54 | Developments in Equal Pay Litigation 2026 ©2026 Seyfarth Shaw LLP But where the evidence clearly demonstrates a business-related justification for how discretion was applied in setting compensation within a banded compensation system, the use of that discretion should not preclude an employer from relying on that compensation system as a defense to an equal pay claim. For example, in Lochner v. Wisconsin Department of Agriculture, Trade, and Consumer Protection,383 a state civil service employee alleged she was discriminated against with respect to compensation because she was paid less than comparable male employees. The crux of her dispute was that some male employees with less seniority were hired at higher starting salaries under the state’s broadbanding pay structure, while she was repeatedly denied discretionary equity or retention adjustments to keep her salary on par with her peers.384 The state’s broadbanding program allowed state agencies some latitude with respect to setting salaries for new hires, rather than requiring a single, rigid minimum rate. The program was intended to give state agencies a better ability to attract new hires by paying them higher starting salaries based on factors such as, special need, private competition, and unique qualifications.385 The problem with this approach is that it can lead to “salary compression,” meaning that “newer staff are paid similar to or higher than long-term staff; and no mechanism within the state compensation system existed to go back and re-set the salaries of all employees in the class.”386 The state attempted to address this problem by allowing the payment of discretionary equity and retention adjustments. However, there was a finite amount of money allocated to such raises, and they were supposed to be granted based on seniority while considering the impact such awards may have on internal equity.387 This resulted in the plaintiff being denied many such awards, even though it meant her salary was falling below other, newer hires.388 Nevertheless the court found in favor of the employer, holding that it had met it. burden to show that broadbanding was required in order to meet its recruitment needs: “Even if the court were to engage in second-guessing with the benefit of hindsight, [employer’s] demonstrated success in recruiting and filling the open WMPSS positions with exceptionally qualified recruits would appear to have vindicated [employer’s] judgment.”389 Moreover, the court found that salary compression that resulted from broadbanding was not inherently discriminatory because senior male colleagues were impacted similarly or worse. “On this record, had [plaintiff] been a man and everything else remained the same, neither [plaintiff’s] nor the new hires’ starting salaries would have been different.”390 b. Economic and Market Justifications Economic concerns, such as competitive pressures to attract top talent, as well as financial difficulties and corporate cutbacks, are often relied upon as factors other than sex. For example, in Williams v. Alabama State University,391 the former Athletic Director for a university alleged that her former employer violated the federal and Alabama EPA when it hired her successor, a male, at a higher salary than she had received when she served in that role.392 The employer had listed the position with the same salary that plaintiff had been paid, but also mentioned that it was “negotiable.” The new Athletic Director demanded a higher salary plus incentives; the employer relented on the salary request and some, but not all, of the incentive requests.393 The employer argued that the incoming Athletic Director’s more advanced education (a Ph.D.) and experience justified the higher salary, while plaintiff argued those considerations were irrelevant to the position. 383 Lochner v. Wisc. Dep’t of Agric., Trade, and Consumer Prot., No. 19-cv-878-wmc, 2022 WL 3355262 (W.D. Wisc. Aug. 15, 2022). 384 Id. at *1. 385 Id. at *2. 386 Id. at *3. 387 Id. at *10. 388 Id. 389 Id. at *9. 390 Id. at *10. 391 Williams v. Ala. State Univ., No. 2:22-cv-48-ECM, 2023 WL 4632386 (M.D. Ala. July 19, 2023). 392 Id. at *2-3. 393 Id. at *3.
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