DIANE M. MACK, Complainant
RICE LAKE HARLEY DAVIDSON, Respondent
Complainant Diane M. Mack filed a complaint with the Equal Rights Division of the Department of Workforce Development on March 23, 2009, in which she alleged that respondent Rice Lake Harley-Davidson had discriminated against her because of sex.
An initial determination was issued by the ERD on August 18, 2009, finding no probable cause to believe that the respondent had terminated Mack's employment because of sex, but finding probable cause to believe that it had discriminated against Mack in compensation and terms and conditions of employment because of sex. Mack did not appeal the no probable cause portion of the initial determination and that has become a final decision. The portion of the complaint as to which probable cause was found was certified to hearing.
Following a hearing held on November 22, 2010, an administrative law judge (ALJ) for the ERD issued a decision on January 20, 2012, which found that the respondent had discriminated against the complainant in compensation and terms and conditions of employment because of sex. The respondent filed a timely petition for review of the ALJ's decision by the Labor and Industry Review Commission.
The commission has considered the petition for review and the briefs of the parties, and it has reviewed the evidence submitted to the ALJ. Based on its review, the commission now makes the following:
1. Rice Lake Harley Davidson (RLHD) is a motorcycle dealership in Rice Lake, Wisconsin. Its owner is Chris Brekken. The general manager of the dealership at all times relevant to the complaint was Aaron Miley.
2. In 2003 Diane Mack, a female, learned of a possible job opportunity at RLHD. She dropped off her resume at the dealership and shortly thereafter Miley contacted her and invited her to the dealership for a talk. He knew that Mack owned a motorcycle. When Mack met with Miley he asked her whether she knew how to run a computer. She said she did, and Miley hired her.
3. Mack began her employment at RLHD on or about July 9, 2003. Her position was salesperson, with additional duties involving taking credit applications and tracking inventory. Mack had no experience selling motorcycles. Initially, Miley set her annual salary at $28,000. At the time Mack was hired the only other person selling motorcycles at RLHD was Miley.
4. About six months later, in early 2004, RLHD recruited Harold Dodge, a male, to come to the dealership to help with sales on Saturdays. A few weeks later RLHD hired Dodge.
5. Miley and Brekken wanted Dodge to assume the role of sales manager. They were aware that Dodge was a long-time motorcycle enthusiast and long-time member and president of a local Harley Owners Group. They hoped that Dodge's management experience, his knowledge of the Harley Davidson culture and his knowledge of the Rice Lake community would be valuable in expanding the sales volume of the business.
6. At the time they hired Dodge, Miley and Brekken were aware that he was earning about $56,000 annually as a manager for a company called Rice Lake Weighing Systems and had lived in the Rice Lake area for 30 years.
7. Dodge was hired by RLHD at an annual salary of $56,000. His starting salary was set by Miley and Brekken together.
8. Dodge was never able to perform the functions of a manager, and he worked primarily as a salesperson. At no time did he manage the activities of Mack. Mack continued taking direction from Miley, not from Dodge.
9. Beginning in September 2004, Mack's annual salary was changed to $34,000.
10. In January 2005 RLHD hired Pat Sterling at an annual salary of $52,000 to work as sales manager for the dealership.
11. After the hire of Sterling in January 2005, RLHD did not consider Dodge to be, or expect him to function as, a sales manager. Dodge continued working for RLHD as a salesperson. RLHD continued to pay him an annual salary of $56,000.
12. A change in salaries occurred simultaneously for Dodge and Mack in February 2006, when Dodge's pay was changed to $36,400 per year plus commissions and Mack's pay was changed to $24,000 per year plus commissions. The commission structure was the same for Dodge and Mack.
13. For the balance of Mack's employment, Dodge continued to earn $36,400 per year plus commissions. Mack received a raise to $27,040 per year plus commissions on March 20, 2007, and her pay stayed at that level until she was discharged from her employment on February 9, 2009.
14. Beginning March 17, 2007, RLHD hired Kris Glinski, a male, as a salesperson, and paid him a salary equal to that of Mack for the remainder of Mack's employment.
17. From January 2005 through the end of Mack's employment at RLHD, sex was a factor in decisions made by RLHD setting the rate of compensation for Mack.
Based on the Findings of Fact made above the commission makes the following:
1. Rice Lake Harley Davidson (RLHD) is an employer subject to the Wisconsin Fair Employment Act.
2. Diane Mack is an individual and was an employee entitled to the protections of the WFEA.
3. The work performed by Dodge in and after January 2005, and the work performed by Mack during that same period, was equal or substantially similar within the meaning of Wis. Stat. § 111.36(1)(a).
4. Mack has shown by a preponderance of the evidence that RLHD discriminated against her in compensation paid for equal or substantially similar work or in terms, conditions or privileges of employment, on the basis of sex, within the meaning of Wis. Stat. § . 111.36(1)(a).
Based on the Findings of Fact and Conclusions of Law made above the commission issues the following:
1. The respondent shall pay the Complainant the amount she would have received from March 23, 2007 to the last day of her employment, February 9, 2009, as if she were paid the average of the salaries of Harold Dodge and Klaus Glinski, minus the salary the Complainant actually received from the Respondent during that period of time.
2. The Respondent shall pay the Complainant interest on the amount stated in paragraph 1 above at the rate of 12 percent per annum, simple. For each calendar quarter, a separate amount of back pay due shall be computed, then interest shall be computed on each quarterly amount from the last day of each calendar quarter to the date of payment.
3. The Respondent shall pay reasonable attorney's fees of $34,127.00 and costs of $1,923.00 (total: $36,050.00) to the Complainant. The amount payable based on this paragraph shall be paid by check made out to the trust account of Attorney Peter J. Fox.
4. Within 30 days of the expiration of time within which an appeal may be taken herein, the respondent shall submit a compliance report detailing the specific action taken to comply with the commission's decision. The compliance report shall be directed to the attention of Jenny Koepp, Labor and Industry Review Commission, P.O. Box 8126, Madison, Wisconsin 53708. The statutes provide that every day during which an employer fails to observe and comply with any order of the commission shall constitute a separate and distinct violation of the order and that, for each such violation, the employer shall forfeit not less than $10 nor more than $100 for each offense. See Wis. Stat. § § 111.395, 103.005(11) and (12).
Dated and mailed
February 7, 2013
mackdianev05 . rrr : 110 :
BY THE COMMISSION:
/s/ Robert Glaser, Chairperson
/s/ Ann L. Crump, Commissioner
In its petition for commission review and in its briefs to the commission, RLHD has not asserted or argued the statute of limitations issue. The commission has stated that the filing of a petition for review by any party vests the commission with jurisdiction to review the entire decision, though as a policy, the commission generally will not exercise its jurisdiction over issues that are neither expressly nor implicitly raised by a petition for review or arguments submitted in connection with the petition. See, e.g., Dude v. Thompson, ERD Case No. 8951523 (LIRC, Nov. 16, 1990). Where circumstances warrant, however, the commission may decide to address an issue presented in a case even where it has not been specifically petitioned. See, e.g., Kanter v. Ariens Co., ERD Case No. 200205229 (LIRC, Sep. 23, 2005).
The circumstances in this case warrant addressing the statute of limitations issue. The issue is a significant one that can be expected to arise again and again. In addition, the ALJ's rationale in its decision on the issue was erroneous and should be clarified. For the reasons discussed below, the commission concludes that the statute of limitations does not bar the complaint in this case.
In early decisions, both the Labor and Industry Review Commission and the Personnel Commission recognized discrimination in pay as a "continuing violation." See, e.g., Jeanpierre v. Milwaukee, ERD Case No. 8852362 (LIRC, Sep. 1, 1993), and Rudie v. DHSS and DER, Case No. 87-0131-PC-ER (Wis. Pers. Comm., Sep. 19, 1990).
A 1995 LIRC decision involving a situation similar to the one in Mack's case, Forster v. Abbyland Processing, ERD Case No. 9200973 (LIRC, March 22, 1995), illustrated LIRC's application of the "continuing violation" approach to pay discrimination. Forster was hired by Abbyland Processing in 1984 to do sales. During her years there, she was not paid as much as male sales representatives. Her employment ended in termination on May 17, 1991. On March 6, 1992, she filed a complaint alleging discrimination because of sex in regard to promotion and compensation. The 300th day prior to the date of filing of the complaint was May 11, 1991 - about a week before her termination. It was not disputed that her complaint was untimely as to its allegations regarding promotion, since those events had occurred before the statute of limitations cut-off date; however, her complaint was accepted and processed as timely insofar as it involved compensation. Sex discrimination in compensation was found and she was given back pay extending 2 years back from the date of her complaint.
In Abbyland Processing v. LIRC and Forster, 206 Wis. 2d 309, 557 N.W.2d 419 (Ct. App. 1996), the court of appeals confirmed that pay discrimination should be treated as a continuing violation. The court held that LIRC properly considered evidence of events occurring more than 300 days prior to the filing of the complaint in deciding whether there had been pay discrimination. Most significantly for the issue of how the statute of limitations should be applied to allegations of ongoing pay discrimination, the court also held:
Salary discrimination is an ongoing matter and can be challenged if the result of the discrimination occurs both within and outside the statute of limitations. In this case, Forster was entitled to challenge the salary paid during the relevant period of time, May 11-May 17, 1991, which is that period within the 300-day statute of limitations. Abbyland does not contest LIRC's ability to address discrimination occurring within this time period.
206 Wis. 2d at 316 (emphasis added).
The court upheld LIRC's decision providing a back pay remedy for the full 2-year period prescribed by Wis. Stat. § 111.39(4)(c), when all that occurred during the 300-day statute of limitations period was 6 days of employment at the challenged pay rate. The holding of the court of appeals in Abbyland that salary discrimination is an ongoing matter and can be challenged if the result of the discrimination occurs both within and outside the statute of limitations, has not been questioned, limited, or overruled by Wisconsin's appellate courts.
In years subsequent to Abbyland, however, LIRC issued decisions which relied more on federal court interpretations of the statute of limitations in Title VII, and those interpretations increasingly moved away from the notion of salary discrimination as an ongoing matter that had been established by Abbyland. Specifically, LIRC issued decisions relying on Amtrak v. Morgan, 536 U.S. 101 (2002), in which decisions LIRC stated that "award of compensation" was considered to be a "discrete act" which had to be complained of within the statute of limitations period. (1) See, e.g., Lau v. LATEC Credit Union, ERD Case No. CR200103183 (LIRC Feb. 7, 2003). In subsequent decisions the commission continued to follow the course taken by some federal courts, of backing away from the notion of pay discrimination as a continuing violation renewed with each paycheck. (2)
The course taken by such decisions was contrary to the holding of Abbyland that "[s]alary discrimination is an ongoing matter and can be challenged if the result of the discrimination occurs both within and outside the statute of limitations." The rationale of the commission at that time for relying on these federal court interpretations of the statute of limitations in Title VII, was reflected in its statement in Lau, that
[t]he U. S. Supreme Court's decision in AMTRAK v. Morgan clarified the state of the law regarding the continuing violation doctrine's application in equal rights cases.
While it has long been recognized that it can be appropriate to look to federal court decisions interpreting Title VII as guidance for interpretations of the Wisconsin Fair Employment Act, see, e.g., Ray-O-Vac v. ILHR Dept., 70 Wis.2d 919, 236 N.W. 2d 209 (1975), Bucyrus-Erie Co. v. ILHR Dept., 90 Wis. 2d 408, 421 n. 6, 280 N.W.2d 142 (1979), and Hamilton v. ILHR Dept., 94 Wis. 2d 611, 621 n. 4, 280 N.W.2d 857 (1980), it has also been recognized that there are limits to this, and that there can be situations in which Wisconsin should adhere to its own path, which may diverge from the course the federal authorities have taken. See, e.g., Goodyear Tire & Rubber Co. v. DILHR, 87 Wis. 2d 56, 65, 273 N.W. 2d 786 (Ct. App. 1978)(presenting the question of whether distinctions based on pregnancy were discrimination on the basis of sex).
The commission believes that its reliance on AMTRAK v. Morgan and other federal cases on this issue was misplaced. First and foremost, the commission is clearly bound by the Wisconsin court of appeals' decision in Abbyland that salary discrimination is an ongoing matter and can be challenged if the result of the discrimination occurs both within and outside the statute of limitations. That is still the law in Wisconsin. Second, Congress has expressly stated that the direction the federal courts were taking in the cases relied upon by the commission, culminating in Ledbetter v. Goodyear Tire & Rubber Co., 550 U.S. 618 (2007), were contrary to the intent of Congress, undermined the statutory protections, ignored the reality of wage discrimination, and impaired the Federal Civil Rights Act they were interpreting. (3) This was an unusual and powerful statement by Congress to change the direction of the federal courts in this area. Indeed, the Seventh Circuit specifically stated that Congress "took the unusual step of expressly providing that the Ledbetter Act applies retroactively to all claims pending on May 28, 2007, or later." Groesch v. City of Springfield, 635 F.3d 1020, 1025 (7th Cir. 2011).
The commission decisions following the federal cases such as AMTRAK v. Morgan were following a blind and narrow alley and the commission believes it is appropriate to right its direction to the binding precedent in Abbyland. (4) The commission is mindful that, though it is not bound by its prior decisions, it nevertheless strives to maintain consistency in its decisions interpreting the law. However, where, as here, it becomes clear that federal court decisions upon which the commission relied were contrary to state court precedent and erroneous interpretations of the federal law that led the commission into a blind alley, the commission believes it is appropriate to find its bearings and right its course in its interpretation of the law.
The ALJ stated that the principles of the Lilly Ledbetter Fair Pay Act were consistent with the WFEA and adopted them to support a position that Mack's complaint was timely. This was erroneous and should be clarified. The fact that the Lilly Ledbetter Fair Pay Act was passed, in itself, does not change the interpretation of the WFEA. There is no ipso facto incorporation of the Federal Civil Rights Act in the Fair Employment Act of the State of Wisconsin, American Motors Corp., 101 Wis. 2d at 352, Hiegel v. LIRC, 121 Wis. 2d 205, 216, 359 N.W.2d 405, 411 (Ct. App. 1984), Tatum v. LIRC, 132 Wis. 2d 411, 420, 392 N.W.2d 840 (Ct. App. 1986), Hilmes v. DILHR, 147 Wis. 2d 48, 52, 433 N.W.2d 251 (Ct. App. 1988). Wisconsin courts must construe Wisconsin statutes as it is believed the Wisconsin legislature intended, regardless of how Congress may have intended comparable statutes, Goodyear Tire & Rubber Co., 87 Wis. 2d at 64, Marten Transport v. DILHR, LIRC & Liebrandt, 171 Wis. 2d 147, 152, 491 N.W.2d 96 (Ct. App. 1992), Moore v. LIRC, 175 Wis. 2d 561, 570, 499 N.W.2d 288 (Ct. App. 1993). The commission is not adopting the Lilly Ledbetter Fair Pay Act into the WFEA. Rather, the commission is returning to the binding precedent in Abbyland for the interpretation of the WFEA. The fact that the Lilly Ledbetter Fair Pay Act was passed is notable only for highlighting for the commission that the road it was on in following the federal court cases on this issue was mistaken.
The dissent asserts that the language of Abbyland stating that salary discrimination is an ongoing matter, is more in the nature of dicta than binding precedent. However, when an appellate court intentionally takes up and decides an issue on a question germane to a controversy, such a decision is not a dictum but a judicial act of the court which it will thereafter recognize as a binding decision. State v. Holt, 128 Wis. 2d 110, 118 (Ct. App., 1985). The Abbyland court took up and decided the issue of how the statute of limitations applied to Forster's claim of discrimination in the salary paid to her. That holding was germane to the issue of whether evidence of events prior to the statute of limitations period could be considered as relevant to the discrimination issue. Therefore Abbyland can be recognized as a binding decision.
The dissent asserts that the commission takes this action capriciously and without explanation. The commission disagrees. The commission explained at length and in detail the development of the case law in this area, why
Abbyland is binding, and why the federal court cases the commission had followed in some of its cases were a blind alley from which the commission should turn. The commission is always cognizant of its need to provide guidance in interpreting the WFEA and strives to be consistent in its decisions. However, consistency is not the goal in and of itself; justice is the goal. The commission believes that its decision properly interprets the law and meets this goal. The decision to change course was not made lightly or capriciously, but after a great deal of thought and long deliberation, as it should be. Such action by the commission should be extremely rare but sometimes may be necessary; when such action is necessary, it is incumbent on the commission to fully explain its rationale for doing so, and the commission does so here. The dissent would have the commission continue down a blind alley for the sake of consistency even in the face of overwhelming evidence that that choice was clearly erroneous. The commission declines to do so. The dissent also asserts that this decision adds uncertainty to the development of the law under the equal pay provisions of the WFEA. To the contrary, the commission believes the decision clearly and expressly states the current law in Wisconsin. It is the dissent that would provide uncertainty by acknowledging that there are circumstances to which the application of the continuing violation theory could apply and yet would continue to follow
Amtrak v. Morgan.
Discrimination in Compensation - In evaluating complaints of sex discrimination in compensation under the Act, the commission has looked to the analysis followed under the federal Equal Pay Act. Under the Equal Pay Act analysis, a complainant must show that the employer pays employees of different sexes differently for equal work on jobs the performance of which requires equal skill, effort and responsibility and which are performed under similar working conditions. If that showing is made, an employer is liable unless it proves that the pay differential is the result of a seniority system, a merit system, a system which measures earnings by quantity or quality of production, or "any factor other than sex." The Equal Pay Act analysis has been described as a strict liability test in which it is not necessary to prove intent to discriminate: an employer who pays different wages is automatically liable unless it proves one of the defenses. Bialk v. Aurora Health Care, ERD Case No. 200700068 (LIRC, Apr. 23, 2010), citing, Schwinn v. Dodge County Cooperative, ERD Case No. 199601849 (LIRC, 10/13/98).
In some cases it can also appropriate to apply the conventional intent-focused analysis on the issue of pay discrimination. The conventional analysis is particularly appropriate where the wage differential is sequential rather than simultaneous. Ibid.
In this case, the alleged pay discrimination involved amounts paid
simultaneously to female and male employees; specifically, the difference in
compensation between Mack and Dodge from January 2005 until the end of Mack's
employment. (5)
The commission therefore applies the Equal Pay Act analysis, as did the ALJ. (6)
Prima Facie Case --The first question which needs to be addressed under an Equal Pay Act analysis is whether the employer was paying employees of different sexes differently. The commission does not believe that the fact that Mack was being paid the same as one other male, Glinski, precludes her from establishing that part of her case. It is undisputed that, during the period from January 2005 until the end of Mack's employment, Mack, a female, was being paid significantly less than Dodge, a male. The pay given to Glinski does not change that fact. If the different pay given to Mack and Dodge was for their performance of "equal work on jobs the performance of which requires equal skill, effort and responsibility and which are performed under similar working conditions," then the requirements of an Equal Pay Act prima facie case are made out. Therefore, the commission turns to that question.
It is undisputed that Mack worked for RLHD as a salesperson. The evidence also persuades the commission that, after January, 2005, Dodge worked primarily as a salesperson. RLHD showed Dodge and Mack as both having the job title "Bike Sales," Ex. C7; RLHD had a formal written job description for the job of "Sales Person," Ex. C10; and in its responses to Mack's discovery requests, RLHD admitted that "beginning in approximately February, 2006, Harold Dodge was employed as a sales person, the same title held by Complainant," Ex. C2.
RLHD nonetheless argues that Mack and Dodge did not have the same job or do the same work, and that thus the "equal work" requirement was not met. It argues in its brief that "any 'title' which may have been associated with either Mack or Mr. Dodge did not accurately describe their disparate position, duties or responsibilities at RLHD."
In support of its argument that they were in different positions, RLHD focuses on claims about special duties allegedly performed by Dodge. RLHD asserts in its brief that what made Dodge's position different was that he was an "ambassador, consultant and advisor" for RLHD, performing duties related to marketing and advertising, and participating in decisions related to growing the business and customer relations.
The commission was not persuaded that this assertion was established. The evidence bearing on RLHD's claim about Dodge's supposed "extra duties" is quite vague. There is a shortage of specific evidence about what Dodge actually did on his job, apart from selling motorcycles, which constituted the extra duties which RLHD claims he did.
RLHD's argument that Dodge performed extra duties as a "goodwill ambassador" had largely to do with the fact that Dodge was one of the leaders of the local HOG ("Harley Owners Group") Club in the area and that he rode his bike a lot in its activities. However, it was admitted that it was not documented anywhere in writing that this role was any part of Dodge's position. It appears just as likely that this was simply Dodge continuing the socializing as a Harley owner that he had always done, even from before he was employed at RLHD.
Another one of RLHD's claims about extra duties Dodge supposedly performed, had to do with Geometrix, a separate company (a sheet-metal job shop) owned by Brekken, located 100 miles from Rice Lake. Brekken claimed that when he hired Dodge, it was his intent to have Dodge provide services for Geometrix in regards to keeping something referred to as "ISO certification." According to Brekken, keeping ISO certification took a lot of "paperwork." He claimed at one point in his testimony that Dodge "was doing" that paperwork. However, when this topic was pursued on cross-examination, that claim fell apart: Brekken effectively conceded that Dodge "never really did any of the actual ISO certification stuff for Geometrix."
RLHD acknowledged that there was no written documentation of any kind reflecting or identifying alleged extra duties Dodge was hired for, or that any part of his pay rate was attributable to such extra duties. In the absence of any sort of documentation as to this, and in the absence of any testimony from Dodge or Miley, neither of whom were at the hearing, (7) everything thus depended on Brekken's testimony. The commission agrees with Mack's argument that Brekken was not a reliable source of information because he did not have much direct personal knowledge of material facts.
Brekken lived 90 miles from Rice Lake, and was at RLHD only three days a week. The dealership was actually run by a general manager, Miley; Brekken himself testified that his focus at RLHD was "bigger-picture things." The list of what Brekken did not know that well about how things worked at RLHD, was a long one. Thus, he testified that:
Beyond the fact that the evidence about Dodge's supposed extra duties was vague, it was also specifically undercut by this admission from Brekken:
Q: So regardless of whether or not she was doing or not doing paperwork, ultimately Ms. Mack, a big part of her job was selling motorcycles, right?
A: That was the most important part.
Q: Same with Mr. Dodge, right?
A. Correct.
T. 221, emphasis added.
To meet the "equal work" standard jobs do not have to be identical; the crucial question is whether they have a common core of tasks and whether any additional tasks make the jobs substantially different. Brewster v. Barnes, 788 F. 2d 985, 991 (4th Cir. 1985). Clearly, the salesperson positions Dodge and Mack held had a common core of duties: "the most important part" of both Mack's job and Dodge's was selling motorcycles. Also, as detailed above, the contention that Dodge had significant other duties does not have persuasive support in the record. The commission therefore finds that it was established, that Mack and Dodge performed "equal work" for purposes of applying the EPA analysis.
RLHD argues that the work performed by Mack and Dodge did not require equal skill, effort and responsibility. Again, this argument depends largely on RLHD's claims about Dodge allegedly performing extra duties which Mack did not. As discussed above, the commission does not believe the record persuasively showed that there was any substantial performance of extra duties by Dodge.
In addition, though, RLHD's focus in making this argument is on skills, experience and other characteristics it is alleged Dodge had and brought to the job - primarily, the extent to which Dodge was involved with, and aware of the interests and desires of, the local Harley-Davidson riding community. This focus is on the characteristics of Dodge, rather than on the job. Under the equal work standard it is the requirements of the job, not the characteristics of the people filling it, which is to be compared. Brock v. Georgia Southwestern College, 765 F. 2d 1026, 1032 (11th Cir., 1985). The ALJ's characterization of Mack's and Dodge's job as sharing a "core duty" of selling motorcycles is clearly supported by Brekken's testimony quoted above. Whatever characteristics Mack and Dodge may have brought to the salesperson position, the skill, effort and responsibility required to perform this core duty was the same.
For the foregoing reasons, the commission concludes that Mack showed that she was paid differently from Dodge for equal work on jobs the performance of which requires equal skill, effort and responsibility and which were performed under similar working conditions. She thus made out a prima facie case of pay discrimination under the Equal Pay Act analysis. This shifts the burden to RLHD, to prove that the differential in pay between Mack and Dodge was the result of either a seniority system, a merit system, a system measuring earnings by quantity or quality of production, or "any factor other than sex."
It is important to bear in mind that, unlike the situation in the conventional intent-focused analysis, in which an employer need merely articulate a non-discriminatory reason in response to a prima facie case, and in which the burden of proof remains at all times with the complainant, under the Equal Pay Act analysis a
prima facie case requires an employer to shoulder and carry an actual burden of proof, by a preponderance of the evidence, of one of the defenses. In this case, there is no claim that the seniority or merit pay or production-based pay system exceptions apply. RLHD relies on the "any factor other than sex" defense. The question is thus whether RLHD proved that by a preponderance of the evidence.
A Factor Other Than Sex - RLHD hired Dodge at a significantly higher rate of pay than Mack was being paid. At hearing, RLHD asserted that that higher initial rate of pay was a result of its plan to have Dodge become sales manager and its belief that Dodge's experience and connection would be valuable to him in the position of sales manager, as well as of a belief by Brekken that he had to match Dodge's then-salary at Rice Lake Weighing Systems if he wanted him to leave that job and come to RLHD as its sales manager.
While these explanations are potentially important as background of events that followed, they are ultimately not the explanations that are most relevant here. As noted above, the ALJ made no finding that there was any discriminatory pay differential prior to January 2005. The difference in pay which RLHD must prove was the result of "a factor other than sex," is the one that existed between Mack and Dodge from January 2005 to the end of Mack's employment. That period begins with the hire of Sterling as sales manager, after which Dodge was no longer sales manager, but was instead performing salesperson work, equal to Mack's. It is that pay differential, which RLHD must prove was the result of "a factor other than sex."
At a mechanical level, it is clear why Dodge was paid so much more that Mack for doing the work of a salesperson: when Dodge's position was changed from sales manager to just sales, his compensation was not decreased. The critical question in this case, though, is: why was Dodge's pay not reduced to what other salespersons were being paid when he went to being a salesperson?
One reason that the commission concludes that RLHD did not establish a "factor other than sex" defense, is that RLHD's inconsistency about what its reasons were for keeping Dodge's pay higher than Mack's make it hard to credit any of them.
RLHD's only witness was Brekken. Initially, he testified that "after I hired [Dodge] and paid him what he had, to be honest with you I never really paid attention to his wages after that." (T. 207). If that were true, of course, it would mean that Brekken had no involvement with deciding to keep Dodge's pay the same even after he was moved from sales manager to salesperson - and as he was RLHD's only witness, it would leave that decision unexplained. Then, however, following unsuccessful attempts by RLHD's counsel to use leading questioning to lead Brekken into providing an explanation for that decision (T. 207-208), testimony was elicited from Brekken that it was "very important to maintain Harold's salary at a point where he would continue to be employed at Rice Lake Harley" because:
His - his overall interaction with the community and all these other facets that he brought to me and Geometrix, the general existence of Rice Lake Harley. He brought a lot to the table, and I didn't want to lose him.
(T. 209). These things represents the entire testimonial evidence as to RLHD's reasons why Dodge's pay was maintained well above Mack's.
Another assertion on behalf of RLHD as to why it kept Dodge's pay high is in the record in the form of a July 10, 2009, letter from an attorney for RLHD to the ERD investigator, which stated:
Given the fact he had been recruited to come to work for Rice Lake Harley-Davidson and had left a well-paying management position to become sales manager, the dealership felt they owed it to him to maintain his salary and vacation levels and not reduce them when his management responsibilities were eliminated. They felt that Mr. Dodge should not be punished financially for a hiring mistake, even though it had an adverse financial impact and they had to "take the hit." (8)
(Complainant's Ex. 5). And, yet another assertion on behalf of RLHD as to why it kept Dodge's pay high was made in a September 7, 2010, Amended Answer filed by counsel for RLHD with the ERD, which stated:
22. Respondent admits that while employed in a sales position by Respondent, Harold Dodge was paid a higher salary than Complainant, but affirmatively states that Harold Dodge's higher salary than Complainant is based upon Harold Dodge's superior knowledge, experience, reputation, and seniority over Complainant in dealing with Harley-Davidson Motorcycles and owners. (9)
(Complainant's Ex. 5)
As noted above, Brekken's assertion that he "never really paid attention to" Dodge's wages after he hired him is inconsistent with his having made a conscious decision to keep that pay high even after Dodge went from sales manager to salesperson. What is more, Brekken's assertion that he felt he had to keep Dodge's salary high in order to keep Dodge from leaving, is unsupported; there was no evidence of a request or demand from Dodge or negotiation with him regarding the salary he would get as a salesperson, and indeed no evidence that Dodge said anything at all about possibly leaving if he was paid what Mack was paid. Such an insufficiency of evidence is a basis for rejecting this kind of explanation for a male's higher wage, see, Valen v. Mortgage Guarantee, ERD Case No. 7606187 (LIRC, Mar. 24, 1981).
Counsel's rationale in the letter to the ERD investigator clearly differs from the rationale articulated by Brekken at hearing: it does not reflect any concern about the possibility that Dodge might leave if his pay was lowered. Its only real similarity to Brekken's articulated rationale, is that it too is not supported by the evidence: Brekken did not give any testimony that his reason for keeping Dodge's salary high was this kind of "our mistake - felt we owed it to him" reason. For all that is in the record, this might well have been no more than a speculation by counsel tasked with explaining the decision to the ERD.
Finally, counsel's rationale in RLHD's Amended Answer, that Dodge was paid a higher salary than Mack based upon "superior knowledge, experience, reputation, and seniority," clearly differs from Brekken's articulated rationale in that it too lacks any reference to concern about the possibility of Dodge leaving. It also differs from counsel's assertions to the ERD investigator in that it lacks any suggestion that the reason was a felt obligation to maintain the salary in view of RLHD having recruited Dodge for a higher level sales manager job.
In view of the foregoing inconsistencies and evidentiary weaknesses, the commission does not believe that RLHD can be considered to have proved by a preponderance of the evidence, what its actual reasons were for maintaining Dodge's pay at a level significantly above Mack's after January 2005 when Dodge was performing salesperson work. Because RLHD bore the burden of actually proving that the pay differential between Dodge and Mack in their work as salespersons was the result of a factor other than sex, discrimination must be found.
The commission does note that in its brief in chief, RLHD appeared to settle on reliance on the second of the rationales described above; that is, that RLHD "felt it owed it to Mr. Dodge, after inducing him to leave his prior employer, to maintain [his] salary," and that "RLHD admirably did not want to punish Mr. Dodge for its expectations." (RLHD Brief, pp. 2, 23.) However, even if the commission were to find that this was RLHD's actual reason for maintaining Dodge's salary at a significantly higher level than Mack's - that this was indeed the factor that the pay differential resulted from - it would still conclude that given the facts and circumstances here, this did not constitute "a factor other than sex" sufficient to rebut a prima facie case under an Equal Pay Act analysis.
The ALJ also concluded that this was an insufficient justification for maintaining a pay discrepancy, and could not meet RLHD's burden of showing that the discrepancy was because of "a factor other than sex." In arguing against this conclusion, RLHD relies significantly on Covington v. Southern Illinois University, 816 F. 2d 317 (7th Cir. 1987), which it characterizes as holding that a choice not to reduce a salary when management responsibilities are eliminated from the position is a legally recognizable "factor other than sex."
Covington did hold that an employer's policy of maintaining employees' salaries upon their reassignment to other positions was a "factor other than sex." However, the facts in Covington were different in a way which the commission finds significant. In Covington there was a formal and general policy to retain employees at old salaries after position changes, whereas here the decision to keep Dodge at the same salary after he was no longer sales manager was ad hoc, not pursuant to any such regular policy. Uniform adherence to a general policy of retaining salaries after position changes tends to ensure overall pay neutrality, a reassuring factor not present when highly individualized ad hoc decisions are involved.
Apart from the matter of that distinction, there is another reason that the commission is not persuaded that it must follow Covington: it is simply one federal circuit's (the 7th) decision, and there are decisions from other circuits that expressly disagree with and reject it.
See, Glenn et al. v. GM, 841 F. 2d 1567, 1571 (11th Cir. 1988), discussing and expressly rejecting the reasoning of
Covington. For a review of the state of the law on this question (10) as of 2005,
see Wernsing v. Dept. of Human Services, 427 F.3d 466, 468-70 (7th Cir., 2005). This is an area in which, because of a lack of a single clear governing rule, relying on federal court case law as a guide to the interpretation and application of the Wisconsin Fair Employment Act provides no assurance that it will be of value.
Attorneys Fees -- When this matter was before the ALJ, Mack sought attorneys fees in the amount of $36,467.75 and costs of $2,884.76. RLHD argued that Mack was not a "prevailing party" and should therefore receive no fees; it alternatively argued for a reduction in the amount of any fees awarded. The ALJ applied a 33% reduction for "partial success" to complainant's attorney fee request, resulting in an award of fees of $24,312 and costs of $1,923 (for a total of $26,235).
On appeal to LIRC, RLHD continues to argue that Mack was not a prevailing party and should not get fees. RLHD appears to rely in part on looking back to the fact that Mack's complaint in this case also alleged discriminatory discharge, and that Mack lost on that charge in the investigation and then did not appeal that part of the case. However, Mack did not retain counsel until well after the Initial Determination had been issued and the case had been certified to hearing solely on the issue of discrimination in compensation. The fact that Mack did not prevail on her discriminatory discharge claim when she was pursuing it pro se at the ERD investigation level, has no relevance to the question of what would be reasonable attorneys fees for the litigation of the compensation discrimination claim
RLHD principally relies on the argument that Mack was not a "prevailing party" on her compensation discrimination claim because she received much less in back pay than she had asked for. RLHD asserts that Mack had sought $91,974 in back pay and ended up being awarded only $8,834.30, less than 10% of the amount sought. This is true; in his initial brief to the ALJ, counsel for Mack had argued that Mack's back pay should be measured by the difference between her pay and Dodge's for the full 4+ year period that they were both employed at RLHD, which Mack's counsel himself figured at $91,974.
The commission does not believe, though, that this supports RLHD's argument that Mack was not a "prevailing party." RLHD's argument confuses prevailing on claims, with obtaining a particular level of remedy as a result of having prevailed on those claims. The claim Mack took to hearing was that RLHD discriminated against her in compensation because of her sex. That was the only claim presented. She prevailed on that claim.
RLHD's argument that Mack was nonetheless somehow not a "prevailing party" relies, as the ALJ noted, on decisions from contexts other than cases under the WFEA. Decisions arising under the WFEA have made it clear that RLHD's argument is not viable.
In Gee v. ASAA Technology, ERD Case No. 8901783 (LIRC, Jan. 15, 1993), the complainant prevailed only in establishing that the employer had based an employment action at least in part because of an unlawful motive. It was found, though, that the same decision would have been reached on the employment action in any event. Therefore, no remedy at all was ordered. However, consistent with the teaching of Watkins v. LIRC, 117 Wis. 2d 753, 345 N.W.2d 482 (1984), in which there was also no other remedy available, attorneys fees were allowed. LIRC rejected the employer's argument that there should be no award of fees and costs, and it expressed a clear intent that Wisconsin state court decisions should be looked to in deciding issues involving awards of attorneys fees under the WFEA.
RLHD argues in the alternative that Mack's attorney fees should be reduced much more drastically than the 33% reduction applied by the ALJ. It proposes a 90% reduction, this apparently reflecting its argument that Mack recovered less than 10% of the back pay she sought.
Mack clearly had partial success in this case. She claimed compensation discrimination. She succeeded on that claim; the ALJ found that from January 2005 until the end of her employment RLHD was discriminating against her because of gender in regards to compensation. She received a substantial back pay award. The only thing "partial" about her success is that the ALJ did not find that any discrimination occurred before January 2005, and he did not accept the argument made in Mack's brief that the measure of her back pay should be the disparity between her pay and Dodge's during the entire time they were employed there. Given this, the commission believes that the ALJ's decision to apply a 33% fee reduction was reasonable. LIRC has not taken the approach urged by RLHD of reducing an attorney fee award by the same percentage as back pay awarded bears to back pay requested. Taking such an approach would actually be contrary to the holdings reflected in decisions such as Gee, supra, that success is not defined solely by remedy recovered and that attorneys fees may be reasonable even where there is in financial remedy awarded.
With her brief to LIRC, Mack submitted a supplemental petition for fees seeking an award of an additional $9,815 in attorneys fees for work in response to RLHD's petition before LIRC. In its reply brief to LIRC, RLHD's response to Mack's supplemental fee petition is to reassert its position that Mack was not a "prevailing" party at all and should not get any attorney fees: it argues that the request for fees for briefing to LIRC should therefore be entirely denied. For the reasons discussed above, however, the commission rejects that argument that Mack was not a prevailing party. The commission also believes that there is no reason to apply any "partial success" reduction to the supplemental fee request, for two reasons. First, RLHD elected not to argue for this. Second, Mack's success with respect to the issues presented by the petition for review to LIRC was complete. Therefore the full amount requested in the supplemental fee petition has been allowed.
NOTE: The Commission has substituted its own findings of fact and conclusions of law and its own Memorandum Opinion in order to more fully set forth the basis on which the Commission arrived at the same ultimate outcome as the ALJ.
LAURIE R. MCCALLUM, Commissioner (dissenting):
Timeliness:
The majority's capricious decision to abandon the commission's long-standing approach to applying the WFEA's 300-day statute of limitations to compensation complaints in general, and the manner in which it applied it to the facts of this complaint in particular, have prompted my dissent in regard to this issue.
It is important to note that each time a relevant compensation decision was made, Mack was aware that she was being paid less than Dodge. And, in fact, as early as 2004, she brought her concerns as to this disparity to the attention of the employer. Mack's Complaint (Ex. C.5), Mack's Deposition pp. 60-61, 62, 84.
It is also important to note that, from March 20, 2007, through the end of Mack's employment in 2009, RLHD made no changes in the pay of any sales worker.
Mack filed her complaint on March 23, 2009. May 27, 2008, marks the beginning of the actionable period for statute of limitations purposes, i.e., the 300th day prior to the filing of the complaint.
Consequently, RLHD took no action to change the pay of Mack or any other sales worker, including Dodge, during the actionable period.
The central question then is whether the running of the statute of limitations is triggered by the specific decisions actually made about pay for Mack and Dodge, or whether the alleged pay discrimination was a "continuing violation" kept alive by the periodic issuance of paychecks reflecting past pay decisions.
In an approach of long standing, LIRC has held that pay decisions of the type at issue here are discrete employment actions and not susceptible to a continuing violation analysis.
The ALJ, in reaching his holding that a continuing violation analysis was appropriate in this matter applied the provisions of the federal Lilly Ledbetter Fair Pay Act (LLFPA).
The ALJ's approach was clearly erroneous.
The ALJ incorrectly suggested in his decision that it is permissible to simply "adopt" changed provisions of a federal statute, the LLFPA, into our statute, the WFEA, which does not include those provisions. The basis for the practice of looking to interpretations of Title VII as a guide to the interpretation of the WFEA has always been that the provisions of the two statutes are similar. See, e.g., Bowen v. LIRC and Stroh Die Casting, 2007 WI App 45, 10 n. 4, 299 Wis. 2d 800, 730 N.W.2d 164 ("Decisions by the United States Supreme Court are persuasive in connection with the interpretation of Wisconsin statutes when the federal statute interpreted by the United States Supreme Court is similar to the Wisconsin statute"; emphasis added). Thus, for example, in Hiegel v. LIRC, supra, the court of appeals said:
Given the similar language of the WFEA's prohibition against sex discrimination in the terms, conditions, or privileges of employment, and the dearth of Wisconsin case law interpreting that provision of the WFEA, it is reasonable to look to federal cases under Title VII for guidance on the subject.
121 Wis. 2d at 217, emphasis added.
However, since the passage of the LLFPA, the language of the WFEA is now materially different from that of Title VII in its statute of limitations
In addition, it is important to bear in mind that the practice has been to give weight to federal court decisions which interpret Title VII. See, e.g., Bucyrus-Erie, Hamilton, Marten Transport, Jim Walter Color Separations, supra. To reflexively treat a legislative amendment of Title VII as somehow automatically changing the meaning of the Wisconsin Fair Employment Act, obviously has nothing to do with looking to court decisions interpreting language in Title VII which is similar to our statute's language. It instead is a particularly overt example of ipso facto incorporation of Title VII into the WFEA, which the supreme court expressly rejected in American Motors Corp. v. ILHR Dept., 101 Wis. 2d 337, 353, 305 N.W.2d 62 (1981).
For these reasons, LIRC cannot simply decide to treat the WFEA's statute of limitations as implicitly containing a "paycheck accrual" rule, based on the fact that Congress amended Title VII's statute of limitations to explicitly contain one.
Prior to 2002, certain of the federal circuits had taken a relatively expansive view of what constituted a "continuing violation" for purposes of applying Title VII's statute of limitations. In AMTRAK v. Morgan, 536 U.S. 101 (2002), however, the U.S. Supreme Court narrowed this concept, and clarified that if a challenged action was a "discrete" one, it did not form part of a continuing violation.
After AMTRAK v. Morgan, 536 U.S. 101 (2002), was decided, LIRC adopted and followed it unreservedly. See, e.g., Lau v. LATEC Credit Union, ERD Case No. CR200103183 (LIRC Feb. 7, 2003), Josellis v. Pace Industries, Inc., ERD Case No. CR199900264 (LIRC Aug. 31, 2004), Koenigsaecker v. City Of Madison, ERD Case No. CR200103889 (LIRC Mar. 11, 2005), Kanter v. Ariens Co., ERD Case No. 200205229 (LIRC, Sep. 23, 2005), Wodack v. Ev. Lutheran Good Samaritan Society, ERD Case No. CR2002304449 (LIRC Aug. 5, 2005), Gaulke v. Sch. Dist. Of Stratford, ERD Case No. CR200303518 (LIRC Dec. 8, 2006).
In fact, in Gaulke, LIRC was guided by and followed AMTRAK v. Morgan, and the 11th Circuit's decision in Ledbetter v. Goodyear Tire & Rubber, 421 F.3d 1169 (11th Cir. 2005), and effectively ruled out the paycheck accrual theory:
Thus, under what appears to be the prevailing current law, since Gaulke filed her complaint of discrimination on September 3, 2003, she may not recover for the discriminatory pay raises she received that are more than 300 days before September 3, 2003.
Then came the U.S. Supreme Court's Ledbetter decision. Ledbetter v. Goodyear Tire & Rubber, 550 U.S. 618 (2007). Contrary to the statement of the ALJ in his decision in Mack's case, the Supreme Court did not reverse the decision of the 11th Circuit, it affirmed it. The Supreme Court's decision expressly held that a pay-setting decision is a discrete act that occurs at a particular point in time, and expressly rejected the "paycheck accrual" rule.
This U.S. Supreme Court decision interpreted the language of Title VII in effect at that time, language sufficiently similar to the corresponding language of the WFEA that the commission relied upon federal court interpretations of it many times to inform its interpretation of the WFEA.
These LIRC decisions cover a period of more than a decade, without exception, and, after early 2003, with the participation of one or both members of the majority here.
The majority states that it "believes it is appropriate to right its direction to the binding precedent in Abbyland [Processing v. LIRC and Forster, 206 Wis. 2d 309, 557 N.W.2d 419 (Ct. App. 1996]." The majority characterizes the holding in Abbyland as "confirm[ing] that pay discrimination should be treated as a continuing violation."
However, that was not the issue in Abbyland. Instead, the issue was an evidentiary one, i.e., whether evidence of acts occurring more than 300 days prior to the filing of the complaint is admissible. In fact, the court in Abbyland noted this distinction in rejecting the petitioner's reliance upon two federal decisions (11):
These cases are inapposite and only address the viability [of] causes of action for acts of discrimination that occur outside the statutory period. Neither of these cases addresses the question whether such acts may be evidence of the state of mind existing for acts committed within the statute of limitations.
Thus, the language of Abbyland relied upon by the majority is more in the nature of dicta than binding precedent, as the majority has characterized it.
In support of its reliance upon this language as binding precedent, the majority cites State v. Holt, 128 Wis.2d 110 (Ct. App. 1985), as standing for the proposition that "when an appellate court intentionally takes up and decides an issue on a question germane to a controversy, such a decision is not a dictum but a judicial act of the court which it will thereafter recognize as a binding decision."
However, that was not the holding in Holt. Holt was a criminal case in which the central substantive issues related to the application of the additional fact test to multiple charges arising from a single course of conduct, the correctness of certain of the trial court's rulings and jury instructions, whether the parties waived objection to any of these rulings and instructions, the required elements of the crime of sexual assault, and the preservation of exculpatory evidence. In its decision, the court did not address whether an issue that was not before either the trial court or the appellate court could properly be decided and then become binding precedent, but, instead ruled that an appellate court may affirm a lower court decision of an issue on a rationale other than that given by the trial court, i.e., that, if a trial court reaches the proper result in deciding an issue, even though for the wrong reason, it will be affirmed. The court in Holt stated in reaching this holding that, "[a]n appellate court may sustain a lower court's holding on a theory or on reasoning not presented to the lower court.
Applying a different theory to deciding an issue is not the same as deciding a different issue. The statute of limitations issue was not before the Abbyland appellate court because the petitioner/appellant had not raised it. A WFEA statute of limitations issue is not the type of issue that may be raised sua sponte by LIRC or by a court reviewing a LIRC decision. Consequently, the Abbyland court's musings on the WFEA statute of limitations should not be considered binding precedent here.
Given this, the majority has effectively offered no explanation for overruling their long-standing interpretation of the WFEA other than they changed their minds.
Not only do I disagree with the legal basis for the majority's decision of the statute of limitations issue, as set forth above, but I also find this capricious action by the majority of serious concern on a policy basis.
Parties to the equal rights process rely upon LIRC to provide guidance as to the interpretation of the WFEA, and integral to LIRC's responsibility in this regard is to provide this guidance in a consistent fashion so that parties, whether employees or employers, can rely upon it in their participation in the employment process.
This is recognized by the courts, which provide deference to LIRC's decisions based upon the fact that the commission has developed expertise in interpreting the WFEA. One of the factors the courts examine in determining whether to accord deference to a LIRC decision, however, is the consistency with which LIRC has applied the law to a particular issue.
Without a change in the language of the WFEA, or a change in a judicial interpretation of it, the majority has decided to abandon one of LIRC's long-standing interpretations of it, and, in the process, to frustrate, without explanation, the commission's responsibility to be consistent.
Moreover, the purpose of WFEA's statute of limitations is to provide certainty and finality to the equal rights process.
Mack was aware of Dodge's salary, and its relationship to hers, at all times relevant here; was aware no later than January 2005 that she and Dodge were assigned the same job responsibilities and yet she was paid less; and, as early as 2004, complained to RLHD about the fact that she was paid less than Dodge. The actions taken by RLHD to set the pay of Mack, Dodge, Sterling, and Glinski, were clearly identifiable and separable employment decisions, which easily fit within the definition of discrete actions. Mack was aware of them, had concerns about them, and yet failed to take any action to address her concerns for years. The focus of Mack's complaint is the decision by RLHD, in January 2005, to continue to pay Dodge $56,000, even though he was no longer performing sales manager duties, and to continue her salary at $34,000; and the decision by RLHD in February 2006 to change Mack's salary to $24,000 plus commission, and Dodge's to $36,400 plus commission. And yet she did not file her equal pay complaint until March 23, 2009, more than three years later, and more than two years outside the actionable 300-day period. To permit her to prosecute her complaint even though its focus is a set of discrete employment actions which she waited years to address, and even though she had apparently formed the belief in 2004 that she was being discriminated against, renders the goal of finality meaningless.
In my opinion, Mack's charge of discrimination was untimely filed, and should be dismissed on that basis.
Discrimination-
Even if Mack's charge of discrimination had been timely filed, in my opinion, she failed to sustain her burden to prove that she was discriminated against on the basis of sex in regard to her compensation as she has alleged.
In evaluating complaints of sex discrimination in compensation under the Wisconsin Fair Employment Act, the commission has looked to the analysis followed under the federal Equal Pay Act. Under the Equal Pay Act analysis, a complainant must make a prima facie case by showing that the employer pays employees of different sexes differently for equal work on jobs the performance of which requires equal skill, effort and responsibility and which are performed under similar working conditions. If that showing is made, an employer is liable unless it proves that the pay differential is the result of: (a) a seniority system, (b) a merit system, (c) a system which measures earnings by quantity or quality of production, or (d) any factor other than sex. Bialk v. Aurora Health Care, ERD Case No. 200700068 (LIRC, Apr. 23, 2010).
In part because the provisions of the WFEA and the EPA are not identical, it is also appropriate to apply the conventional analysis on the issue of discrimination. Under the conventional analysis, the complainant must make a prima facie case by showing she was a qualified worker treated less favorably with respect to pay than workers of the other gender. The burden then shifts to the employer to articulate a legitimate nondiscriminatory reason for the pay difference. If such a reason is articulated, the complainant must prove by a preponderance of the evidence that the proffered nondiscriminatory reason was not the real reason for the discrimination in pay but merely a pretext for discrimination. Ibid.
It is implicit in the ALJ's decision, and conceded by the complainant, that there is no discrimination issue with respect to the decisions on Mack's starting salary, Dodge's starting salary, the 2004 change in Mack's salary, or Sterling's starting salary. Rather, the issue has to do with the decision by RLHD in January 2005 to continue Dodge's salary at $56,000, even though he and Mack, who was paid $34,000, would be performing essentially identical duties as salespersons; and the decision by RLHD in February 2006 to change Mack's salary to $24,000 plus commission, and Dodge's to $36,400 plus commission.
As of January 2005, Mack and Dodge were both working for RLHD as salespersons. Their jobs were the same; their pay was not. A prima facie case was established under the Equal Pay Act analysis.
RLHD relied on the "any factor other than sex" defense. It contended that after it gave up its plan to have Dodge be sales manager, it maintained Dodge's pay at a level higher than it would otherwise have been, because it felt obliged to do so given that it had induced him to come to RLHD with an offer of a high salary. It contended that it had originally made the decision on what to pay Dodge when he was hired because it wanted and planned to have him be its sales manager, and because it felt it was necessary to offer him a salary matching what he was earning at the job he was then working in at Rice Lake Weighing Systems.
The ALJ concluded that this was insufficient to establish the "any factor other than sex" defense. He noted that there was a lack of evidence that there had actually been any negotiation over Dodge's initial salary, and a lack of evidence that Dodge would not have accepted a lower salary. Primarily, though, he appears to have concluded that a desire to maintain an employee's previous salary after a position change could not be a "factor other than sex," as a matter of law.
I disagree.
Focusing solely on whether there was evidence of an ultimatum from Dodge as to an initial salary and negotiation over that amount, ignores other evidence that is equally relevant to the question of what drove RLHD's decision to initially offer Dodge the salary it did. As the ALJ found in his Findings of Fact, RLHD's owner Brekken and its general manager Miley, were aware that Dodge was then in a position paying him $56,000/year. Brekken specifically and directly testified at the hearing, that he made the decision on what pay to offer Dodge because he believed he had to match that salary in order to get Dodge to take the job with RLHD. He also testified that it was his view that:
[W]hen you're hiring someone away from another business, you have to at least match it. You're never going to get an employee if you don't, so you have to match that.
The question here is not whether Brekken was objectively correct in his belief about what salary offer it would take to get Dodge to leave his then-job and come to work for RLHD. The question is what actually drove Brekken's decision: what that decision was the result of. Even absent an ultimatum by Dodge that his then-salary had to be matched, and even absent negotiation between Dodge and Brekken on a starting salary, if Brekken's offer of a salary match actually resulted from Brekken's belief that he had to match Dodge's salary to get him, then it necessarily resulted from a factor other than sex. And, as noted above, the evidence is that Brekken's offer of a salary match did result from such a belief.
In addition, and as the ALJ himself found, RLHD's initial decision to offer Dodge a salary of $56,000/year was also a result of its desire and plan to have Dodge assume the role of sales manager, and its expectations that Dodge's management experience, his knowledge of the Harley Davidson culture, and his knowledge of the Rice Lake community, would be valuable in expanding the sales volume of the business. The ALJ clearly accepted that this was not a mere pretense on RLHD's part, but was rather a hope genuinely held at the time. I agree. The fact that RLHD turned out to be mistaken in its expectations as to what Dodge could do, and that its hope that he could assume the role of sales manager turned out to be in vain, does not change the fact that the initial salary offer was made based on those hopes and expectations.
For these reasons, in my opinion, the early 2004 decision to offer Dodge a salary of $56,000/year, for what was then expected to be work by him as a sales manager, was a result of factors other than sex.
This leaves the questions of whether RLHD's decision of January 2005 to keep Dodge at his then-salary of $56,000/year, and its subsequent decisions to keep him at higher salary levels than was being paid to Mack, were also the result of factors other than sex. As noted above, the contention primarily relied on by RLHD was that it maintained Dodge's salary at a higher level than that of the other salespersons because it felt an obligation to do so given that it had induced Dodge to leave a well-paying job to come to work for RLHD in a position in which Dodge proved unsuccessful and in which RLHD could not retain him.
It is first important to note that the reason the ALJ rejected this contention does not appear to have been that he did not accept its factual predicate. The ALJ recognized that it was RLHD's contention that Brekken genuinely felt an obligation to maintain Dodge's salary at a higher level than he would otherwise have felt it appropriate to pay him, because he (Brekken) had induced Dodge to come to RLHD with an offer of a high salary. The ALJ recognized that "[f]rom March 2007 on, the explanation for perpetuating a discrepancy in pay between Mack and Dodge was basically that the company felt obliged to Dodge for having made incorrect predictions about his performance." Significantly, the ALJ expressly found that explanation to be "plausible." I agree.
Rather, it appears that the ALJ rejected this contention because he believed that it was insufficient as a matter of law to meet RLHD's burden of showing that the difference between Dodge's and Mack's pay was because of "a factor other than sex." He cited Jones v. Westside-Urban Health Center, 760 F. Supp. 1575 (S.D. Ga. 1991) and Bullock v. Pizza Hut, Inc., 429 F. Supp. 424 (M.D. La. 1977), as standing for the proposition that clinging to a salary discrepancy when the underlying assumption on the basis of which it was initially created has been proved grossly incorrect, does not satisfy the burden to establish a factor other than sex. The ALJ also cited Irby v. Bittick, 44 F.3d 949, 955 (11th Cir., 1995), as standing for the proposition that although a prior salary in conjunction with other factors can justify a pay disparity, prior salary alone cannot justify a pay disparity, because if it did, it would tend to perpetuate the pay disparities the law was intended to address.
I maintain a different view.
Jones did not in fact directly hold that a desire to maintain a past salary level cannot be found to be a factor other than sex. It is important to note that in Jones the case was before the court on motions for summary judgment, so that the court was not dealing with facts as finally found after trial, but with dueling contentions. While the court described the situation as one in which an employer had hired one employee at a higher rate of pay because of an expectation of performance at a high level, and then stated that the employer "ha[d] offered no explanation for clinging to a salary discrepancy when their underlying assumption has been proved, as plaintiff alleges, grossly incorrect," 760 F. Supp at 1580, understanding the import of this depends on understanding the posture of the case. The operative decision of the court in the case was to deny the defendant's motion for summary judgment. The court said:
To conclude, the Court is not holding that sex discrimination played a factor in Westside's salary determination. The Court is only holding that defendants have not yet met their burden of persuading a fact finder that sex played no role. The Court simply cannot dispose of such a fact-specific and fact-contested claim at such an early stage in the litigation. Questions of material fact make summary judgment in favor of either party premature.
Thus, the court was not holding that an employer could not, as a matter of law, offer an explanation for retaining a salary discrepancy based on an earlier assumption that proved faulty. It was merely observing that the defendant there had not done so yet, and thus could not obtain summary judgment in its favor.
Bullock, too, is distinguishable. Although it did involve a comparator whose pay was retained at its previous level even after a "standardization" program reduced the pay for his job classification somewhat, this was not expressly relied on by the defendant as a "factor other than sex" and was not expressly rejected as such by the court.
Finally, while the 11th Circuit Court of Appeals did hold in Irby that "prior salary alone cannot justify pay disparity," there are other views. In the 7th Circuit, encompassing Wisconsin, the federal Court of Appeals has taken the view that a purpose of retaining a previous pay level may be considered a "factor other than sex". See, e.g., Covington v. Southern Illinois University, 816 F. 2d 317 (7th Cir. 1987), cert. denied, 484 U.S. 848, 98 L. Ed. 2d 101, 108 S. Ct. 146 (1987). In Covington, the employer had a policy of retaining the salary of employees who changed assignments. The 7th Circuit Court of Appeals expressly held that the retention policy qualified as a factor other than sex, stating:
We do not believe that the EPA precludes an employer from implementing a policy aimed at improving employee morale when there is no evidence that that policy is either discriminatorily applied or has a discriminatory effect.
816 F. 2d at 321-22.
The commission has previously been guided by the views of the 7th Circuit Court of Appeals in regard to the "any factor other than sex" standard in the Equal Pay Act. For example, in Bialk, supra, the commission noted this observation by the 7th Circuit in Dey v. Colt Construction Co., 28 F.3d 1446 (7th Cir. 1994):
We explained in Fallon [v. Illinois, 882 F.2d 1206 (7th Cir. 1989)] that the EPA's fourth affirmative defense "is a broad catch-all exception [that] embraces an almost limitless number of factors, so long as they do not involve sex." [Fallon], 882 F.2d at 1211; see also Patkus [v. Sangamon-Cass Consortium], 769 F.2d [1251] at 1261 [(7th Cir. 1985)]. The factor need not be "related to the requirements of the particular position in question, nor must it even be business-related." Fallon, 882 F.2d at 1211; Covington v. Southern Illinois Univ., 816 F.2d 317, 321-22 (7th Cir. [1987]), cert. denied, 484 U.S. 848, 98 L. Ed. 2d 101, 108 S. Ct. 146 (1987). Because it is not our province to second-guess the employer's business judgment, we ask only whether the factor is bona fide, whether it has been discriminatorily applied, and in some circumstances, whether it may have a discriminatory effect. Fallon, 882 F.2d at 1211.
Also in the Bialk decision, the commission noted this observation by the 7th Circuit in Wernsing v. Dept. of Human Services, 427 F.3d 466 (7th Cir. 2005):
Section 206(d) [of the Equal Pay Act] does not authorize federal courts to set their own standards of "acceptable" business practices. The statute asks whether the employer has a reason other than sex -- not whether it has a good reason. Accord, Taylor v. White, 321 F.3d 710, 719 (8th Cir. 2003)("the wisdom or reasonableness of the asserted defense" is irrelevant); Strecker v. Grand Forks County Social Service Bd., 640 F.2d 96 (8th Cir. 1980) (en banc). Congress has not authorized federal judges to serve as personnel managers for America's employers.
The majority here, the two members of which personally participated in the Bialk decision, have again offered no convincing explanation for now abandoning the approach they adopted in that decision of relying upon Covington and other decisions of the 7th Circuit Court of Appeals in interpreting the language of the federal Equal Pay Act. In my opinion, their attempt to distinguish Covington on its facts is not persuasive.
As with the majority's approach to the timeliness issue, by abandoning the holding in Bialk, supra., in which they both participated, the majority, without reasonable explanation, has added inconsistency and uncertainty to the development of the law under the equal pay provisions of the WFEA.
For the foregoing reasons, I believe that RLHD's explanation for why it maintained Dodge's salary at the level it did even after he was only a salesperson, was sufficient, both factually and legally, to establish that the disparity between Dodge's salary and Mack's was the result of "a factor other than sex." Therefore, considering the matter under an Equal Pay Act analysis, Mack did not establish that RLHD discriminated against her because of sex in regard to compensation.
In my opinion, Mack's claim of pay discrimination was also not established even if her case is considered under the conventional intentional discrimination analysis. Mack established a prima facie case by proving that she and Dodge were performing work that was equal or substantially similar. However, RLHD articulated a nondiscriminatory reason for its payment of a higher salary to Dodge, namely, that it felt an obligation to do so given that it had recruited Dodge and induced him to leave his then-job with an offer of a salary matching that which Dodge was earning at that job. The ALJ found this reason plausible and so do I. I am not persuaded that Mack sustained her burden to prove that this stated reason was a pretext to cover up an actual intent to discriminate against Mack because of her sex. "Pretext" means a dishonest explanation, a lie rather than an oddity or an error. Kulumani v. Blue Cross Blue Shield Assn., 224 F.3d 681, 685 (7th Cir. 2000), citing Reeves v. Sanderson Plumbing Products, Inc., 530 U.S. 133 (2000). Considering all of the evidence here - including the fact that RLHD employed another male as a salesperson (Glinski) and paid him exactly the same as Mack - I am not persuaded that the asserted explanation for Dodge's pay was dishonest or a lie. Therefore, in my opinion, intentional discrimination was not established.
In my opinion, the complainant in this matter has failed to sustain her burden to prove her allegations of sex discrimination in compensation.
_________________________________________________
Laurie R. McCallum, Commissioner
cc:
Attorney Michael D. Schwartz
Attorney Peter J. Fox
Appealed to Circuit Court. Affirmed November 12, 2013. Appealed to the Court of Appeals. Affirmed, Rice Lake Harley Davidson v. LIRC and Mack, 2014 WI App 104, 357 Wis. 2d 621, 855 N.W.2d 882; rev. denied, 01/13/2015.
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