Court Opinion

ID: 9477405
Source: CourtListenerOpinion
Date Created: 2023-08-05 06:23:05.182323+00
Date Added: 2024-06-11T17:45:52.194817
License: Public Domain

HILLMAN, District Judge,
dissenting.
Although I join in part I of the court’s opinion, I cannot agree that the “factor other than sex” defense authorizes the “head of household” classification at issue in this case. Consequently, I respectfully dissent.
Defendant has chosen to extend an employment benefit, spousal health coverage, to employees who earn more than their spouses while denying that benefit to employees who earn less than their spouses. Because this policy produces a disparate impact on women employees, defendant can avoid liability under Title VII only if defendant's reasons for adopting the policy fall within one of the defenses in the Act.
As a preliminary matter, I disagree with the court’s conclusion that considerations that would be compelling in evaluating discriminatory wage claims are not relevant to this court’s evaluation of plaintiffs’ claim of discriminatory fringe benefits. Title VII’s prohibition against compensation practices that discriminate against women employees does not vary with the type of compensation chosen by the employer. See Los Angeles Dept. of Water and Power v. Manhart, 435 U.S. 702, 712 n. 23, 98 S.Ct. 1370, 1377 n. 23, 55 L.Ed.2d 657 (1978) (“[T]he Bennett Amendment extends the [Equal Pay] Act’s four exceptions to all forms of ‘compensation’ covered by Title VIL”)
Because of its disparate impact on women employees, the spousal benefits policy in this case requires the same close judicial scrutiny that courts ordinarily apply to wage policies. The EEOC has taken this position in its interpretive rulings, which, although not controlling, are entitled to great weight. State of Ohio v. United States Dept. of Health & Human Serv., 761 F.2d 1187 (6th Cir.1985); Brennan v. Owensboro-Daviess County Hosp., 523 F.2d 1013, 1028 (6th Cir.1975), cert. denied, 425 U.S. 973, 96 S.Ct. 2170, 48 L.Ed.2d 796 (1976). See Guidelines on Discrimination Because of Sex, 29 C.F.R. § 1604.9(c) (1987); The Equal Pay Act: Interpretations, 29 C.F.R. § 1620.11(c) (1987) (“Where an employer conditions benefits available to employees on whether the employee is the ‘head of household’ or ‘principal wage earner’ in the family unit, the overall implementation of the plan will be closely scrutinized.”).
The examples of free parking and health clubs with which the court attempts to *255illustrate the difficulty of applying close scrutiny to fringe benefits policies are, I respectfully suggest, misplaced. I agree that those benefits are valuable to some employees and of no value to others. But this disparate impact results from each employee’s individual choice to decline the benefit, not from the employer’s choice to withhold it. The court’s examples would only be helpful to the inquiry in this case if defendant’s policy offered spousal coverage to all employees on equal terms and permitted those employees who could or would not use the coverage to decline.
I also cannot agree with the court that defendant’s policy is reasonably related to defendant’s rationales for adopting the head of household policy, or that those rationales are the type of “legitimate business reasons” that would bring the policy within the “factor other than sex” defense. The court suggests that defendant sought to accomplish three objectives by adopting its policy: “maximizing employee satisfaction,” “ ‘providing the greatest benefits for the people who needed the coverage,’ ” and “minimizing or controlling cost.”
Title VII does not sanction “employee satisfaction” as a justification for every differential increase in compensation without regard to the sex and race of the employees affected or the degree to which employee satisfaction is achieved. If it did, Penney could legally adopt any compensation policy that would “engender more employee satisfaction” in a small group of employees, even if that policy had a disparate impact on employees of one race or sex. Instead, the Act mandates that an employer’s policy adequately achieve its asserted business goal.
The majority holds that defendant’s policy of unequal compensation for employees is permissible under the “factor other than sex” defense because the policy is “reasonably related” to Penney’s asserted goal of maximizing employee satisfaction. Assuming, but not deciding, that Title VII would authorize Penney’s head of household policy if the relationship between the policy and employee satisfaction is merely reasonable, I disagree with the court’s assumption that defendant demonstrated this relationship. The percentage of female employees eligible for spousal benefits under defendant’s policy is much lower than of male employees. Yet, as of 1983, nearly three-fourths of the affected employees at Penney were female. In my view, a policy that extends benefits to so few employees is not reasonably related to Penney’s asserted justification of maximizing employee satisfaction. Furthermore, I cannot join the court in relying on defendant’s “belief” regarding the appropriateness or effectiveness of its policy. Penney presented no evidence that the satisfaction of its employees was increased, much less maximized. Perhaps Penney decided satisfying employees who are heads of households was more important to its business than satisfying employees who were not heads of households, but this supposition is unsupported in the record as well. To use the court’s phrase, if the “bang” defendant sought was maximum employee satisfaction, it appears to me that Penney got very little “bang” for its “buck.”
In addition, my objection to the court’s use of employee satisfaction as a legitimate business reason justifying unequal compensation under the “factor other than sex” defense is even more fundamental. Any compensation differential that has a positive effect on a majority of employees may be said to be reasonably related to employee satisfaction, regardless of whether the disadvantaged group of employees is made up of Blacks, women, or some other protected group. The court offers no guidance as to when employee satisfaction ceases to be a legitimate business reason and becomes a pretext for discrimination in compensation.
I now turn to defendant’s second rationale for its policy: to provide the greatest benefits for those employees who need coverage. Penney has withheld an employment benefit from a class of employees and their spouses because it unilaterally decided those employees and their spouses did not need the benefit. I submit this rationale for unequal compensation is based on defendant’s patriarchal, perceived social justification of what is in the best interest of its employees, rather than a “legitimate business reason.” Defendant presented no *256link between its effort to aid only those employees whom it has determined need aid and any legitimate business concern. Judge Posner, discussing defendant’s plan in the context of another case, suggested the absence of this connection:
[Plaintiff] can attack Penney’s spouse rule under a disparate-impact approach, but of course not all rules that have a disparate impact are unlawful; the defendant can rebut by showing a good business justification for the rule.... It may well be as Penney argues that usually the higher-paid spouse has the more generous provision for coverage of family members, and therefore that the only employees who need spouse coverage are those who earn more than their spouses. But to this the obvious replies ... are first, that under the Penney plans the employee’s dependents are covered regardless of the spouse’s income relative to the employee’s income, and second, that if it is true that the employee won’t want coverage, if his (or her) spouse has a higher income, Penney would not be affected by abrogating the head of household rule. No doubt some employees with higher-paid spouses would elect coverage, because the spouse’s benefit package might be less generous ... or the spouse might be worried about his own (or her own) job security. Why not let employees in those circumstances elect coverage? There may be answers to these questions, but it is not obvious what they are.
Colby v. J.C. Penney Co., Inc., 811 F.2d 1119, 1128 (7th Cir.1987).
As the Ninth Circuit stated in Kouba v. Allstate Ins. Co., 691 F.2d 873, 876 (9th Cir.1982), “The Equal Pay Act concerns business practices. It would be nonsensical to sanction the use of a factor that rests on some consideration unrelated to business.” I cannot agree with the majority that by adopting the Equal Pay Act or the Bennett Amendment, Congress intended to authorize discriminatory wage policies based on whatever conception of social justice an employer may choose to pursue.
Finally, the court recognizes defendant’s desire to minimize cost as an additional reason for withholding spousal benefits from employees who are not heads of households. Although cost is a concern in almost every business decision, cost alone is no defense once discrimination under Title VII has been shown. See Arizona Governing Committee for Tax Deferred Annuity and Deferred Compensation Plans v. Norris, 463 U.S. 1073, 1084 n. 14, 103 S.Ct. 3492, 3499 n. 14, 77 L.Ed.2d 1236 (1983); Newport News, 462 U.S. at 685 n. 26, 103 S.Ct. at 2632 n. 26; Manhart, 435 U.S. at 716-17 & n. 32, 98 S.Ct. at 1379-80 & n. 32. Withholding benefits from a group of employees is very often cheaper than extending the benefits equally to all. However, if the group disadvantaged by the policy is one protected by Title VII, the employer must demonstrate some additional business reason that adequately explains why the employer drew the line where it did. By endorsing cost minimization as a “legitimate business reason” that would bring a discriminatory policy within the “factor other than sex” defense, the court accomplishes what it claims to reject: it interprets Title VII to “facilitate an employer’s disguising all but the most blatent discrimination.” In my judgment, the majority expands the “factor other than sex” defense beyond its intended scope.
For these reasons, I would reverse the judgment of the court below and remand the case for further proceedings.