Trellis Blog - Legal Analytics

Ripping Her Dollars in Half

Sep 18, 2019 1:22:12 PM / by Caitlin Davis

A Case of Gender Pay Discrimination in Silicon Valley

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As a Director of Sales Operations of Hewlett-Packard Enterprise Company (HPE), R. Ross regularly encountered financial and personnel documents, some of which revealed confidential details about the salaries of her male colleagues.

She began to notice a pattern.

It appeared as though the base pay of male employees consistently exceeded those of female employees who were hired at HPE at the same, a disparity that existed even when the female employees had more extensive work experience. This pattern quickly became personal. Her superiors had drawn similar conclusions about her own compensation, noting to Ross that her salary was less than her male colleagues—individuals who were performing similar work under similar conditions.

Turning Observations into Allegations

The information uncovered by Ross is at the heart of a putative class action filed against HPE in the Superior Court of Santa Clara County late last year, which alleges gender-based pay discrimination in violation of the California Equal Pay Act (EPA).

As a multinational corporation headquartered in Palo Alto, HPE is the next tech giant in line to face a lawsuit regarding gender discrimination. Other companies to face similar gender discrimination class claims include Disney, Oracle, Riot Video Games. Like most large technology companies, HPE is largely composed of men. Women make up only one-third of its workforce, filling 81 percent of its administrative support jobs, 17 percent of its technician jobs, 22 percent of its sales jobs, and only 17 percent of its management jobs. HPE has left its pay grades information opaque to employees in each of these categories, even instructing them “to keep their compensation to themselves” and not “compare their compensation to coworkers during salary negotiations.” Following amendments to the Equal Pay Act, companies can no longer prohibit employees from discussing information about their wages with co-workers.

The Demurrer: An Opportunity for Judicial Analytics to Impact Equal Pay Case Trajectories

The EPA, which was codified into Section 1197.5 of the California Labor Code, states:

An employer shall not pay any of its employees at wage rates less than the rates paid to employees of the opposite sex for substantially similar work, when viewed as a composite of skill, effort, and responsibility, and performed under similar working conditions, except where the employer demonstrates the wage differential is based upon one or more of the following factors: a seniority system; a merit system; a system that measures earnings by quantity or quality or production; a bona fide factor other than sex, such as education, training or experience.

In other words, once a plaintiff has made a prima facie showing in support of a gender-based pay discrimination claim, the burden then shifts to the employer, who must demonstrate that the wage differential is based on one of the exceptions listed above.

Before tackling this burden, HPE initially responded to the lawsuit with a demurrer to the complaint. According to HPE, the plaintiffs lacked a claim because they failed to identify a specific male “comparator.” Some federal courts have made this a requirement for a prima facie showing in gender-based pay discrimination cases, asserting that a plaintiff must demonstrate that she was paid lower wages than a male “comparator” for similar work. Some state courts have followed suit requiring comparator evidence be sufficiently alleged.

And, with this, HPE’s demurrer was sustained as to the plaintiff’s individual claims.

Contextualizing the Demurrer - Insights on Use of Early Dispositive Motions in Equal Pay Cases

From a judicial analytics perspective, this outcome is not particularly surprising. Within the Superior Court of Santa Clara County, demurrers have been sustained more often than they have been overruled. Not only that, but the presiding judge, the Hon. Brian C. Walsh, has tended to rule more favorable on demurrers than some of his peers, sustaining nearly 88 percent of recent demurrers filed within his court, while still granting leave to amend.

This, however, is only the beginning of the story. For HPE, the defendant’s demurrer was sustained, but with a caveat. The judge’s decision in this matter was partially informed by comparator requirements. Instead, it was largely informed by the plaintiffs’ counsel’s position that plaintiffs did not seek to pursue individual claims under the EPA in this matter. Rather, according to the plaintiffs, the purpose of this complaint was to set forth a pattern and practice of discrimination; it was never intended to present individual claims.

And thus, even with a sustained demurrer, the judge granted leave to amend, and the case will proceed. Judge Walsh concluded that the “plaintiffs are not required to identify specific comparators at the pleading stage, with regard to their individual or their class claims.” That is to say, a resolution to the comparator issue is not required—at least not yet. However, it is an issue that will need sufficient evidentiary support once the plaintiffs seek class certification.

There is much more to this case than the final outcome of the demurrer. Instead, the demurrer is a single step in a long journey towards resolution of a complex and evolving issue wherein judicial interpretation of the amended EPA is only beginning to weave its way through our lower courts.

Although the positive outcome on demurrer in this case didn’t shield the defendants from continued litigation, the successful use of offense as defense is an example of ways in which quantitative data can affect and transform the trajectory of a case. In this case, although the plaintiff’s were allowed to amend their pleadings, the defense got valuable insights into the judge’s thinking on “comparator” requirements in EPA cases.

Tracing the paths of judicial reasoning, is just as important as identifying their quantitative tendencies. Researching analysis in trial court rulings, such as the Hon. Walsh’s reasoned analysis on demurrer in Ross v. HPE, helps to clarify and contextualize the outcome in the instant matter, but more importantly, it provides valuable insights into judicial interpretation of the rapidly evolving Equal Pay landscape for litigators who find them themselves on either side of the EPA fence.

Written by Caitlin Davis

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