A federal judge in Phoenix recently ruled that Northern Arizona University (NAU) violated the civil rights of 40 white male faculty members by giving salary raises to female and minority professors, but not to them. The white male professors alleged the university violated Title VII of the Civil Rights Act of 1964 when it implemented a “pay equity” plan in 1993 that gave one-time pay increases that averaged $3,000 for minorities and $2,400 for women, while they received no increases. Judge Robert C. Broomfield of the U.S. District Court in Phoenix ordered the university to pay the white male faculty members $1.4 million in lost retroactive wage increases and interest.

Background: NAU was a federal contractor and maintained an affirmative action plan that required it to evaluate all employees’ compensation annually for purposes of gender and minority equity and remedy such disparities. As a result, the university commissioned Dr. Stephen Chambers, head of the university’s office of institutional research, to analyze faculty salaries. His report incorrectly concluded that a statistical difference existed with regard to gender and ethnic pay equity, and this difference could be eliminated with salary adjustments. The university used Chambers’ analysis and made increases of $207,613 to female and minority male faculty members whose salaries fell below the predicted salary of a similarly situated white male faculty member. No non-minority men were granted salary increases, even those with salaries below their predicted levels.

Rudebusch, along with a class of white male professors, sued NAU and the Arizona Board of Regents under Title VII (Rudebusch v. Hughes). A jury found in favor of NAU and the Regents, and Rudebusch’s claims were dismissed. On appeal, the Ninth Circuit Court of Appeals reinstated the claims of the white male faculty members in a 2002 ruling.

The court found the Chambers pay equity report to be inadequate for several reasons. First, the study indicated that the highest single pay disparity was a mere 2.0 standard deviations from the predicted salary. The court pointed out that Ninth Circuit precedent has, in a Title VII case, rejected the idea that standard deviations of 1.3 and 2.46 alone were sufficient to infer discrimination. This means NAU had adjusted salaries on the basis of race when the differences in pay were neither statistically significant nor conspicuously out of balance overall.

Second, the court criticized the Chambers Report because it failed to account for certain performance factors, such as academic credentials, performance, merit, teaching, etc. in its regression analysis. In addition, the court found problematic the fact that a very large percentage of white male faculty also made less than the predicted salary amount, yet they were not granted pay adjustments.

As a result, the Ninth Circuit sent the case back to the district court to decide whether the raises given to women and minorities were higher than necessary to make up for past inequities. District Court Judge Broomfield found that in awarding the raises, NAU had failed "to attain a balance and went beyond attaining a balance." He ruled that when experience, rank, discipline and tenure status were taken into account, male professors at the time made only $750 per year more than females, on average. White professors made only $87 more than the minority group. Judge Broomfield also said that in determining raises, the university had failed to consider doctoral status and performance.

Significance: This case is another reminder of the potential minefield employers face when they conduct compensation self-evaluations and make related pay adjustments. The OFCCP acknowledges these risks in their new voluntary self-evaluation guidelines and cites the Ninth Circuit opinion in Rudebusch v. Hughes. The lesson learned is that prudent contractors must invest in expert statistical and legal expertise to insure their compensation evaluations and pay adjustment methodology is sound.

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