – reinforcing women’s hesitancy to negotiate. The no-win situation women face at the bargaining table has even led Laura Kray, a Professor at the Haas School of Business to advocate for banning salary negotiations all together – and instead forcing companies to base salaries on the value of the job, rather than the worker.

Legally, while the Equal Pay Act is meant to ensure equal pay for equal work, a recent per curiam decision by the 11th Circuit in Kalu v. Florida Department of Children and Families highlights how courts may fail to consider differences in how men and women negotiate – and how these differences can entrench gender pay gaps over time.

Kalu v. Florida Dept. of Children and Families

In Kalu, Patricia Kalu and Susan Linder-Wyatt both worked as nurse practitioners at Florida State Hospital (“FSH”). FSH is located in a small town near the Georgia border and is responsible for housing and caring for people who have been found not guilty by reason of insanity, or who were incompetent to stand trial. The location, difficult patient population, and limited budget for employee compensation meant that the hospital regularly had “trouble attracting well-qualified candidates.”

Kalu worked at FSH for eight years before leaving to work for the Florida Department of Corrections. She earned $77,000 per year at the Department of Corrections, and when she decided to return to FSH two years later she requested a 10% raise which she was denied. At the time of the lawsuit both Kalu and Linder-Wyatt were making roughly $78,000 per year working at FSH. At some point, Kalu and Linder-Wyatt learned that FSH was paying their nursing colleague, Michael Peel, $95,000 to perform the same job as the women. Peel had worked for seven years at FSH, with an annual salary of $75,000, before leaving in 2013 to work at the Florida Agency for Persons with Disabilities. At this new job he was given a raise and paid roughly $85,000/year.

In 2014, another nurse practitioner left FSH, and Dr. Josefina Baluga, the hospital’s executive medical director, testified that this left the hospital short staffed and created a “critical need” to hire another nurse practitioner who could proscribe medications. To fill this need, Dr. Baluga reached out to Peel based on his “excellent” employment record and familiarity with FSH to see if he would come back. Just like Kalu, Peel negotiated for a 10% raise, but unlike Kalu, Peel was adamant that he would not consider coming back without more money. Per public hiring requirements, Dr. Baluga posted a job vacancy, Peel was the only applicant, and Dr. Baluga submitted a request to the Department to hire Peel with a 10% raise, brining his annual salary to roughly $95,000. Discovering the discrepancy, Kalu and Linder-Wyatt sued under 29 U.S.C § 206(d)(1) claiming gender-based wage discrimination.

The “Critical Need” Defense

The Equal Pay Act states that male and female employees should be paid the same for doing jobs that require equal skill, effort, and responsibility, and which are performed under similar working conditions. The four exceptions to the Act are “(i) a seniority system; (ii) a merit system; (iii) a system which measures earnings by quantity or quality of production; or (iv) a differential based on any other factor other than sex.” The 11th Circuit recognized that all of the nurse practitioners in this case – Kalu, Linder-Wyatt, and Peel – had the “same responsibilities” and performed the same job, but were being paid different amounts, a prima facie case of gender pay discrimination.

FSH presented an affirmative defense that its critical need to hire someone into that position was a “factor other than sex.” The Court agreed with FSH that the pay disparity “was a result of exigent circumstances: a critical need for more prescribing providers…at the time of Peel’s hiring combined with the complete absence of any other applicant and Peel’s unequivocal position that he would not return to the Hospital without a 10% pay increase.” The 11th Circuit affirmed the District Court’s decision for summary judgment in favor of FSH, writing in its unpublished decision that “Peel benefitted from good timing, but good timing is gender-neutral.”

Dissecting This Gender Pay Gap

This case presents a number of questions for those working to shrink the gender pay gap. First, skeptics of equal pay laws cannot blame the usual suspects. Kalu and Linder-Wyatt did not leave the workforce on maternity leave, nor did they take part-time work do to child-care responsibilities. They did not self-select into lower paying jobs and they were as qualified, as experienced, and were performing the same responsibilities as Peel in a high-stress environment. The usual critical response to statistics about the gender pay gap is that there are “life choices” women make that account for pay disparities, but those do not factor in here.

Second, Kalu, unlike many women, asked for a raise when she negotiated coming back to FSH. Kalu asked for a 10% raise, presumably based on her two years of additional work experience, but was denied by FSH. The record does not mention why FSH denied the raise, nor why Kalu decided to accept the job at FSH even without additional pay. This, however, begs the question: should the Equal Pay Act cover differences in ability or inclination to negotiate?

Negotiation as a “factor other than sex”?

The Court itself recognized that the exigent circumstances in this case were caused by the critical need for more providers AND Peel’s unequivocal position that he would not return to the Hospital without a raise. Based on what we know about the ways in which women generally negotiate, it is unclear that Peel’s difference in salary, due in part to him driving a hard-bargain, really is a “factor other than sex.”

There is limited case law on the question. In an equal pay case in 2014, the 5th Circuit considered the plaintiff’s argument that, “negotiation is not a proper ‘factor other than sex’ because men and women’s different success in negotiation may reflect exactly the sort of inequality Congress intended the EPA to cure.” The Court decided to dodge the question, noting that “to resolve the matter before us, we need not – and do not – decide whether negotiation is a proper ‘factor other than sex.’” Instead the court decided that because the plaintiff had not been given the opportunity to negotiate when her male colleagues had, that the employer could not defend the wage differential.

While the courts have punted on this issue so far, there is an argument that wage discrimination is endogenous to the ‘exigent circumstances’ inquiry. Exigent circumstances do not exist just as an artifact of market conditions – rather they are produced by the potentially gendered bargaining stance of the applicant, and the potentially gendered bargaining response. Not only that, but any employer policy where it is ambiguous whether or not an employee can negotiate, may disadvantage women more often than not – strengthening the argument that bargaining should not be considered by the courts as a “factor other than sex” but rather as one of the drivers of the gender pay gap.