No Equal Work Required: Second Circuit Rejects Strict Application of EPA Standard to Title VII Claim

The Second Circuit ruled this month in Lenzi v. Systemax, Inc. that “Title VII does not require a showing of unequal pay for equal work.”  Drawing a line between the Equal Pay Act (“EPA”) and Title VII, the court held that “all Title VII requires a plaintiff to prove is that her employer ‘discriminate[d] against [her] with respect to [her] compensation . . . because of [her] . . . sex.’”

Danielle Markou (née Lenzi) was terminated from Systemax in 2013, following an internal audit of an expense report she submitted for a business trip.  Prior to her termination, she raised several concerns, including about her salary.  She was promoted to Vice President of Risk Management in 2011, at which time she complained to the CFO and CEO that the raise she was given was insubstantial and that she was not being paid as much as her male peers.  Shortly thereafter, she received a more substantial salary increase, followed by additional increases in subsequent years.  However, Markou continued to raise the concern that she was underpaid according to market rates, while other male department heads were receiving salaries exceeding the corresponding market rates.  Markou was also allegedly subjected to various disparaging comments that the CFO (to whom she reported) made about women, including circulating emails with stereotypes and “fat pictures” of women, and commenting on the appearance of women and who he would have sex with at the company.  Following Markou’s termination, she brought suit, alleging, among other claims, compensation discrimination under Title VII.

The district court dismissed Markou’s Title VII compensation discrimination claim at summary judgment, based primarily on analyzing the male department heads’ jobs and determining that none was “substantially equal” to plaintiff’s job (as required under the EPA) and thus none provided an adequate comparator.  The district court also found that allegedly discriminatory comments by the CFO were “stray remarks” and disconnected from Markou’s compensation.

The Second Circuit vacated the judgment as to the Title VII claims, noting at the outset that the Supreme Court held in Washington v. Gunther, 452 U.S. 161 (1981), that Title VII does not allow an employer to “hire[] a woman for a unique position in the company,” for whom there are no comparators, but then pay her less than it would have “had she been male.”  Given the facts of the case, the Second Circuit held that it would be appropriate to consider an analysis of how other male department heads were paid relative to market rate.  It found that plaintiff’s proposed market rate analysis raised a question of fact, since it appeared to demonstrate that Markou received only 87.5% of the benchmark market rate, whereas the three male department heads received 104.8% or higher of the benchmark market rate.  The Second Circuit found that such differences—combined with the gender-based remarks Plaintiff alleged by her direct supervisor (a senior officer at the company)—could permit an inference of discrimination.  In sum, the Second Circuit held that “[t]aken together, the fact that Systemax paid Markou below the market rate for her position while paying her male peers above market rate, along with [the CFO]’s pervasive disparagement of women, are enough to carry Markou past the prima facie stage.”  Importantly, however, because the decision was at the summary judgment stage, the Second Circuit merely considered whether a genuine issue of fact was raised when construing all allegations and evidence in the light most favorable to plaintiff.  It made no ultimate determination as to whether plaintiff’s evidence was sufficient to prove her claims or carry her ultimate burden under Title VII.

The full ramification of this decision remains to be seen.  As the Second Circuit itself notes, its ruling is arguably consistent with the Supreme Court’s earlier determination in Gunther and thus may not break new legal ground.  Further, this case involved a unique set of claims that included both a lack of traditional comparators and pervasive derogatory comments about women by a senior company official to whom the plaintiff directly reported.  We will continue to monitor and report on developments in this area.