Opinion ID: 503098
Heading Depth: 1
Heading Rank: 2

Heading: GM's Affirmative Defense

Text: 9 Once the appellees established a prima facie case, the burden shifted to GM to prove that the difference in pay was justified by one of the four exceptions in the Equal Pay Act: (i) a seniority system; (ii) a merit system; (iii) a system which measures earnings by quantity or quality of production; or (iv) a differential based on any factor other than sex. 29 U.S.C.A. Sec. 206(d)(1); see Corning Glass Works, 417 U.S. at 196, 94 S.Ct. at 2229; Georgia Southwestern, 765 F.2d at 1036. 10 GM seeks to justify the pay disparity on the fourth ground--a factor other than sex. From 1977 to its first collective bargaining agreement with the United Auto Workers (UAW) in 1982, GM, in an attempt to maintain a nonunion Alabama production force, set hourly wages at levels of parity with the national UAW contract in other locations. 7 Prior to 1977, another hourly wage schedule applied to all hourly employees, regardless of gender. 11 In the present case, Nugent was hired off the street as a salaried follow-up. Glenn and Johns transferred from their salaried secretarial positions. In contrast, the male comparators transferred from hourly wage jobs. GM contends that to encourage people to move out of hourly wage jobs into salaried tracks, it maintains a longstanding, unwritten, corporate-wide policy against requiring an employee to take a cut in pay when transferring to salaried positions such as those at issue in the present case. GM thus argues that this policy constitutes a factor other than sex and legitimizes the pay disparity. 12 The district court found that the policy suffered from a fatal flaw: 13 [T]his so-called salary policy is in fact not a policy at all, but merely one aspect of a practice. In practice GM simply pays Follow-Ups what it takes to induce them to accept the employment. The court notes that historically companies may and do hire women at lower starting salaries. The court is thus unconvinced of GM's attempted justification for the pay disparity. The three female plaintiffs are being paid less money than their male counterparts for equal work without justification. 14 658 F.Supp. at 924. Consequently, the district court held that GM had failed to prove an affirmative defense justifying the pay disparity. 8 15 We affirm the district court. GM seeks to defend the pay disparity as a result of the market force theory. This Court and the Supreme Court have long rejected the market force theory as a factor other than sex: [T]he argument that supply and demand dictates that women qua women may be paid less is exactly the kind of evil that the [Equal Pay] Act was designed to eliminate, and has been rejected. Georgia Southwestern, 765 F.2d at 1037 (citing Corning Glass Works, 417 U.S. at 205, 94 S.Ct. at 2233 (The differential arose simply because men would not work at the low rates paid women inspectors, and it reflected a job market in which Corning could pay women less than men for the same work. That the company took advantage of such a situation may be understandable as a matter of economics, but its differential nevertheless became illegal once Congress enacted into law the principle of equal pay for equal work.); Brennan v. Victoria Bank & Trust Co., 493 F.2d 896, 902 (5th Cir.1974) (market force theory that a woman will work for less than a man is not a valid consideration under the Equal Pay Act); Brennan v. City Stores, Inc., 479 F.2d 235, 241 n. 12 (5th Cir.1973) (same); Hodgson v. Brookhaven General Hosp., 436 F.2d 719, 726 (5th Cir.1970) (same)). 16 GM argues that the legislative history supports its contention that prior salary can be a factor other than sex. Under the facts of the present case, GM's argument is without merit. The relevant legislative history provides: 17 Three specific exceptions and one broad general exception are also listed. It is the intent of this committee that any discrimination based upon any of these exceptions shall be exempted from the operation of this statute. As it is impossible to list each and every exception, the broad general exclusion has also been included. Thus, among other things, shift differentials, restrictions on or differences based on time of day worked, hours of work, lifting or moving heavy objects, differences based on experience, training, or ability would also be excluded. It also recognizes certain special circumstances, such as red circle rates. This term is borrowed from War Labor Board parlance and describes certain unusual, higher than normal wage rates which are maintained for many valid reasons. For instance, it is not uncommon for an employer who must reduce help in a skilled job to transfer employees to other less demanding jobs but to continue to pay them a premium rate in order to have them available when they are again needed for their former jobs. 18 H.R.Rep. No. 309, 88th Cong., 1st Sess. 3, reprinted in 1963 U.S.Code Cong. & Admin.News 687, 689. 19 The legislative history thus indicates that the factor other than sex exception applies when the disparity results from unique characteristics of the same job; from an individual's experience, training, or ability; or from special exigent circumstances connected with the business. The pay disparity at issue here does not result from any of these reasons. Consequently, resort to the legislative history does not support GM's position, but rather buttresses the district court's conclusion that a factor other than sex does not explain the pay disparity. 20 We recognize that our holding may contradict the Seventh Circuit's holding in Covington v. Southern Illinois University, 816 F.2d 317 (7th Cir.), cert. denied, --- U.S. ----, 108 S.Ct. 146, 98 L.Ed.2d 101 (1987). In Covington, the defendant university argued that its salary retention policy, its financial emergency, and the male comparator's education and experience justified the pay disparity. The Seventh Circuit agreed with the university, and examined whether the salary retention policy alone could be a factor other than sex. 21 The university had a sex-neutral policy of maintaining an employee's salary upon a change of assignment within the university. Covington argued that 22 factors other than sex for purposes of the [Equal Pay Act] ... are limited either to business-related reasons or, more narrowly, to factors that relate to the requirements of the job or to the individual's performance of that job. Covington contend[ed] that [the university]'s policy of retaining the salary of employees who change assignments does not fall within either of these categories. 23 816 F.2d at 321. The Seventh Circuit rejected Covington's argument. The flaws of the Covington decision are that the Seventh Circuit implicitly used the market force theory to justify the pay disparity and that the Seventh Circuit ignored congressional intent as to what is a factor other than sex. Consequently, we reject Covington because it ignores that prior salary alone cannot justify pay disparity. 9 III. Statute of Limitations 24 The applicable statute of limitations for the present case is provided in 29 U.S.C.A. Sec. 255(a): [E]very [cause of] action shall be forever barred unless commenced within two years after the cause of action accrued, except that a cause of action arising out of a willful violation may be commenced within three years after the cause of action accrued. The district court first determined that under the Jiffy June in the picture standard, 10 GM's actions were willful. 658 F.Supp. at 926. 25 GM does not contend that it met the Jiffy June in the picture standard, but rather argues that the Supreme Court disavowed that standard in Trans World Airlines, Inc. v. Thurston, 469 U.S. 111, 105 S.Ct. 613, 83 L.Ed.2d 523 (1985). Thurston addressed the definition of willful for liquidated damages under the Age Discrimination in Employment Act. The Supreme Court rejected the Jiffy June standard and held that a violation was willful if the employer either knew or showed reckless disregard for the matter of whether its conduct was prohibited by the ADEA. Id. at 128-29, 105 S.Ct. at 625. The Court, however, expressly did not determine if the in the picture standard was appropriate for statute of limitations purposes. Id. at 127-28, 105 S.Ct. at 624-25. 11 26 After the Supreme Court decided Thurston, however, this Court applied the Jiffy June standard to the precise issue presented by this appeal (i.e., the definition of willfulness for a statute of limitations connected with an Equal Pay Act claim). Georgia Southwestern, 765 F.2d at 1038-39. GM seeks to avoid Georgia Southwestern 's binding character by pointing out, and correctly so, that this Court did not discuss Thurston 's impact in that case. Even if the lack of discussion concerning Thurston would allow us to examine the controlling character of Georgia Southwestern, we would adhere to the Jiffy June standard. The district court persuasively noted that the liquidated damages provision is punitive in nature, and that the statute of limitations has a restitutionary function. 658 F.Supp. at 926 n. 1. Consequently, willful can have differing definitions based upon the underlying purpose of the provision. 12 27 The district court alternatively held that GM failed Thurston 's reckless disregard standard. 658 F.Supp. at 927. We affirm the district court on this alternative ground as well. GM showed reckless disregard because, as noted above, GM sought to rely on the market force theory, a theory long discredited by this Court and the Supreme Court. 13