Quick Hits

  • The First Circuit ruled that the Maine Equal Pay Law does not require a showing  of discriminatory intent for allegations that an employer paid male and female employees differently for comparable work.
  • The First Circuit found the statute’s language to be “plain and unambiguous[,]” and rejected a request to send the question to the Maine high court.
  • This is the first federal appellate decision interpreting the Maine law on the question of intent.

The 2-1 panel decision in Mundell v. Acadia Hospital Corp. found in favor of a clinical psychologist who alleged a nonprofit hospital in Maine violated the MEPL when it paid male and female employees differently, and upheld an award of treble damages to the psychologist.

In so doing, the First Circuit found the MEPL’s language to be “plain and unambiguous[,]” and decided the matter without certifying the question of discriminatory intent to Maine’s highest court. This decision could have the effect of limiting the defenses available to employers facing MEPL claims.

The ruling affirmed a district court’s decision that the MEPL does not require a plaintiff to prove that an employer acted with discriminatory intent. It further clarified that defendants cannot assert a “catch-all affirmative defense” that pay differences are based on “any reasonable differentiation except difference in sex,” because the MEPL limits affirmative defenses to those alleging that differentials are based on seniority, merit, or shift time.

Background

Acadia Hospital employed Clare Mundell as one of a “pool” of five psychologists. According to the First Circuit decision, the hospital paid the two male psychologists at a rate of $95 per hour and $90 per hour, while the females were paid approximately $50 per hour.

Mundell brought suit in federal court alleging a violation of the MEPL, which prohibits discrimination “in the same establishment on the basis of sex” by paying male and female employees differently for “comparable work on jobs that have comparable requirements.” The MEPL further states that such pay differentials do not violate the law if they are tied to established seniority systems, merit increase systems, or differences in shift times, so long as those systems “do not discriminate on the basis of sex ….” The district court found that the hospital violated the MEPL and awarded Mundell treble damages.

On appeal to the First Circuit, the hospital contended that the district court misconstrued the MEPL and essentially imposed strict liability on the hospital by reading out of the statute “discriminate” and “on the basis of sex.” The hospital further argued that the ruling prohibited employers from pointing to legitimate business reasons other than sex that might explain differentials.

Discriminatory Intent and Legitimate Business Reasons

In upholding the district court’s decision, the First Circuit majority found that the language of the MEPL “provides no role for the employer’s motivation” as it “states, without qualification, that it is the unequal pay, not the reasons for it, that constitutes the impermissible discrimination.”

The majority further rejected arguments that would essentially require reading an intent element into the statute. The First Circuit reasoned that finding such an intent element would run counter to the statutory language because it would permit employers to assert “market factors” as a “legitimate defense to MEPL liability.” The court determined the MEPL specifically limits affirmative defenses to those enumerated in the statute (i.e., differentials based on seniority, merit, or shift time).

State Question

First Circuit Chief Judge David Barron dissented, arguing that the federal appellate court should have certified the question to the Maine high court, also known as the Law Court, over how the MEPL should be construed.

Specifically, Judge Barron pointed out that the panel majority interpreted the MEPL to use “discrimination on the basis of sex” in two “contradictory” ways: first, to describe an employer’s pay differentials as discriminatory, and second, to say “that an employer may make certain kinds of differential payments to employees of different sexes only when the differential is not the result of the employer’s intentional sex-based discrimination.”

Judge Barron contended that such an interpretation goes against standard statutory construction and should not have been made on the text alone without sending the question to the state court.

Next Steps

The ruling is significant in that it is the first federal appellate decision interpreting this issue under the MEPL and it could expand potential liability for employers by eliminating the ability to point to various legitimate business reasons or market factors to explain pay differentials, such as paying bonuses or premiums to attract talent to relocate from other geographic areas. The ruling comes after Maine Governor Janet Mills, in June 2023 during the pendency of the case, signed a law that expanded the MEPL to cover discrimination based on race, thereby prohibiting pay differentials between employees of different races in addition to employees of different sexes.

The hospital may still seek to have the decision reviewed by the full First Circuit en banc or by the Supreme Court of the United States, but neither appeal is guaranteed. In the meantime, employers in Maine may want to review their pay practices in light of the First Circuit’s interpretation of the MEPL.

Ogletree Deakins will continue to monitor developments and will provide updates on the Maine and Pay Equity blogs.

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Recent high-profile lawsuits and increased activity from state legislatures have thrust pay equity issues to the forefront for today’s employers. As the momentum of legislation, regulation, and corporate initiatives focused on identifying and correcting pay disparities continues to grow, our attorneys are ready to assist with the full spectrum of pay equity-related issues.

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