Royal Tire, Inc. Will Pay $182,500 to Female Manager Who Was Paid Far Less Than Male Predecessor

On August 4, 2014, the U.S. District Court for Minnesota issued a consent decree approving a $182,500 settlement for the Plaintiff in Equal Employment Opportunity Commission v. Royal Tire, Inc., and ordering changes to the company’s policies and practices regarding sex discrimination in pay.

Plaintiff-Intervenor Christine Fellman-Wolf was promoted to the position of Human Resources Director at Royal Tire, Inc. in January 2008. The male employee who held that position before her was paid $82,800 per year. According to company policy she should have been paid between $66,268 and $82,825, but they actually paid her only $47,164. In addition, Ms. Fellman-Wolf’s predecessor had also been treated as part of its Executive Team and awarded a bonus of $58,000 in 2010, which was a typical year. However, the position ceased to be part of the Executive Team as soon as Fellman-Wolf took over, so she received only the $7,000 bonus paid to members of the management team. In short, the EEOC argued, Ms. Fellman-Wolf suffered substantial monetary losses due to Royal Tire’s discriminatory treatment of her, in spite of her repeated requests for equal pay.

The EEOC alleged in its complaint that Royal Tire violated the Equal Pay Act of 1963 (“EPA”) and Title VII of the Civil Rights Act of 1964, both of which prohibit sex discrimination in pay. John C. Hendrickson, Regional Attorney for the EEOC’s Chicago Discrict, said “Too many employers appear to think that it’s enough just to let women in the door, and that no one is going to notice if the money in their pay envelope is less than men’s who are doing the same work. Bad guess. Employers should know that such pay discrimination is a violation of federal law under two statutes and that it’s a top law enforcement priority for the EEOC. That should be the takeaway for employers-and women-who have been watching this case.”

There is another takeaway from this case: from a legal standpoint it is fortuitous that Royal Tire maintains a relatively transparent compensation policy, at least internally, making it a relatively straightforward matter to compare Fellman-Wolf’s compensation relative to her male counterparts. In a vast majority of sex discrimination cases like this one, the companies are more secretive about their policies and openly threaten retaliation against employees who try to find out how their salaries compare to those of their coworkers. The Paycheck Fairness Act, if passed, would begin to address this problem, but it has been rejected by the U.S. Senate three times.

Under the terms of the settlement, Royal Tire will now be required i) to investigate, report, and correct current sex-based inequality in employees’ pay; ii) to require annual training for managers and employees regarding Title VII compliance; iii) to post notices for employees; iv) and to record all reports of sex discrimination by employees and report all such complaints to the EEOC.

If you believe an employer has discriminated against you based on your sex, please contact The Harman Firm, LLP.