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Negotiating Salaries With Candidates? Ok, But Beware of Unlawful Pay Differential Claims


Thibodeaux-Woody v. Houston Community College - Fifth Circuit Court of Appeals


Facts:  Margaret Thibodeaux-Woody ("Woody") applied for a position at Houston Community College ("HCC") for a faculty position.  At the interview, after being told she would receive $41,615.00 in salary, Woody informed her interviewer that she would like to negotiate more.  However, the interviewer told her that was the salary offered was "set" and there would be no negotiations for a higher salary.  Woody accepted the position shortly afterward.

Around the same time Woody accepted the position, HCC offered another candidate, Alan Corder, a similar position as Woody's.  Corder was male.  However, the male candidate made a counteroffer on this salary for $60,000.00.  HCC came back with a counteroffer of $52,000.00 which the candidate accepted.  After Woody and Corder had worked in their positions for over a year, Woody learned that he made more than she did.  When Woody complained to HR, HR told her that nothing could be done. 

Woody subsequently filed a charge with the Equal Employment Opportunity Commission and then sued HCC for violating the Equal Pay Act ("EPA") and Title VII.  Both parties moved for summary judgment and the district court granted summary judgment in favor of HCC as to each of Woody's claims.

Holding:  The Fifth Circuit Court of Appeals reversed the lower court's granting of summary judgment in favor of HCC.  Note that HCC relied upon the defense that the pay differential was due to the candidates' different approaches to salary negotiation.  Remember, an employer is not liable under the EPA if it can show that a pay differential is based on "any other factor other than sex."

However, the Court held that if negotiation is not available to persons of both sexes, it cannot be a legitimate, non-discriminatory reason for a pay differential.  In this case, the Court noted that Woody had presented evidence that HCC had an informal policy that permitted negotiation.  As well, Woody had presented evidence that the HCC employee who interviewed her for the position knew or should have known about the policy before Woody accepted the job offer.  As a result of this evidence, the Court held that a genuine issue of material fact existed of unlawful pay differential, sufficient to defeat HCC's motion for summary judgment.  

Judgment:  The Fifth Circuit Court of Appeals reversed the lower court's granting of summary judgment in favor of HCC, as to Woody's Title VII and Equal Pay Act claims, on the grounds that there was a genuine issue of material fact of an unlawful pay differential for male and female candidates.

The Takeaway:  Oh boy, employers need to read this case and take note.  Relying upon a defense that the employer opened salary negotiations with a male candidate simply because he negotiated better than the female candidate is not going to hold much weight when a court looks at the big picture.  When there is evidence, as in this case, that the female candidate's interviewer became aware of the negotiations with the male candidate yet failed to do anything to correct his original comments that negotiations were not possible, that spells trouble.  

It is one thing to have a policy to not negotiate with candidates.  It is another thing to have a policy to allow negotiations with candidates.  Regardless of the employer's policy, stick to it!  When an employer says that salary negotiations are not allowed, then starts to negotiate a salary with another candidate (especially when it is different genders), that can lead to claims of alleged Title VII or Equal Pay Act violations.

Majority Opinion Judge:  Judge Haynes

Date:  November 14, 2014

Opinion:  http://cases.justia.com/federal/appellate-courts/ca5/13-20738/13-20738-2014-11-14.pdf?ts=1416445706

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