Employers often decide to impose salary ranges or bands for similarly classified jobs. In many cases, senior employees in these job classifications exceed the maximum salary level for the band. While most employers grandfather employees' salaries in these situations, the maximum salary levels often prevents additional salary increases. In an unpublished decision released last month, the Sixth Circuit Court of Appeals rejected a claim that the salary band's impact on raises for older workers constituted age discrimination.
In Blandford v. Exxon Mobil Corp., the plaintiffs were older, experienced territory sales managers whose salaries exceeded the maximum level set by Exxon for that group of jobs. They contended that as a result of the banding, younger, less experienced employees received larger raises than the nominal ones given to employees with higher salaries. Because these higher salaries correlated with the employees' ages, the plaintiffs contended that the salary policy violated ADEA.
The Sixth Circuit disagreed, affirming summary judgment for Exxon. In terms of the disparate treatment claims, the court found that statements made by an HR executive that diminished the value of experience were not direct evidence of age discrimination, because that executive had no role in the establishment of the policy. On the plaintiffs' disparate impact claims, the Sixth Circuit concluded that even though the policy had a statistically negative impact on older managers, Exxon articulated legitimate business purposes for establishing the salary bands. The plaintiffs could not show a less discriminatory alternative that would have achieved the same goals.
Employers considering imposition of maximum salary levels for job categories should analyze the proposal to determine if it has a negative impact on older workers, who tend to have higher salaries based on experience and tenure with the company. If the new policy results in capped salaries or limited opportunities for increases, the employer should document and be able to explain the business reasons for the new system, along with its exploration of possible alternatives.