Equal pay claims hinge on salaries, not commissions: 4th Circuit

A picture illustration shows U.S. 100-dollar bank notes taken in Tokyo August 2, 2011. REUTERS/Yuriko Nakao
  • Commissions and other merit-based pay don't matter in equal pay cases, appeals court says
  • Court revived claims that medical device firm underpaid female manager
  • Plaintiff was backed by EEOC

(Reuters) - A U.S. appeals court on Friday ruled that courts should only consider an employee's base salary or wage rate, and not additional compensation such as commissions, when analyzing claims of sex-based pay discrimination.

A three-judge panel of the 4th U.S. Circuit Court of Appeals revived a lawsuit against medical device maker Tactile Systems Technology by Tracy Sempowich, a former sales manager who claims she was paid less than a male colleague and transferred to make room for him to be promoted.

Sempowich was paid a lower salary than the male manager but her total pay was higher because she earned more commissions, according to court filings.

A North Carolina federal judge ruled that Sempowich could not state a claim under the federal Equal Pay Act, but the 4th Circuit on Friday said the judge was wrong to look at the managers' total compensation rather than their base salaries alone.

Sempowich was backed by the Equal Employment Opportunity Commission, which filed an amicus brief earlier this year and appeared at oral arguments. The EEOC argued a woman working more and earning greater commissions in order to achieve pay parity with a male colleague is an EPA violation.

Kathryn Abernethy of The Noble Law firm, who represents Sempowich, did not immediately respond to a request for comment. Nor did Minneapolis-based Tactile and its lawyers at Stinson.

The 4th Circuit panel did not cite any other appeals court decisions addressing the issue. But the EEOC in its brief said the 6th Circuit rejected a total-compensation standard for EPA claims in the 1983 case Bence v. Detroit Health.

The case is Sempowich v. Tactile Systems Technology, 4th U.S. Circuit Court of Appeals, No. 20-2245.

For Sempowich: Kathryn Abernethy of The Noble Law

For Tactile: Kristin Berger Parker of Stinson

For the EEOC: Julie Gantz

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Dan Wiessner (@danwiessner) reports on labor and employment and immigration law, including litigation and policy making. He can be reached at daniel.wiessner@thomsonreuters.com.