Opinion ID: 733284
Heading Depth: 4
Heading Rank: 2

Heading: Restriction Policy Defense

Text: 38 Although defendant argues that the restriction policy falls under the merit system defense, we think its alternative argument--that the policy creates a red-circle rate which results in a disparity based on a factor other than sex--is the correct one. The Act's regulations specify that a red-circle rate can be a valid factor other than sex. 29 C.F.R. § 1620.26 (1995). Generally defined, the term red-circle rate describes certain unusual, higher than normal, wage rates which are maintained for reasons unrelated to sex. Id. The legislative history of the Act indicates that Congress intended to include the practice of red circling as a § 206(d)(1)(iv) factor other than sex to explain a wage differential. See H.R.REP. NO. 309, 88th Cong., 1st Sess. 3 (1963), reprinted in 1963 U.S.C.C.A.N. 687, 689. 39 Defendant's evidence shows that as soon as the mistake was brought to its attention, it undertook to remedy the situation by restricting Esser's position in accordance with the rules of the Michigan Civil Service Commission. Defendant demonstrated that the restriction policy is sex-neutral and has been applied when the Civil Service has determined that a position has been over-allocated. Such a policy avoids demoralizing employees whose classifications have changed through no fault of their own. 40 Plaintiff argues that defendant's policy does not fall within the examples listed in the regulations. See 29 C.F.R. § 1620.26. However, the regulations merely provide illustrations of legitimately maintained red-circle rates. Red circling has yet to be defined in all of its manifestations. The flexibility of the red circling concept has been preserved in anticipation of the need to reconcile legitimate business interests with the Act's purpose. Gosa v. Bryce Hosp., 780 F.2d 917, 919 (11th Cir.1986). 41 This is not a situation where wage rate differentials have been or are being paid on the basis of sex to employees performing equal work, [and the] rates of the higher paid employees may not be 'red circled' in order to comply with the Act. 29 C.F.R. § 1620.26. Such a situation would indeed perpetuate the inequities that Congress intended the Act to cure. Here, however, the record establishes that the wage differential that existed before Esser's job was restricted was not the product of unlawful, sex-based discrimination. The evidence further shows that the restriction policy was not based on considerations of sex and was not discriminatory in application.