Wernsing v. Department of Human Services
427 F.3d 466 (7th Cir. 2005)

Facts:

  • The Department had a practice of paying lateral entrants a salary that was at least as much as they were earning at their old job, plus a raise, if possible.
  • Jenny Wernsing was making $1,925 a month at her old job, and the Department gave her about a 30% raise to $2,478 a month as an “Internal Security Investigator II.”
  • She argued that this practice discriminated against women.

(1) The Department lacked an “acceptable business reason” for its approach; and
(2) Because all pay systems discriminate on account of sex, any use of prior pay to set salary must be discriminatory.

  • For example: Charles Bingaman, hired contemporaneously with Wernsing, had a prior salary of $3,399 a month. He received a monthly salary of $3,739 to start his new job, a 10% raise.
  • Bingaman and Wernsing do the same work, under the same working conditions.

Issue:
Does an employer’s practice of paying lateral transferees initial salary at least as much as salary they were earning in their old job, plus a raise if possible, discriminate on the basis of sex in violation of the Equal Pay Act?

Holding:
No.

Reasoning:

  • Section 206(d)(1) prohibits sex-based wage discrimination. However, 206(d)(1)(iv) exempts any pay differential “based on any other factor other than sex.”
    • Here, wages at one’s prior employer are a “factor other than sex.”
  • The court rejected Wernsing’s argument that the employer is required to show a “business reason” for the practice:
    • The Equal Pay Act deals exclusively with disparate treatment; it does not have a disparate-impact component.
  • The court also rejected Wernsing’s argument that market wages are all discriminatory and should be ignored (because women earn less than men from private employment):
    • “That many women spend more years in child-rearing than do men thus implies that women’s market wages will be lower on average, but such a difference does not show discrimination.

Rule: An employee’s prior wages are a “factor other than sex” that could be used to set pay consistently with the Equal Pay Act.

Rule: The Equal Pay Act deals exclusively with disparate treatment; it does not have a disparate-impact component.

  • Thus, an employer need not show “business necessity.”