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Ensuring Equal Pay for Women in Minnesota

EWALD V. ROYAL NORWEGIAN EMBASSY

Introduction

Since 1969, the Minnesota Human Rights Act (the Act) has afforded protection for women from being paid less than men absent a legitimate, non-discriminatory reason. Nonetheless, according to The status of Women & Girls in Minnesota data pay disparities continue to persist with women making an average of 80 cents to the dollar paid to men.

Accordingly, Minnesota took bold steps in 2014 in the Women"s Economic Security Act (WESA) to require large state contractors to certify to the Minnesota Department of Human Rights (MDHR) that they pay women and men equally for substantially equivalent work. Since August 2014, MDHR has certified over 200 businesses.

While large state contractors are required to obtain an equal pay certificate from MDHR, all employers in Minnesota are subject to liability under the Act for compensation systems that unlawfully discriminate against women.

The U.S. District Court for the State of Minnesota recently published an order in Ewald v. Royal Norwegian Embassy that provides guidance for Minnesota employers on equal pay compliance under the Act. See, Ewald v. Royal Norwegian Embassy, No. 11-CV-2116 SRN/SER, 2014 WL 7409565 (D. Minn. Dec. 31, 2014).

Ewald was awarded $170,594 in lost wages and an additional $100,000 for emotional distress suffered. Beyond damages, the Norwegian government will be forced to pay legal fees likely to reach nearly $2 million. The Star Tribune and other media reported on the case and its settlement.

Plaintiff"s Equal Pay Burden

Ewald reaffirms that equal pay claims under the Act are analyzed the same as claims under the federal Equal Pay Act (EPA). Id. at *62 (citing Price v. NSP Co., 664 F.3d 1186, 1191 (8th Cir.2011)). Accordingly, for an employee to prevail, she must initially establish that she was compensated less than a male employee for work requiring substantially equal skill, effort, and responsibility performed under similar working conditions. The determination of whether two positions are substantially equal requires a much deeper analysis than merely looking at the "bird"s eye view" of position titles and descriptions, but rather depends on the actual work required for each position. See, Ewald at *66.
If an employee successfully establishes less pay for equal work, the employer must meet the "heavy burden" in establishing one of four specific defenses that the pay differential is due to a:

  1. Seniority system;
  2. Merit system;
  3. Pay system based on quantity or quality of output; or
  4. "A disparity based on any other factor than sex." Id. at *70.

It is important to note that because claims of unequal pay under the Act and EPA are treated as strict liability claims, employers cannot avoid liability by claiming ignorance or nondiscriminatory intent. Id. at *62 (citing Bauer v. Curators of the Univ. of Mo., 680 F.3d 1043, 1045 (8th Cir.2012)).

Background Facts

In 2007, the Royal Norwegian Embassy began revamping its Minnesota-based Consulate to enhance economic cooperation between Norway and North America. In order to implement its desired changes, the Embassy hired its two most strategic employees:

  1. Innovation and Business Development Officer; and
  2. Higher Education and Research Officer.

In filling the two positions, the Embassy communicated that they would be "equal" and "parallel." See, Ewald at *14.

Ultimately, Ellen Ewald (female) was hired at a salary of just over $70,000 for the Higher Education and Research Officer position, and Anders Davidson (male) was hired at a salary of $100,000 as the Business Development Officer.

The Embassy could point to no seniority system, merit system, or output system to account for its pay discrepancy between the two strategic positions. The Embassy"s sole defense for the pay differential rested on the "any other factor than sex" defense. Specifically, the Embassy asserted that the differential was justified because of the male employee"s

  1. Marketplace value,
  2. Salary negotiations,
  3. Prior salary, and
  4. Status as a "breadwinner" for his household and the Embassy"s efforts to meet his demands.

Analysis

As a threshold matter, Ewald confirms that the "any other factor than sex" defense is subject to close scrutiny of the evidence presented and a narrow interpretation. Id. at *70 (citing Ryduchowski v. Port Auth. of N.Y. & N.J., 203 F.3d 135, 143 (2d Cir.2000)).

Ewald sounds the horn as relating to the depth and quality of research required to rely on the market value defense. The court chided the Embassy"s reliance on "deeply flawed" research based on invalid market comparisons and unfounded "common sense" notions of what backgrounds should entitle a higher pay scale. See, Ewald at *72.

The Ewald court further noted that the "marketplace value" defense can only be justified on the individual credentials and market value of the particular individuals being compared. The court rejected the Embassy"s defense in this regard as the facts established that the female employee herself had better credentials and market value than her male comparator.

Ewald also acknowledges that, while salary negotiations may serve as a valid defense to an equal pay claim, such considerations must be based on actual negotiation efforts made by the better-paid candidate. In Ewald, the Embassy could not rely on this defense as the evidence established that the male employee made no affirmative efforts to negotiate his salary.

As far as relying on an individual"s "breadwinner" status, Ewald reiterates that such a defense is to be "closely scrutinized" as it bears questionable relation to the requirements of any particular position. The court rejected this argument because there was no evidence that the Embassy inquired into whether Ewald was the breadwinner in her family. Id. at *74.

Lessons Learned

Ewald provides the following valuable lessons for employers:

  1. Equal Pay claims under the Act are analyzed the same as claims under the federal Equal Pay Act.
  2. Courts go beyond position titles to determine whether the jobs in question are substantially equal, and the actual work performed provides the most relevant evidence.
  3. The defense of "any other factor than sex" is subject to close scrutiny and narrow interpretation.
  4. Employers should be prepared to support defenses with documentation and evidence of consistent uniform application of compensation considerations.
  5. Failing to comply with the law can be quite costly as the Embassy may be liable for approximately $2 million in attorney"s fees in addition to damages for this dispute involving only two employees.
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