Employer Fails to Prove Good Reason for Unequal Pay

May 19, 2009 (PLANSPONSOR.com) - The 8th U.S. Circuit Court of Appeals has ruled that a Missouri employer did not adequately justify a significant pay differential between a female former human resources manager and her male replacement.

According to the court’s opinion, Leeson Electric Corporation first argued that because it negotiated a salary with Thomas C. Crosier and he “required an annual salary of $62,500” this proved the differential was based on a factor other than sex. However, the court said that since the new hire’s salary was in line with the market average for the position and Tammy Drum’s salary was well below market, Leeson must justify Drum’s salary and not Crosier’s.

Leeson asserted that Drum’s salary resulted from a hiring policy that set salaries slightly under industry averages, but Crosier was hired under a new “broad band salary structure,” the opinion said. Leeson tried to prove that “since 2005, every new HRM [human resource manager] hired from the outside under the new policy has been given a higher salary than that of the former HRM except one, who was given the same salary” by providing the names of the new and former HRMs, their genders, and their salaries.

But the court ruled that because Leeson did not provide their education, experience, or other qualifications, its data does not prove that the difference in salaries was due to a change in policy and not sex. The court declined to grant summary judgment to Leeson and remanded the case to district court for further proceedings.

According to the opinion, in 2005, Drum’s HRM salary was $41,548. She was promoted to another position with a salary of $45,600. Her male HRM replacement, Crosier, was hired from outside the company at an annual salary of $62,500.

Drum sued Leeson for sex discrimination in violation of the Equal Pay Act, Title VII, and the Missouri Human Rights Act.

The 8 th Circuit’s opinion is here .