Pay equity, diversity and inclusion
Equal Pay Case Sheds Light on Defensible Pay Practices
A federal equal pay lawsuit in Iowa provides important data points for employers assessing their compensation practices. The case, Bertroche v. Mercy Physician Associates, Inc., 2019 WL 4307127, (N.D.Iowa, 2019), involved a class of female physicians who sued her former medical practice of over 20 years. The plaintiff class claimed that Mercy Physician Associates, Inc. violated the federal Equal Pay Act by paying male physicians performing equal work more money based on gender.
Under the Equal Pay Act, an employer may not discriminate against employees “on the basis of sex by paying wages to employees … at a rate less than the rate at which he pays wages to employees of the opposite sex … for equal work on jobs the performance of which requires equal skill, effort, and responsibility ….”
At various times during the course of the litigation, Mercy Physician Associates, Inc. argued 1) that the plaintiffs’ medical practices were sufficiently distinct that they should not be compared together as a class, and 2) that any differences in compensation between male and female physicians were based on legally justifiable factors. Mercy Physician Associates, Inc. won on both arguments, with important lessons for employers in the process.
With respect to Mercy Physician Associates, Inc.’s first argument—that plaintiffs’ cases were sufficiently distinct to warrant individual trials—a District Court judge agreed. The Court noted, among other differences, that one plaintiff doctor provided obstetrics, while the other two did not; two plaintiff doctors hired physician’s assistants, while the third did not; and one plaintiff doctor elected to raise her own salary. These differences, the Court observed, all affected physician compensation and weighed in favor of individual trials. Compare this situation to that in Boston where a world renown flutist argued she received unequal pay for equal work as compared to an oboist.
Mercy Physician Associates, Inc.’s second argument held water with a jury, who ruled in the medical group’s favor in November 2019. Specifically, Mercy Physician Associates, Inc. argued that each doctor (male or female) was subject to the same compensation formula: revenue – expenses = income. Any variance in the outcome of the formula, the medical group claimed, was a result of business idiosyncrasies tied to the individual physician’s practice model and not based on gender. This argument was ultimately successful.
The takeaway from this case for employers is that differences in compensation for employees performing similar work should be well documented and defensible. Experts from across the human resources, benefits, and legal industries recommend conducting a pay equity audit to proactively identify and ameliorate risks—before a lawsuit or regulatory investigation is initiated. Learn more about pay equity audits here.
Organizations that conduct a pay equity audit must communicate their progress and achievement along the way. To help you faciliate discussions around compensation, we created the Pay Equity Communications Planner.