500 Eagle Gate Tower
60 East South Temple
Salt Lake City, Utah 84111
Who can forget the elephant that never forgets—Horton, a character appearing in two of Dr. Seuss?? children??s books: Horton Hatches an Egg and Horton Hear a Who? The question in the case below is did Horton, the home-building company of the same name, forget about the Equal Pay Act and Title VII of the Civil Rights Act in unlawfully paying a female employee less wages than a male coworker who performed some of the same duties she had previously performed. Read on to find out.
In 1999, Diana Lewis began working as an accounting manager for D.R. Horton, Inc. (Horton), a home-building company with numerous divisions in the United States. From 2001 to 2005, Lewis held the title of Vice-President of Financial Operations/Division Controller for the New Mexico Division and was responsible for supervising the accounting department of that Division. She was also responsible for preparing various reports, including budget and profit projections.
In 2004, at the instruction of Horton??s CEO, who anticipated future growth, the New Mexico Division added two new positions: a Chief Financial Officer (CFO) and a Senior Vice-President of Land. Mark Ferguson, the New Mexico Division President, hired Dean Anderson for the CFO position. Anderson had 20 years of experience in the home-building industry, including 6 years of experience working as a CFO for two different home-building companies. After a period of negotiation, Ferguson agreed to pay Anderson a base salary of $120,000 a year, plus bonuses. In 2006, his total compensation was over $250,000.
Anderson assisted Ferguson with Horton??s business operations and advised him regarding construction, marketing, cost, infrastructure, and long-term planning. He also was responsible for three reports that Lewis was previously responsible for preparing. Preparing these reports took approximately 15 to 20 percent of his time. Except for the preparation of these reports, Lewis had the same job duties after Anderson was hired as she had before, including being responsible for accounting reporting and supervising the accounting staff. However, her title changed from Vice-President/Division Controller to simply Controller.
In April 2005, Lewis received a bonus of $1,000. She asked Anderson why her bonus was much less than usual. After meeting with Ferguson and Anderson, Ferguson told her that the bonus plan was always discretionary and only for specific fiscal years. He further explained that because Horton hired a CFO and she was no longer Vice President/Division Controller, she would not be on the bonus program after the first quarter. Ferguson offered her a reassignment to the Land department. After Lewis refused the reassignment, Ferguson sent her an email stating that the matter was closed and off the table. The next day, Lewis submitted a letter of resignation stating her belief that her job had been threatened if she did not accept a much lower position in the Land department, and that she no longer retained her position as Controller due to her exclusion from the bonus program. The following day, Ferguson sent an email to Horton??s Corporate account manager, stating that he did not intend to replace the Controller position because he felt that the Division was adequately staffed.
Lewis filed suit against Horton in federal district court, alleging salary discrimination on the basis of her gender in violation of the Equal Pay Act. She also alleged employment discrimination in violation of Title VII of the Civil Rights Act. The district court dismissed all of Lewis??s claims without a trial. Horton appealed this decision to the Tenth Circuit Court of Appeals, which covers Utah as well as New Mexico.
The Tenth Circuit applied a two-step analysis to Lewis?? salary discrimination claim under the Equal Pay Act. To prevail upon such a claim, an employee must first show that employees of the opposite sex were paid differently for performing substantially similar work. While the jobs do not have to be identical, they must involve substantially equal work. If the employee satisfies this first step, then the employer must show that the wage disparity was justified by one of four permissible reasons. Those reasons are where pay is made pursuant to (1) a seniority system, (2) a merit system, (3) a system which measures earnings by quantity or quality of production, or (4) a differential based on any other factor other than sex.
Although Anderson was compensated much more than Lewis, the court determined that Lewis had not adequately shown that she and Anderson performed substantially similar work. The court found that Anderson??s admission that he performed a lot of the responsibilities that Lewis had previously performed was insufficient to show that their work was substantially similar. Although Anderson became responsible for preparing the three reports that Lewis previously prepared, those reports only took 15 to 20 percent of his time. The majority of Anderson??s time was spent doing different job assignments than what Lewis did. The Controller position was responsible for managing many of the daily activities of the accounting team and generating task-oriented reports, whereas the CFO was engaged primarily in strategic business planning and forecasting. Thus, Lewis had not satisfied the first step necessary to show salary discrimination under the Equal Pay Act.
The court rejected various arguments Lewis raised in support of her salary discrimination claim. Lewis argued that, prior to Horton hiring Anderson, she met with the Division President daily to discuss not only financial, accounting, and planning issues, but also operational issues involving construction, marketing, land acquisition, and infrastructure. However, the court noted that there was no evidence detailing any of these meetings or how they compared to the CFO??s responsibilities. The court also rejected Lewis?? argument that Horton had not presented evidence showing the full extent of Anderson??s job duties, because it was incumbent upon Lewis to produce evidence adequately detailing the jobs at issue. The court, therefore, concluded that Lewis was not entitled to a trial on her claim under the Equal Pay Act.
Court Properly Did Not Allow Title VII Claim to Be Heard by Jury
For similar reasons, the Tenth Circuit upheld the district court??s decision to dismiss Lewis?? Title VII claims alleging pay discrimination, discriminatory demotion, and discriminatory discharge. To show a basic case of pay discrimination under Title VII, a female employee must show that she occupied a job similar to that of higher paid males. However, for the same reasons that the court concluded that Anderson??s and Lewis?? positions were not substantially similar under the Equal Pay Act, the court found that Lewis failed to satisfy this test.
Nevertheless, the court analyzed the case further to determine that even if Lewis had established a basic Title VII claim, she failed to show that Horton??s reasons for hiring Anderson and paying him a higher wage were simply a cover up for unlawful gender discrimination. Horton explained that Anderson was hired as CFO at a base salary of $120,000 because of negotiations and market conditions, as well as Anderson??s prior salary, experience, and skills. Lewis claimed that she was just as qualified as Anderson, if not more so, because she had worked as Vice-President of Horton for four years and had trained Anderson on how to prepare the three reports he took over from her. However, the court stated that generally an employee must go beyond her own opinions about her qualifications to show an overwhelming disparity in qualifications. Where Anderson had nearly twice as much experience in the home-building industry, having worked for 20 years compared to Lewis??s 10 years of experience, and where he had 6 years experience as a CFO, the court found that Lewis did not come close to showing that she was overwhelming more qualified than Anderson. Lewis also had no evidence to counter Horton??s explanation that Anderson??s salary was based on negotiations between Horton and Anderson, where Anderson asked for a salary greater than what Horton initially wanted to pay and they negotiated for over a month before reaching an agreement on salary. Thus, the district court had properly dismissed Lewis??s Title VII claim as well. Lewis v. D.R. Horton, Inc., 2010 U.S. App. LEXIS 6094 (10th Cir., March 24, 2010).
While employers may not face the tremendous responsibilities of protecting an egg before it hatches or saving a microscopic world from destruction that Horton faced in Dr. Seuss?? books, they do have considerable responsibilities to keep their businesses afloat while not violating the law. As with the elephant in the children??s stories, staying on task and remembering what??s at stake are important qualities for a happy ending.
First, failure to furnish equal pay for comparable work or like jobs is not actionable. Jobs must be substantially equal for the equal pay requirement of the Equal Pay Act to apply. Also, remember that the employee bears the burden of showing that the challenged positions are substantially equal and in detailing the responsibilities of each position. Additionally, companies with organized salary structures based on seniority, merit, quality or quantity of production, or some other factor other than sex will have the benefit of added protection against claims of salary discrimination even between substantially equal positions. Disparate wages resulting from salary negotiations and market conditions are fair game. Consequently, while it is good practice for employers to make sure that female employees are not underpaid (and conversely that male employees are not overpaid) for their positions and corresponding job responsibilities, disparities in salaries will often occur for legitimate reasons that are not discriminatory. Certainly, keeping good records as to how and why an employee is given a particular salary is essential to protect employers from gender-based claims involving unequal pay.
Q: I have an employee who has a legitimate prescription for Percocet, but it??s affecting her performance. Some days she appears high as a kite. We have another employee who operates a forklift and is also on Percocet. Is there anything we can do?
A: Presuming that you have job descriptions for both positions, you should have the employees take a copy of the job description to their doctors asking if they can perform the essential functions of their job with or without reasonable accommodation. In the request, you can explain the workplace behaviors which concern you. This may cause the doctor to modify the dosage or place restrictions on the use of Percocet.
Q: A terminated employee came in today, without notice, and asked for a copy of her employment file. I wasn??t sure what to copy for her. I haven’t had this request before, but I??ve heard that in some instances, there can be liability issues. I asked the secretary to tell her to come back tomorrow. I didn’t have time to drop everything and give her what she wanted. What is the best way to proceed?
A: Utah law does not require you to give employees a copy of their employment file. However, if they file a lawsuit against you, they certainly can get a copy, so I always encourage employers to respond positively to requests for employment files by terminated employees. If, on review of the file, you believe there are materials that should be blanked out to protect the privacy of other employees, you can certainly do that. Furthermore, you should boldly number the documents in the file (1 of 10, 2 of 10, etc.) so there is at least a chance that the employee won??t remove documents from the file before showing it to others.
Q: We??re having a problem with employees submitting timesheets late, which ends up costing us more because we have to process manual checks for them. We would like to implement a policy that allows us to charge a fee for late timesheet submission. I know you can??t withhold deductions from an employee’s pay unless the employee agrees to it in writing. Can I create a policy that all employees must agree to as a condition of employment that would allow us to collect a fee for a late timesheet submission?
A: Where are your supervisors? It should be up to the supervisor to make certain that employees complete their timesheets in a timely manner. Instead of taking deductions from an employee??s pay for not getting their timesheets in on time, I would make it the subject of disciplinary action. For example, you can suspend an employee for failing to turn in their timesheets in a timely manner. This should get their attention.
Q: Our company is considering adopting a policy allowing employees to donate some of their paid time off for the benefit of a coworker who is dealing with a catastrophic illness or injury. Are there any problems we should be aware of before implementing such a policy?
A: I am aware of companies that permit these policies. The only potential downside I can see is that an employee will feel the obligation to donate more time than they should and may themselves end up with a need for the time they have donated. Any employee who donates should be required to sign a certificate stating their acknowledgment that they are giving up their own paid time off, and you should check with your short or long-term disability carrier to see if there are any implications for employees who subsequently need to go on short or long-term disability. You should also check any tax implications with your accountant.
Eulogio Hinojos, a United States citizen, was a long-time employee of the Parks Department of Park City, Utah. During his years of employment, two of his supervisors reportedly had a habit of making crude and derogatory racial remarks about Hinojos and other Hispanic employees. These remarks disturbed Hinojos so personally and intensely that he sued Park City. Among other things, he claimed that Park City had violated Title VII by creating a hostile work environment. Unfortunately for Hinojos, he waited too long to initiate legal proceedings, making it impossible for him to pursue this claim. Read on to see how Park City may have barely escaped potential liability.
Hinojos was a nearly twenty-year employee of the Parks Department of Park City, Utah. After being fired from his employment on June 2, 2006, Hinojos sued Park City for, among other things: (1) violating Title VII by creating a hostile work environment based on race; (2) violating Title VII by retaliating against him; (3) violating his constitutional rights by creating a hostile work environment; and (4) violating the Family and Medical Leave Act (FMLA).
Hinojos is a U.S. citizen but was born in Mexico. In his complaint, Hinojos claimed that two of his supervisors, Troy Dayley and Pace Erickson, had repeatedly referred to him and other Hispanics as dumb Mexicans, f**ing Mexicans, dumb f**ing Mexicans, dumb Mexican piece of sh*t, wetbacks, spics, and Mexican backhoe. Furthermore, Hinojos claimed that Dayley and Erickson would not let Hispanic employees use the break room or drive certain vehicles, that Dayley and Erickson gave the physically demanding and/or dirty jobs to Hispanics, and that only Hispanic employees were required to be on-call on the weekends.
On February 28, 2006, Dayley and Erickson met with Hinojos regarding a complaint that another employee, Chris Angelovich, had made regarding Hinojos?? treatment of Angelovich??s teenage daughter. Angelovich had reported to Dayley and Erickson that Hinojos had made inappropriate sexual comments to and regarding his daughter. At this meeting, Hinojos was told that his job was not in jeopardy and that the meeting was simply to address Angelovich??s concerns.
The meeting upset Hinojos, however. He believed that he was being targeted because of his race because, during the meeting, Dayley and Erickson had used terms such as white girl, and had opined that the difficulties were possibly the result of cultural differences.
After the meeting, Hinojos went to Park City??s Human Resources department and asked it to conduct an investigation regarding the accusation against him. The Human Resources Director and Deputy Public Works Director both saw how agitated Hinojos was and determined that Hinojos should not work his scheduled evening shift. That evening, Hinojos went to the emergency room, suffering from anxiety, depression and emotional distress.
These symptoms prevented him from returning to work, and he was eventually admitted to the hospital??s psychiatric ward were he made threats to harm and kill two of his supervisors. Hinojos?? therapist contacted Park City about the threats.
Hinojos was placed on an FMLA leave of absence. During this leave, Park City told him that he would need to obtain a physician??s certification that he was fit to work before he could return. He never produced such a certificate, nor did he return to work. On June 2, 2006, more than twelve weeks after his FMLA leave began, Park City terminated Hinojos?? employment.
Hinojos?? first claim in his lawsuit was that Park City had created a racially hostile work environment. Park City relied upon the positive self-evaluations that Hinojos had submitted during his years of employment as evidence that Hinojos did not actually feel that the work environment was hostile.
The Federal District Court for Utah did not agree with Park City. The court said that Park City cannot plausibly expect that an employee will express concerns about discrimination on a self-evaluation form during a process in which the employee??s performance and pay is at stake. Furthermore, the court said that complaints of discrimination do not have to be in writing for an employer to be held liable under Title VII.
That being said, Hinojos?? claim for hostile work environment under Title VII ultimately failed because he waited too long to bring it. Before an employee can sue under Title VII, the complaining employee must first file a claim with the Equal Employment Opportunity Commission (either directly or through the Utah Antidiscrimination Division) within 300 days of the allegedly illegal conduct. Hinojos, however, did not file a claim with the EEOC until November 21, 2006.
When applied to Hinojos?? hostile work environment claim, the 300 day requirement meant that at least one of the acts creating the allegedly hostile work environment had to occur within the 300 days preceding November 21, 2006. Furthermore, Title VII requires that if an employee is relying upon actions that occurred outside of that 300-day window in his efforts to establish an ongoing hostile work environment, the action occurring within the 300-day time frame has to be the same type of action that occurred outside the 300-day time frame.
Unfortunately for Hinojos, although the derogatory language, if true, could have been sufficient to support his claim, there was no evidence showing that any of these statements had occurred during the 300-day time frame. Hinojos tried to argue that the meeting on February 28, 2006 was one of the acts creating the allegedly hostile work environment, but because that event was not of the same type or manner of activity that Hinojos?? hostile work environment claim was largely based upon?i.e., the derogatory ethnic slurs?the February 28, 2006 meeting was not an event that tended to show a hostile work environment.
Thus, because no event that tended to show a hostile work environment occurred within the 300 days preceding November 21, 2006, the court dismissed Hinojos?? Title VII hostile work environment claim as untimely.
Regarding Hinojos?? Title VII claim for retaliatory discharge, the court said there was no causal connection between Hinojos?? firing and his report to Park City??s Human Resources department. Hinojos?? failure to provide a doctor??s certification that he was fit to return to work was a reasonable requirement, given Hinojos?? threats to harm his supervisors, and Hinojos?? failure to provide such a document, together with Hinojos?? failure to return to work, was an appropriate reason to terminate his employment. Hinojos had presented no evidence to show otherwise.
h5. Claim that Park City had Violated the U.S. Constitution
In addition to his Title VII claims, Hinojos tried to argue that, because it was a governmental entity, Park City had violated the U.S. Constitution by creating a hostile work environment. To prove this claim, Hinojos had to show that the work environment was either: (1) the result of an official Park City policy favoring discrimination based on race and/or national origin; or (2) the result of a municipal custom.
Hinojos failed to show that the environment was the result of an official policy; indeed, there was evidence that Park City had an official policy forbidding such discrimination. Thus, Hinojos?? only hope was to show that the alleged discrimination was a municipal custom.
To show a municipal custom, Hinojos was required to show that the offending actions were continuing, persistent and widespread, and that the municipal employee whose actions were offensive had final policy making authority with respect to the allegedly offensive actions. To have this type of authority, a government employee must not be constrained by policies not of his own making, his decisions must not be subject to meaningful review, and the policy decision purportedly made [by the employee] was not within the realm of authority granted to the person.
Neither Erickson nor Dayley, however, fit this definition of having final policy making authority. Both were mid-level supervisors subject to review and evaluation. Thus, they did not have final policy making authority, and, therefore, their actions could not be seen as establishing an illegal custom of discrimination violating the U.S. Constitution.
Finally, the court rejected Hinojos?? argument that Park City had violated the FMLA. The FMLA requires employers not to interfere with an employee??s right to up to twelve weeks of FMLA leave, and to reinstatement following that leave.
Hinojos argued that Park City had violated the FMLA by calling him once while he was on leave, and also by not providing him with information regarding the investigation that he had requested, which Hinojos argued made it impossible for him to obtain the required certificate, which in turn resulted in a violation of his right to be reinstated.
The court decided that a single phone call during his leave did not constitute interference with Hinojos?? FMLA leave rights. Regarding his claim that the failure to provide him with information violated his reinstatement rights, the court said that no law supported his argument, and that Hinojos had adequate notice of the certificate requirement. It also concluded that there was evidence that Park City??s Human Resources Director had told Hinojos he should return to work once he was better.
In short, the court dismissed all of Hinojos?? claims against Park City. Hinojos v. Park City Municipal Corp., 2010 U.S. Dist. LEXIS 17907 (March 1, 2010.)
Although Park City escaped liability on all of Hinojos?? claims, it avoided liability on Hinojos?? Title VII hostile work environment claim simply because Hinojos waited too long. The derogatory slurs could have been enough to justify a jury trial on that claim if Hinojos had been able to show that any such comments were made within the required 300-day window. While fortuitous timing favored Park City in this respect, it would have been better if Park City had not had to rely on Hinojos?? failure to file in a timely manner. Thorough and consistent training regarding clear policies prohibiting racial discrimination, coupled with effective supervision, help employers avoid being dragged into court. While it is good to be lucky, it is best to never be sued in the first place.