Wednesday, September 15, 2021

A Victory for App-Based Drivers: California Superior Court Strikes Down Proposition 22

A woman wearing a face masks sits in the driver's seat of a car, smiling and looking out the window.


In a momentous win for app-based drivers, the California Superior Court struck down Proposition 22 on August 20th, 2021. Gig companies such as Uber and Lyft spent an unprecedented $200,000,000+ to pass Proposition 22 in order to exempt themselves from treating app-based drivers as employees. Designating these workers as independent contractors allows companies like Uber and Lyft would to avoid their obligations to provide basic protections to their drivers, including a minimum wage, health insurance, contributions to workers compensation, and the ability to unionize. Bryan Schwartz Law has written before about these and other dangers of Prop 22: as independent contractors, drivers are paid an effective rate of about $5.64 per hour, well under the minimum wage, and would be denied an array of vital benefits and protections. 


Although proponents of Proposition 22 claimed that it would protect the independence of app-based drivers, the California Superior Court disagreed in Castellanos. The court even found that a provision of Proposition 22 that prohibited the Legislature from passing laws allowing app-based drivers to unionize only served to “protect the economic interests of the network companies in having a divided, ununionized workforce” and was completely unrelated to the stated goal of protecting drivers. The court found that this provision was therefore outside of the “single-scope” of Proposition 22; however, because the provision was severable, this finding did not impact the rest of the proposition.


Even more striking to the court was how Proposition 22 curtailed the ability of the Legislature to provide a robust system of workers’ compensation, an essential part of our social safety net. Our Legislature’s ability to protect injured workers through an expansive workers’ compensation program is so critical that the power is enshrined in the California Constitution and completely unlimited by any other provision of the Constitution. Only a Constitutional amendment can reduce workers’ right to receive worker compensation. Proposition 22’s attempt to create a statute that reduced the number of employees eligible for workers compensation was therefore unconstitutional. Unlike the provision limiting drivers’ ability to unionize, this provision limiting workers’ compensation was not severable, so the court’s ruling that this provision was unconstitutional meant that the entirety of Proposition 22 was rejected.


Before Proposition 22 was in place, California used the ABC test that was established by the 2018 California Supreme Court decision in Dynamex, and codified by AB5, to determine whether someone is an employee or an independent contractor. Under the ABC test, a worker is an independent contractor only if: 1) the worker is not controlled or directed by their employer in how they perform their work, 2) their work is outside the scope of the employer’s usual business, and 3) the worker is working in an independently established trade or business that matches their work for their employer. The employer must prove each of these elements before it can call a worker an independent contractor. The ABC test makes it much more difficult for employers to classify workers as independent contractors, which allows many more workers to receive the benefits and protections to which they are entitled. 


The decision in Castellanos vindicates the rights of hundreds of thousands of app-based drivers throughout California. This decision will likely be appealed, but it still represents an important step towards ensuring that app-based drivers receive the respect and protections that they deserve.

 

If you believe you have been misclassified as an independent contractor, please contact Bryan Schwartz Law.

Thursday, August 12, 2021

Rescission of Trump-Era Joint Employer Rule Strengthens Workers’ Rights










The federal government is scrapping a rule created under the Trump administration to narrow the protections of the Fair Labor Standards Act (“FLSA”) for workers with more than one employer. Because this Trump administration rule shrank the category of entities liable for wage violations, it made recovering earned wages more difficult for employees. Its implementation would have cost employees one billion dollars per year, according to the Economic Policy Institute. A federal court struck down a large portion of the rule last year in New York v. Scalia; now, the Department of Labor (“DOL”) has decided to rescind the rule entirely. The rescission will take effect on September 28, 2021. 

When multiple entities are considered joint employers, they can be held accountable for the same employee’s wages and other rights and benefits. For example, some workers hired through staffing agencies are jointly employed by the agency and the business at which they perform their duties. In such a case, both the agency and the other business is legally responsible for ensuring that the worker is appropriately compensated. The Trump-era “Joint Employer Status Under the Fair Labor Standards Act”' redefined the criteria for the joint employer classification, to make fewer employers liable. 


The rule broke from past DOL interpretations of the FLSA, as B
ryan Schwartz Law previously
wrote. It did away with the traditional “economic dependence” analysis in favor of an employer-favorable four-factor analysis of the entity’s control over the employee. These Trump administration-preferred factors were whether an entity

(i)                Hires or fires the employee;

(ii)              Supervises and controls the employee's work schedule or conditions of employment to a substantial degree;

(iii)           Determines the employee's rate and method of payment; or

(iv)            Maintains the employee's employment records.


The court in New York v. Scalia threw out most of this rule, siding with the seventeen states and the District of Columbia that challenged it. However, the court’s decision applied only to “vertical” joint employment—when an employee obtains work with an entity through a contractor, such as a staffing agency, and in similar situations. Meanwhile, the Trump administration’s rule continued to govern “horizontal” joint employer liability, which can apply when a worker splits time between two employers. 


The Biden administration’s DOL will eliminate the Trump DOL’s rule in its entirety, providing a clear set of uniform regulations. This rescission fuels advocates’ hopes that the Biden Administration will continue to reverse regressive Trump-era policies undermining workers’ rights. Bryan Schwartz Law has written about previous reversals. For instance, in May, the Biden Department of Labor prevented the Trump administration’s Independent Contractor Rule from going into effect. That rule would have made it easier for employers to misclassify workers as independent contractors, denying them the rights of employees under the FLSA. Biden also revoked a memo issued by Trump’s Justice Department attempting to limit the protections that the landmark decision Bostock v. Clayton County affords LGBTQ+ workers. 


If you have been denied wages, breaks, overtime pay, or any other workers’ rights, please contact Bryan Schwartz Law.

Thursday, July 29, 2021

Employees Win Victory in California Supreme Court Ruling on Meal and Rest Break Compensation










California law provides non-exempt employees with meal and rest periods. If an employer does not provide compliant meal or rest periods, employees are entitled to “one additional hour of pay at the employee’s regular rate of compensation.” (
Cal. Lab. Code Section 226.7(c).) But are forms of pay such as incentives or commissions included in this calculus, or is it limited to hourly pay? In a victory for employees, the California Supreme Court decided earlier this month that other non-discretionary pay must be included in calculating an employee’s regular rate.


The case was filed by Jessica Ferra, a former bartender at the Loews Hollywood Hotel. Ferra claimed Loews had underpaid her and a class of similarly-situated employees for non-compliant meal and rest breaks because she and the other class members’ incentive payments were excluded from the calculation of missed breaks premiums. These payments were part of the pay Ferra expected and Loews promised, so Ferra contended that they should be factored into the formula for the “regular rate of compensation” used to calculate missed break premiums. In Ferra v. Loews Hollywood Hotel, LLC (2021) No. S259172 , the California Supreme Court agreed. 

 

“Regular rate of compensation” versus “regular rate of pay”


The decision came down to whether the “regular rate of compensation” for meal and rest break premiums is calculated the same way as is the “regular rate of pay” for overtime purposes. Loews contended that the calculations were different because the legal phrases were different, arguing that when the legislature uses different terms, it intends their meaning to differ. The court was not persuaded, noting that “compensation” and “pay” are synonyms. Regardless, the key phrase was “regular rate,” which applies to the calculations for both overtime and meal and rest break premiums. The court reasoned that the “regular rate” calculation follows that of the federal Fair Labor Standards Act (“FLSA”), looking to California case law and legislative history. Therefore, the “regular rate of pay” under California law must follow the same method of calculation as the “regular rate” in the FLSA, both for overtime calculations and for meal and rest break premium calculations. The court further opined that even if “compensation” and “pay” had different meanings in a relevant way, compensation covers a broader range of employment benefits than pay, such as wages, commissions, medical benefits, and other benefits.


Retroactive application


Sweetening the victory for employees, the Court determined that its decision applies retroactively to violations that came before the July 15 decision. The Court reasoned that its ruling rested on statutory interpretation, which merely clarifies a statute’s meaning, rather than setting forth new law. The Court rejected Loews’s misguided argument that this decision would put employers on the hook for millions of dollars, pointing out that “it is not clear why we should favor the interest of employers in avoiding ‘millions’ in liability over the interest of employees in obtaining the ‘millions’ owed to them under the law.” Consequently, employees may have a legal claim for non-compliant meal and rest break premiums, even if they were denied compensation before Ferra was decided.  


If you believe you have been wrongly denied meal or rest breaks or premiums paid at the correct rate of pay, please contact Bryan Schwartz Law here.



Tuesday, June 22, 2021

Biden Administration Rescinds Trump-Era "Independent Contractor Rule"











It has been a rough year for workers, but recent developments in worker classification suggest better days are ahead. On May 5, 2021, the Department of Labor (“DOL”) rescinded Trump-era guidelines regarding independent contractor classification under the Fair Labor Standards Act (“FLSA”). The withdrawal came days before the Trump Administration’s “Independent Contractor Rule” would have gone into effect, essentially preserving the status quo with respect to federal independent contractor classification guidelines.

The FLSA does not cover independent contractors. As a result, they are not guaranteed minimum wage, overtime pay, unemployment insurance, workers’ compensation, and other vital protections. Given its dramatic implications, worker classification remains a hot-button political issue. Courts commonly apply the “economic realities” approach to assess worker classification, a multi-factor balancing test that evaluates whether a worker depends on their employer to make a living as a matter of economic reality. If the “totality of the circumstances” indicate that more factors than not show that worker is economically dependent on their employer, several federal circuit courts nationwide held that they are classified as an employee.

The Trump Administration adopted a pro-business position on worker classification in 2017. In keeping with this position, the DOL issued a final “Independent Contractor Rule” (Rule) on January 6, 2021. Bryan Schwartz Law blogged about this Rule previously. Although the Rule purported to reaffirm the extant “economic realities” test, in practice it abandoned longstanding judicial precedent in favor of a more business-friendly standard. The new guidelines would have made it easier for employers to classify workers as independent contractors by reducing the considerations traditionally included in the analysis. Instead of the multi-factor balancing test applied by courts for decades, the Rule prioritized two main factors, the worker’s level of control and opportunity for profit, above all other considerations. If analysis of these main factors proved inconclusive, the Rule then required employers to weigh three additional factors: (1) the level of skill required for the work, (2) the permanence of the working relationship between the worker and the employer, and (3) whether the work is integral to the employer’s overall business operation. This approach ultimately would have reduced the number of workers classified as employees under the FLSA, thereby depriving them of federal protections.

After the Trump Administration’s exit, the Biden Administration instructed its DOL to withdraw the “Independent Contractor Rule.”  The DOL offered three reasons to rescind the Rule: first, that it conflicted with the text, purpose, and judicial precedent interpreting the FLSA; second, that its hierarchy of main and guiding factors contravened the balancing approach used in the economic realities test; and third, that it restricted “the totality of the circumstances” traditionally analyzed when determining worker classification.

Workers’ rights advocates hope more administrative and legislative actions will follow. As part of his 2020 presidential campaign, Biden promised aggressive FLSA enforcement to crack down on employers who misclassify their workers as independent contractors. In addition, Biden committed to designing a federal standard for worker classification modeled after the “ABC test.” California’s AB-5 legislation is one such example of this test. To qualify as an independent contractor under the ABC test, that worker must (a) be free from the control and direction of the hiring entity, (b) perform work outside the usual course of the hiring entity’s business, and (c) engage in an independently established trade, occupation, or business. That worker may be classified as an independent contractor only if they satisfy all three prongs.

If you believe you have been misclassified as an independent contractor, contact Bryan Schwartz Law


Juneteenth: A Celebration and a Call to Action



What is Juneteenth and why is it a national holiday?

The oldest known celebration of the end of slavery in the U.S. became a national holiday last week. President Biden signed the Juneteenth National Independence Day Act on June 17, creating the first new federal holiday since Martin Luther King Jr. Day was established in 1983.

Juneteenth originated in Texas to mark Maj. Gen. Gordon Granger’s announcement on June 19, 1865, at Galveston, that formerly enslaved people were free under the law. This day is a celebration of freedom, but it also serves as a reminder for the country that just as the Emancipation Proclamation did not actually end slavery in 1863, Black Americans’ fight against oppression did not end with freedom from slavery. Instead, these moments mark turning points in a struggle that is ongoing today.

What does the Juneteenth National Independence Day Act really do?

This law doesn’t guarantee a day off for most workers. Though most federal employees got Friday, June 18 off this year (June 19 being a Saturday), and some states (though not California) also made the day a paid holiday for state employees, private employers can choose whether or not to cancel work.

Recognition of Juneteenth as a milestone of national importance is certainly cause for celebration, though advocates recognize it is only a step toward racial justice. Opal Lee, who helped lead the movement to make Juneteenth a federal holiday and was in attendance as Biden signed the bill, said, “We've got all of these disparities that we've got to address and I mean all of them. While we've got some momentum I hope we can get some of it done.”

What is the role of employment law in effecting change?

While legal action can address only a limited range of racism’s manifestations, it can serve as an important tool against certain forms of race-based harassment and discrimination that employees face at work. For example, a class represented by Bryan Schwartz Law is suing Tesla for the rampant racism its members have experienced as workers in the car manufacturer’s Fremont factory. On April 9 of this year, the court denied Tesla’s motion to end class claims, fueling hopes for the lawsuit’s future.

As an employment law firm, Bryan Schwartz Law is committed to fighting race-based discrimination and harassment in the workplace. If you are experiencing harms of these kinds and are seeking legal assistance, you can reach out to us here.






Wednesday, May 26, 2021

Accommodating the telework employee post-COVID: What was often thought to be an “unreasonable” accommodation request, turns out to be very reasonable after all




[This article by Bryan Schwartz and Cassidy Clark appeared first in the May 2021 edition of Plaintiff magazine.] 

Plaintiffs’ employment lawyers are wondering how our society’s response to COVID-19 will change our practice, permanently. We now know that we can take depositions, attend mediation, argue motions, and perform almost every other basic litigation activity remotely, without compromising the quality of our efforts.

These changes will also improve our clients’ footing when they seek work-from-home disability accommodations. Employers have long argued that physical attendance at work is an essential function of most jobs. Courts have frequently rejected workers’ requests for telework or work from home as reasonable accommodations for disabilities under the federal Americans with Disabilities Act (ADA) and the California Fair Employment and Housing Act (FEHA).

Courts and juries will never see telework the same again. Even as more Americans become vaccinated against COVID-19 and traditional offices resume in-person operations, plaintiffs’ attorneys will successfully argue that pre-COVID-19 precedents regarding telework are outdated, and that today, telework is a presumptively reasonable accommodation in most places of employment.

Reasonable accommodations and undue hardship 

Under the ADA and FEHA, employers must provide reasonable accommodations to qualified employees where such an accommodation does not cause the employer “undue hardship.” (42 U.S.C. § 12112(b)(5); Gov. Code § 12940, subd. (m).) The initial burden rests with the employee to show that she is a “qualified individual” under the statutes. A qualified individual is a person who has the requisite education and experience for a job, and can perform the essential functions of the job “with or without reasonable accommodation.” (42 U.S.C. § 12111(8); Gov. Code § 12940, subd. (a)(1).)

The statutes provide examples for reasonable accommodations such as “job restructuring, part-time or modified work schedules, reassignment to a vacant position, [and] acquisition or modification of equipment or devices.” (42 U.S.C. § 12111(9); Gov. Code, § 12926, subd. (p) (2).) California’s FEHA specifically lists, “Permitting an employee to work from home,” as an example of a reasonable accommodation. (Gov. Code, § 11065, subd. (p)(2)(L).) As for undue hardship, the statutes instruct courts and juries to consider the financial resources of the employer, the impact of the accommodation on the operations of the employer, and the type of work conducted by the employer. (42 U.S.C. § 12111(10)(B); Gov. Code, § 12926, subd. (u).) This minimal guidance has allowed courts to deny employees the opportunity for telework frequently.

Telework jurisprudence

In February 2019, Bloomberg Law conducted an analysis of ADA telework cases and found that employers won 70 percent of rulings over the prior two years regarding whether they could reject workers’ bids for telework as an accommodation for a disability. Many federal and California courts had adopted a “general rule – that regularly attending work on-site is essential to most jobs, especially the interactive ones.” (E.E.O.C. v. Ford Motor Co. (6th Cir. 2015) 782 F.3d 753, 761; see also EEOC v. Yellow Freight Sys., Inc. (7th Cir.2001) 253 F.3d 943, 948; Tyndall v. Nat’l Educ. Ctrs. (4th Cir. 1994) 31 F.3d 209, 213; Samper v. Providence St. Vincent Med. Ctr. (9th Cir. 2012) 675 F.3d 1233, 1237-38 (collecting cases); Mason v. Avaya Commc’ns, Inc. (10th Cir. 2004) 357 F.3d 1114, 1122-24 (same); McCormick v. Pub. Employees’ Ret. Sys. (2019) 41 Cal.App.5th 428, 441.) As a typical example, the Seventh Circuit opined that “most jobs require the kind of teamwork, personal interaction, and supervision that simply cannot be had in a home office situation.” (Rauen v. U.S. Tobacco Mfg. L.P. (7th Cir. 2003) 319 F.3d 891, 896.) One unpublished (thankfully) California Court of Appeal explained (citing federal authorities), “Except in the unusual case where an employee can perform all work-related duties at home, an employee who doesn’t come to work cannot perform any of his job functions, essential or otherwise.” (ital. in orig.) (Hernandez v. Pac. Bell Tel. Co. (Cal. Ct. App. Jan. 24, 2017) No. B260109, 2017 WL 345057, at *7 (quoting Samper v. Providence St. Vincent Med. Ctr., 675 F.3d 1233, 1239 (9th Cir. 2012).) 

On the other hand, even before COVID-19, some courts recognized remote work as a possible reasonable accommodation. (See Samper, Id. [“regular attendance is not necessary for all jobs”]; Waggoner v. Olin Corp. (7th Cir. 1999) 169 F.3d 481, 485 [“In some jobs . . . working at home for a time might be an option”]; Carr v. Reno, 23 F.3d 525, 530 (D.C. Cir. 1994) [“in appropriate cases, that section requires an agency to consider work at home, as well as reassignment in another position, as potential forms of accommodation”]; Ravel v. Hewlett-Packard Enter., Inc. (E.D. Cal. 2017) 228 F.Supp. 3d 1086, 1096 [holding “work from home” may be a reasonable accommodation under FEHA].)

An especially promising 2001 Ninth Circuit decision, Humphrey v. Memorial Hospitals Association, should guide plaintiffs’ attorneys in a post-COVID-19 landscape. (239 F.3d 1128, 1138 (9th Cir. 2001).) “Working at home is a reasonable accommodation when the essential functions of the position can be performed at home and a work-at-home arrangement would not cause undue hardship for the employer.” (Id. at 1136.) In Humphrey, the court reasoned that because other employees were allowed to work remotely for reasons other than disability, working in person may not have been an essential function of the job, and therefore, remote work should have been considered as an accommodation for the plaintiff-employee with a disability. (Id. at 1137; see also Hughes v. U.S. Foodservice, Inc. (9th Cir. 2006) 168 F. App’x 807, 808 [applying Humphrey to FEHA, finding the plaintiff “able to perform the essential functions of the new customer service position from home and that a work-at-home arrangement would not cause [defendant] undue hardship” under FEHA].)

Humphrey teaches us that in analysis of undue hardship and essential functions, courts consider whether the work has been successfully performed by other employees outside of the physical office. Now, following a year of widespread telework wherein most traditional office employers have successfully instituted some form of telework without sacrificing productivity, plaintiffs will be armed with abundant examples of successful telework arrangements. Many plaintiffs will be able to show that they themselves have successfully completed their jobs remotely.

Telework in a post-COVID-19 landscape

Workers’ advocates should start by reminding employers – and courts – that employers have the burden of establishing that the stated essential functions are, in fact, essential functions of the job. (See Bates v. United Parcel Serv., Inc. (9th Cir. 2007) 511 F.3d 974, 991 [“Although the plaintiff bears the ultimate burden of persuading the fact finder that he can perform the job’s essential functions ... an employer who disputes the plaintiff ’s claim that he can perform the essential functions must put forth evidence establishing those functions.”].) In other words, employers cannot simply state that physical attendance is an essential function of the job. Employers must offer evidence supporting their contention that physical attendance is essential. This will likely become more difficult as many employers have already instituted widespread telework accommodations for their entire workforces. 

We can already see a shift occurring. On September 16, 2020, a Massachusetts District Court accepted evidence of an organization’s COVID-19 work-from-home arrangement to support a plaintiff-employee’s argument that they should be allowed to telework as a reasonable accommodation for their disability going forward. (See Peeples v. Clinical Support Options, Inc. (D. Mass. 2020) 487 F.Supp.3d 56, 65.) In Peeples, the employer made the same argument made successfully by so many employers before, that it needed its employees physically in the office to ensure adequate supervision and client interaction. (Ibid.) However, here, the plaintiff presented evidence that they performed the same duties on-site that they had provided remotely during the organization’s initial COVID-19 response. (Ibid.) Thus, because the plaintiff had already demonstrated that they could perform the essential functions of the job remotely, the court held that the balance of hardship weighed in the plaintiff ’s favor. (Ibid.)

Whereas prior to COVID-19, courts were not persuaded that intangibles such as “teamwork, personal interaction, and supervision” could be accomplished through telework, the past year’s experience may persuade them otherwise. Before 2020, courts frequently repeated the Samper quote, that only in the “unusual case” could an employee effectively perform work-related duties at home. Now, it is much less “unusual” for people to work entirely from home. Additionally, prior to the pandemic, much of the legal profession, including the courts, had never experienced telework. Now, attorneys and courts know that remote work arrangements can be successful. 

Further, the widespread nature of telework during COVID-19 accelerated the technology available to employers to facilitate remote work. Prior to March 2020, most of the world had never heard of Zoom and many workplaces had never had video meetings. Now, these technologies are integral aspects of office jobs that courts and juries will take into account. 

EEOC guidance

In December, the EEOC, under the prior administration, issued guidance regarding telework in a post-COVID-19 America. (What You Should Know about COVID-19 and the ADA, the Rehabilitation Act, and Other EEO Laws. EEOC (last accessed April 26, 2021).) The Guidance emphasized that even if a workplace participated in telework during the COVID-19 pandemic, the employer will not be required to approve telework as a reasonable accommodation after the pandemic concludes. (Ibid.) However, the agency noted, “the period of providing telework because of the COVID-19 pandemic could serve as a trial period that showed whether or not this employee with a disability could satisfactorily perform all essential functions while working remotely.” (Ibid.)

Although this guidance is outdated because of the new administration, the suggested framework of viewing an employee’s telework during COVID-19 as a sort of “trial period,” may inform plaintiffs’ strategy going forward. As in Peeples, plaintiffs should consider using their own successful experience working remotely as evidence that they can perform the essential functions of their jobs while working from home.

Conclusion

For far too long, courts disfavored the prospect of telework because of traditional notions of productivity and workplace comradery, even though telework provides an avenue for people with disabilities to have successful careers that otherwise may not be available to them.

One silver lining of having experienced the COVID era may be that plaintiffs’ attorneys can move courts and juries toward presumed acceptance of work-from-home disability accommodations. We now know that employers have the capacity to make big changes to keep their workforce employed,  including shifting to telework, without losing productivity. What was previously thought of often as an “unreasonable” accommodation request, turns out to be very reasonable after all.

Bryan Schwartz is an Oakland-based practitioner representing workers in class, collective, and individual actions, including discrimination, wage/hour, whistleblower, and unique federal and public employee claims. He practices in state and federal trial and appeals courts, in arbitration, and before a variety of administrative agencies. Since 2010, he has represented a certified class of Foreign Service Officer candidates denied reasonable accommodations against the U.S. Department of State. He is past Chair of the 8,000+-member State Bar Labor and Employment Law Section (now called California Lawyers Association), and on the Board of Directors of Legal Aid at Work, the Foundation for Advocacy, Inclusion and Resources (FAIR), and is a former Board member of the California Employment Lawyers Association. He is a regular speaker, moderator, and conference co-chair on employment law issues, and a frequent contributor to Plaintiff magazine and other publications. www.BryanSchwartzLaw.com.

Cassidy Clark is the Joseph V. Kaplan Workers’ Rights Fellow at Bryan Schwartz Law. She represents workers in discrimination, retaliation, whistleblower, and wage/hour claims. Ms. Clark earned her undergraduate degree at Cornell University and her Juris Doctor from UC Berkeley School of Law.

Tuesday, April 27, 2021

Ninth Circuit Rejects University’s Latest Attempt to Scuttle Professor’s Equal Pay Case


By Jennifer Reisch

On Friday, April 23, 2021, the full 9th Circuit Court of Appeals issued an order in Freyd v. University of Oregon, No. 19-35428 (9th Cir. 2021) rejecting the University of Oregon’s petition for rehearing en banc, its latest attempt to prevent the pay equity claims of renown psychology professor Jennifer Freyd from going to trial.  The order leaves intact the March 15 decision reversing summary judgment on Professor Freyd’s Equal Pay Act and Title VII disparate impact claims, solidifying positive precedent for workers seeking fair pay across industries and occupations, where gender and race wage gaps remain the norm. 

The Freyd opinion and order denying en banc review came as welcome news for the plaintiff and supporters of gender pay equity, dozens of whom joined amicus briefs filed in support of her appeal back in 2019. It came on the heels of Equal Pay Day, a symbolic date that marks how far into this year women employed full-time had to work to earn what men were paid, on average, in 2020. The persistent gender wage gap costs women and families nearly $1 trillion dollars per year and hits particularly hard in a year that saw women being pushed out of the workforce in record numberslosing more than half of the jobs shed by the U.S. economy during the COVID pandemic. 

In 2021, women are still paid less that men in almost all occupations and pay gaps still grow as education levels increase, with the largest disparities among workers with advanced degrees  like Professor Freyd.

Freyd, a tenured professor of psychology and renowned trauma studies scholar, first discovered she was being paid significantly less than several of her male colleagues back in 2014. Men who held the same positions, in the same department, but had less seniority and were no more accomplished than she, were making tens of thousands of dollars more. And while Freyd’s pay disparity was particularly glaring, it was not unique: her own regression analysis and other studies conducted by the university and independent analysts found a “significant equity problem with respect to salaries at the full professor level” in her department. This disparity was driven primarily by the practice of giving “retention raises” to certain (disproportionately male) professors as an incentive to remain at the university, without making corresponding equity adjustments to the salaries of other (disproportionately female) faculty members, like Freyd, who did not seek outside offers to leverage higher pay. 

After attempting to resolve the issue internally over three years to no avail, Freyd filed suit in the U.S. District Court for the District of Oregon, asserting claims under the federal Equal Pay Act (EPA), Title VII of the Civil Rights Act, the U.S. and Oregon constitutions, and related state laws. The district court threw out all of her claims on summary judgment. In dismissing her EPA claim, Judge Michael McShane held that Freyd did not do “equal work” to her male comparators, even though they held the same position and rank, had the same core job functions and responsibilities, and were evaluated based on the same criteria. The university argued — and the district court agreed — that Freyd could not show she did “equal work” to the comparators because they conducted different types of research, ran different labs, obtained research grants from different sources, and sat on different university committees. 

In its March 2021 decision, the 9th Circuit reversed, rejecting the view that granular distinctions in the way individuals carry out particular segments of their job make it impossible to establish that they did substantially equal work (or “work of a comparable character,” under Oregon’s equal pay statute) as a matter of law, especially if they hold positions that share a “common core of tasks.” The court affirmed that under the EPA, the concept of “equal work” does not mean each aspect of the work must be “identical.”  The majority opinion (written by Judge Jay Bybee) underlined the importance of comparing the overall content of jobs, “not the individuals who hold the jobs” in determining whether a plaintiff could establish a prima facie case under the law.  Embracing arguments advanced by amici Equal Rights Advocates and other women’s and civil rights organizations, the majority noted that, “the granularity with which the dissent picks through the facts would gut the Equal Pay Act for all but the most perfunctory of tasks.” This would render the EPA a dead letter for huge swaths of the workforce, not just academics, ignoring the law’s “broadly remedial” purpose and frustrating its intent.

The decision reinforced the importance of closely scrutinizing market-based defenses to discriminatory pay practices precisely because they are so likely to perpetuate the very gender wage disparities that our equal pay laws are designed to address.

In reversing summary judgment on Freyd’s disparate impact claim under Title VII, the 9th Circuit recognized that she was not challenging the practice of giving retention raises, per se, but rather “the specific employment practice of awarding retention raises to some professors without increasing the salaries of other professors of comparable merit and seniority.” This important distinction was lost on the dissent (penned by Trump appointee Judge Lawrence VanDyke), which lamented that limiting the unequal application of retention raises will hinder universities’ ability to compete and cause “brain drain” — a position echoed by the university in its statement following the decision. The problem with this position—aside from its gender- and racially biased undertones about whose “brains” are worth retaining—is its implication that only through engaging in discriminatory employment practices can the university (and other employers) attract and retain the “best and brightest” and succeed financially. 

Fortunately, the majority recognized that disputed issues of fact remain about whether the university’s retention raise policy actually represents a “business necessity,” and if so, whether Freyd’s proposed alternative practice — of “evaluating the resulting salary disparity with others in the same rank with comparable merit and seniority, and giv[ing] affected individuals a raise” — would be equally effective in accomplishing the goal of retaining talented faculty, without having a discriminatory impact on women. This aspect of the decision serves as a reminder that there is nothing inevitable or natural about compensation structures and practices; they are devised by human beings -- and can be changed by human beings.

Finally, the court reversed the district court’s finding that the small size of the psychology department precluded Freyd from using statistical evidence to support her pay discrimination claim. This important aspect of the ruling affirms that courts must not deprive employees of Title VII protections simply because they work in a small employee pool.

All workers deserve to be paid fairly and valued fully. But closing the gender wage gap and ensuring fair and equal pay for all won’t happen by accident. Achieving these goals will require bold, persistent efforts by workers, like the brave employees who achieved remarkable settlements to advance equity and racial justice at Kaiser Permanente last week; by creative advocates, like those tenaciously fighting for equal pay at Oracle; and by employers who heed the call to act, in the words of Dr. Freyd, with institutional courage by taking proactive steps to make workplaces more diverse, equitable, and inclusive. 

----

Jennifer Reisch is Of Counsel to Bryan Schwartz Law and the former Legal Director of Equal Rights Advocates, who co-authored its amicus brief in the Freyd case.