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While in-house counsel at U.S. companies have been monitoring their compliance with a wave of new salary transparency laws, a court has given new life to a closely watched pay discrimination case in California.
A California appeals court ruled in Allen v. Staples, Inc. that a trial court erred in dismissing an employee’s claim under California’s Equal Pay Act (EPA) and reversed the trial court’s decision, allowing the plaintiff to proceed with her claim. And while the appellate court tossed sex discrimination and retaliation claims, ruling that the plaintiff failed to show the pay disparity was linked to her gender, the decision breathes new life into an important EPA test case that in-house counsel would be wise to monitor.
Joyce Allen—who worked for Staples as an outside facilities area sales manager, overseeing a team of sales representatives—was the plaintiff in this case. A male field sales director, who had previously served as an area sales manager, initially supervised Allen in her role. After two years in her position, Staples promoted Allen to field sales director and she assumed the same role and responsibilities as her former male supervisor. Two years later, Staples eliminated Allen’s position as part of a corporate reorganization.
Ms. Allen then discovered a significant pay gap between her salary in each of her positions and the salary of her male co-worker in those same two positions:
Ms. Allen subsequently sued Staples and made a claim for violation of California’s EPA. The trial court dismissed her complaint before trial and she appealed that decision.
The three-judge California appellate panel reversed the trial court’s determination, ruling that Ms. Allen proved she received a lower salary than a similarly situated male co-worker at Staples.
California’s EPA (Cal. Lab. Code § 1197.5) states that no employer can pay any employee less than the rate paid to employees of the opposite sex for “equal work on jobs the performance of which requires equal skill, effort and responsibility, and which are performed under similar working conditions.”
In the appellate court’s decision in Allen v. Staples, the judges found that Staples had not supplied the specific factors contributing to the differing base salaries between the female plaintiff and comparable male employee, so Staples could not prove the pay disparity was non-discriminatory. The appellate court cleared the lawsuit to continue, and the outcome of this case could be an important bellwether for in-house counsel to monitor.
Lexis Practical Guidance has assembled a wide range of resources to help in-house counsel better understand how to comply with California’s Equal Pay Act and the federal Equal Pay Act of 1963, which both target wage disparities between men and women:
The Pew Research Center reported in March 2023 that the gender pay gap has failed to close in recent years, with women earning an average of 82% of what men earned in 2022. This is similar to where the gap stood in 2002, when women earned 80% as much as men. It is likely that legislation designed to address pay disparity will continue to gain momentum.
For example, several states, such as California, Colorado, Connecticut, Maryland, Nevada, New York (effective September 17, 2023), Rhode Island, and Washington, have laws requiring pay transparency in job postings. Several localities including, among others, New York City, have corresponding pay disclosure in job postings laws.
Many states, such as California, Colorado, Connecticut, Delaware, District of Columbia, Hawaii, Illinois, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nebraska, Nevada, New Hampshire, New Jersey, New York, Oregon, Rhode Island, Vermont, Virginia, and Washington, have also enacted laws barring employers from preventing employees from sharing their salary information—or from retaliating against them if they discuss their pay package with co-workers.
Furthermore, many states, such as Alabama, California, Colorado, Connecticut, Delaware, Hawaii, Illinois, Maine, Maryland, Massachusetts, Nevada, New Jersey, New York, Oregon, Rhode Island, Vermont, and Washington, have laws that prohibit employers from requesting salary information from job applicants. Several localities including, among others, New York City, have corresponding pay history inquiry bans.
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