The recent pay discrimination case of Korty v Indiana University Health offers an alternative perspective on pay equity and highlights why employers must ensure salary ranges are set without regard to sex or gender.
In this article, we highlight some key points from the court ruling, the potential for reverse discrimination in determining pay, and the importance of using pay equity software that complies with employment law, EEOC Title VII, and helps to ensure workplace fairness and transparency in compensation practices.
In the case of Korty v. Indiana University Health, the court ruled in favor of the employer.
The defendant, Indiana University of Health (“IUH”) had internal guidelines for staff to follow in making compensation offers. Those guidelines encompassed salary range, internal equity, prior relevant work experience, and budget.
After Plaintiff Laura Korty (“Korty”) resigned from IUH, a decision was made to hire Justin Reagin, an internal candidate, to replace her. Due to Reagin’s current salary, IUH made a compensation offer that was higher in pay than Korty’s earnings. Korty subsequently made a claim under the Equal Pay Act.
IUH was required to prove that the pay differential was based on factors other than sex, and evidenced three criteria to justify the wage gap and prove workplace fairness. These factors were market range/prior salary, internal equity, and knowledge, skills, and experience.
In summary, employers should note that:
Reverse discrimination is the unfair treatment of employees in a majority group based on race, gender, and so on. It can often arise from legislation intended to address discrimination against minorities and marginalized groups, such as women and LGBTQIA+ people. Examples of reverse discrimination include:
In October, 2021, a jury in the US District Court for the Western District of North Carolina awarded a white male former employee $10 million in a reverse discrimination lawsuit against Novant Health. That was later reduced on appeal due to a federal law that limits damages in Title VII workplace discrimination cases at $300,000. However, the employer was still required to pay $4 million in damages, lost pay and interest, in what was described as one of the largest employment law judgments in the state’s history.
The primary federal employment laws which affect equal pay include:
Choosing the right pay equity software provider enables your company to comply with federal and state pay equity legislation and equal pay law.
Korty v. Indiana reinforces the need to justify pay differentials or any apparent compensation disparity to ensure workplace fairness and avoid violating equal pay law.
Employers can achieve this by implementing a policy of pay equity, which includes the following:
Set fair, explainable, and equitable salary ranges: An explainable salary range is one that employers can demonstrate ensures workplace fairness. It also means that in the event of an inquiry, employers can clearly show how the salary range was identified. It is estimated that one in four US workers is now covered by a law that requires organizations to post salary ranges in job listings.
Adopt a policy of internal equity: Internal equity refers to the practice of ensuring fair and equal compensation is paid to employees in the same position in a specific field of work when each has the same skill set and duration of employment. In the above, IUH referred to “internal equity” to review the pay of current employees in determining where to fit their new hire. Their internal equity policy”permits pay differences between individuals in the same job based on relevant work experience, performance, or seniority”. IUH also adopted a policy of avoiding new hire rates that are higher than incumbent pay, while acknowledging that “exceptions may occur”.
Avoid discrimination: Ensure your Pay equity software does not violate EEOC Title VII guidance. That guidance makes it clear that employers cannot delegate responsibility for pay discrimination or AI bias to their software vendor, nor rely on their vendor’s assurance that its software is Title VII compliant. If pay equity software violates workplace laws, you, as an employer, may be held liable.
Partner with a pay equity software that doesn’t discriminate. Speak to one of our experts.
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