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Shultz v. First Victoria National Bank

United States Court of Appeals, Fifth Circuit
Jan 12, 1970
420 F.2d 648 (5th Cir. 1970)

Summary

In First Victoria National Bank, the training program "consisted of little more than the recognition of the ability of employees to work their way up the ranks * * * [although it] was supposed to provide rotation for the `trainee' through the various departments of the bank so [that] the employee would more fully comprehend the banks' operations."

Summary of this case from Hodgson v. Security National Bank of Sioux City

Opinion

Nos. 26960, 26971.

November 28, 1969. Rehearing Denied and Rehearing En Banc Denied January 12, 1970.

Charles Donahue, Solicitor of Labor, Robert E. Nagle, Anastasia T. Dunau, Attys., Bessie Margolin, Associate Solicitor, Edward D. Friedman, Harold C. Nystrom, U.S. Dept. of Labor, Washington, D.C., M.J. Parmenter, Regional Atty., James E. White, James F. Gruben, Dallas, Tex., for plaintiff-appellant.

Richard Henderson, Frank Guittard, Guittard, Henderson, Jones Lewis, Victoria, Tex., for defendant-appellee First Victoria National Bank.

William S. Fly, Victoria, Tex., Tracy Crawford, Tyler, Tex., for defendant-appellee American Bank of Commerce.

Before JOHN R. BROWN, Chief Judge, DYER, Circuit Judge, and HUNTER, District Judge.

Before JOHN R. BROWN, Chief Judge, DYER, Circuit Judge, and HUNTER, District Judge.


The Secretary of Labor brought these actions under one of the modern shields of women's rights — the Equal Pay Act of 1963, 29 U.S.C.A. § 206(d)(1). He was commissioned the champion of the female worker by the Act, which was enacted as an amendment to the Fair Labor Standards Act of 1938, and seeks to recover for the female employees of these two banks the difference between what they were paid and what male employees, allegedly doing equal work, received. And, in addition, he seeks to enjoin the banks from future discrimination.

The right of women to equal consideration at the hiring hall is protected by Title VII of the Civil Rights Act of 1964, 42 U.S.C.A. § 2000e et seq. See notes 22, 26, infra, and accompanying text.

"No employer having employees subject to any provisions of this section shall discriminate, within any establishment in which such employees are employed, between employees on the basis of sex by paying wages to employees in such establishment at a rate less than the rate at which he pays wages to employees of the opposite sex in such establishment for equal work on jobs the performance of which requires equal skill, effort, and responsibility, and which are performed under similar working conditions, except where such payment is made pursuant to (i) a seniority system; (ii) a merit system; (iii) a system which measures earnings by quantity or quality of production; or (iv) a differential based on any other factor other than sex: Provided, That an employer who is paying a wage rate differential in violation of this subsection shall not, in order to comply with the provisions of this subsection, reduce the wage rate of any employee."
29 U.S.C.A. § 206(d)(1).

29 U.S.C.A. § 201 et seq.
The authority of the Secretary to act on behalf of the workers is given by 29 U.S.C.A. § 206(d)(3), which provides:

"For purposes of administration and enforcement, any amounts owing to any employee which have been withheld in violation of this subsection shall be deemed to be unpaid minimum wages or unpaid overtime compensation under this chapter."

And, 29 U.S.C.A. § 216(c) empowers the Secretary to bring civil action on behalf of employees to recover such "minimum wages or unpaid overtime compensation."

These cases involve banks that are both located in Victoria, Texas, First Victoria National Bank and the American Bank of Commerce of Victoria. Both cases involve essentially the same factual pattern and the same legal questions. The cases were heard on consecutive days by the District Court and disposed of by that Court in a single memorandum opinion. They were argued together before us, each bank separately represented.

It is the Secretary's contention that these relatively small banks paid women bookkeepers and tellers substantially less than was paid to male employees performing the same work. He relies heavily on the actual pay differentials at both the First Victoria National Bank and the American Bank of

The following tables illustrate the comparative pay rates for the male and female employees in the First Victoria National Bank. The male employees are listed in italics. "P R" teller means "paying and receiving teller." Future references will be to the line and column.
Table A Employee and Item Date of Hiring Monthly Salary and Work Assignment 7/61 10/64 10/65 7/66 10/66

Commerce of Victoria to demonstrate this. The banks, however, argued that there has been no violation of the Equal Pay Act. First, they contended the inequality in pay was due to differences in the work performed. Second, they claimed that the differential was, to quote the statute, based on a "factor other than sex". (See note 2, supra.) This factor was "a bona fide training program" — a "factor other than sex" approved by the Secretary's Interpretative Bulletin. 29 C.F.R. § 800.148. The Secretary makes a triple response by

The comparative rates of pay for the American Bank of Commerce are set out in the following tables in which the male employees are listed in italics and future references will be to the line and column.
AMERICAN BANK OF COMMERCE
Table C Employee and Item Date of Hiring Monthly Salary and Work Assignments Held

(a) (b) (c) (d) 6/65 1/66 6/66 1/67

1. Edwin Wagner $325 325 350 350 (hired 5/65) worked as bookkeeper, drive-in teller, note teller

2. Earl Smith $ ___ 325 350 ___ (hired 10/65) worked as bookkeeper, drive-in teller, note teller

3. Sandra Hester $275 290 290 325 (hired 6/61) worked as bookkeeper, proof operator, drive-in teller

4. Velma Hennig $250 275 275 300 (hired 12/55 with worked as bookkeeper, paying and interruptions receiving teller, head teller totaling 3 years)

5. Lillian Berger $280 300 300 350 (hired 9/62 with worked as proof operator, bookkeeper, 3 years previous collection teller, note employment at teller, paying and receiving teller same bank)

6. Frances Steffens $245 270 270 300 (hired 9/63) worked as paying and receiving teller, collection teller, drive-in teller

7. Beatrice Ryback $240 255 255 270 (hired 10/63) worked as bookkeeper

8. Ruby Mallette $ ___ 217 230 270 (hired 11/65) worked as drive-in teller

9. Helen Billo $ ___ 217 230 245 (hired 10/65) worked as bookkeeper

10. Bernice Hoxworth $ ___ ___ ___ 250 (hired 10/66) worked as drive-in teller
11. Ferrell Matthews $ ___ 217 230 260 (hired 12/65) worked as bookkeeper and drive-in teller

The Secretary's Interpretative Bulletin provides:

Table D Employee and Item Date of Hiring Monthly Salary and Work Assignments Held

(a) (b) (c) (d) 6/64 1/65 1/66 6/66

1. Lester Dorton $325 350 400 425 (hired 2/63) worked as bookkeeper, drive-in teller, note teller, assistant cashier

2. Lillian Berger $265 280 300 300 (hired 9/62 with worked as proof operator, bookkeeper, 3 yrs. previous collection teller, note employment at teller, paying and receiving same bank) teller

3. Sandra Hester $260 275 290 290 (hired 6/61) worked as bookkeeper, proof operator, drive-in teller

4. Velma Hennig $250 250 275 275 (hired 12/55 worked as bookkeeper, paying and with interruptions receiving teller, head teller totaling 3 years)

5. Delores Watkins $325 340 355 355 (hired 4/56) worked as proof operator, collection teller, paying and receiving teller

6. Carrie Bergman $325 340 355 355 (hired 6/57) worked as bookkeeper, drive-in teller, paying and receiving teller

attempting to show that (1) the jobs performed by the employees were the same, (2) the alleged training program was not a "bona fide training program" within the meaning of the Department's Interpretative Bulletin nor (3) was it a "factor other than sex" within the meaning of the statutory exception.

The District Court apparently labored under the belief that the Secretary had the burden of proving that there were no applicable exceptions. This was clearly error. It has long been established that the employer has the burden of proving exemptions under the Fair Labor Standards Act. Arnold v. Ben Kanowsky, Inc., 1960,

The District Court found it unnecessary to pass on the similarity of the various jobs performed by the employees involved here since it found that the pay differential was based upon a "bona fide training program." Since this approach impliedly assumed that there was in fact unequal pay for equal work we need consider only whether the District Court was correct in its construction of the statute and of the Interpretative Bulletin. Since we believe that the training program found to exist and to be the basis of the unequal pay was neither a "bona fide training program" within the meaning of the Bulletin nor within the statutory exemption, we must reverse and remand the cases for the District Court to compare the jobs performed by the employees involved here and decide whether in fact under the appropriate burden of proof there was unequal pay for equal work.

The District Court in its memorandum opinion said:
Fact or fact-legal conclusions induced by erroneous legal standards do not have the F.R.Civ.P.

The training programs that the District Court found to exist and to be the justification for the unequal pay were informal, unwritten, and, if not imaginary, consisted of little more than the recognition of the ability of employees to work their way up the ranks. The training program was supposed to provide rotation for the "trainee" through the various departments of the bank so the employee would more fully comprehend the banks' operations. Such rotation of the male "trainees" was, however, not distinguishable from the normal course of employment for the female employees. The rotation of the "trainee" has apparently been unpredictable, sporadic, and unplanned. The time spent in each department varied widely and was in fact based not upon any concept of training but upon the banks' personnel needs.

After the investigation in this case was commenced by the Secretary, the American Bank of Commerce on Oct. 1, 1966 presented the Secretary with a formal, written program. The program, however, has not been put into effect.
For example, in the American Bank, Lillian Berger has been a proof operator, a bookkeeper, a paying and receiving teller, a collection teller and a note teller (Tables C D, Items 5 2 cols. a-d); Frances Steffens worked as a paying and receiving teller, a drive-in teller and a collection teller (Table C, Item 6, cols. a-d); Delores Watkins has been a proof operator, a paying and receiving teller and a collection teller (Table D, Item 5, cols. a-d); Sandra Hester has been a proof operator, a bookkeeper, and a drive-in teller (tables C D, Item 3, cols. a-d); Carrie Bergman has worked as a bookkeeper, a drive-in teller and a paying and receiving teller (Table D, Item 6, cols. a-d); and Velma Hennig has been a bookkeeper, a paying and receiving teller and a head teller (Tables C D, Item 4, cols. a-d). And, in the First Victoria Bank Florence Payne had worked as a bookkeeper, a paying and receiving teller and a mail teller (Table A, Item 5, col. a); Jean Ann Payne had worked as a bookkeeper, note teller, and savings teller (Table A, Item 8, cols. a-b); and all the other women cited in the above tables, except Evelyn Langston, had worked in at least two departments.
For example, the First Victoria Bank employee Gary Prai, one of the male "trainees" (Table A, Item 1, cols. a-d) worked as a paying and receiving teller for five years. As Table A indicates he received wages higher than the female employees in that department for the entire time. In addition, the American Bank of Commerce kept Lester Dorton "training" as a note teller for two years (Table D, Item 1, cols. a-d). These times should be compared with two and six months respectively, provided as training periods in these departments in American's formal plan. See note 11,

Moreover, there was no definite understanding or agreement between the banks and their male employees concerning a training program. Mr. Sheffield, Vice President of First Victoria in charge of personnel, testified that when he hired an employee he did not know if that employee would be "trained" to be an officer. Yet, the male employees were started at substantially higher salaries than female employees performing the same task. For example, Gary Prai started work for First Victoria in 1961 as a paying and receiving teller at $300.00 a month (Table A, Item 1, col. a), while LaRose Halsey, who had worked at the position since 1946 (Table A, Item 2, col. a), received only $290.00 per month.

Mr. Sheffield said:
The difference was exaggerated as time passed, although there is no indication that Prai was selected to train to be an officer. In 1965 he received $340 (Table A, Item 1, col. c) per month as a paying and receiving teller while Halsey received only $300 (Table A, Item 2, col. c).

Thus it is apparent that the training programs that the District Court found to exist and be the motivation for the discrimination were not specific and their metes and bounds were at best poorly surveyed. As structured and operated it was little more than a post-event justification for disparate pay to men and women from the commencement of employment up through advancement. The training was essentially the acquiring of skills, and experience and knowledge of the business through continued performance of regular tasks. In this sense every job in every type of business would be training, and nothing would be left for the operation of the Interpretative Bulletin Training program. This was not the Secretary's intention. In addition, the imprecision, in and of itself, of the Banks' training program is not in keeping with the Secretary's Interpretative Bulletin on training programs. (See note 7, supra).

This is reflected by this excerpt from the Victoria National Bank's

Moreover, such imprecise programs are outside the scope of the broad statutory exception — "a factor other than sex" — (See 29 U.S.C.A. § 206(d)(1) (iv)) because they are not in harmony with the Congressional purpose: The elimination of those subjective assumptions and traditional stereotyped misconceptions regarding the value of women's work. These programs are inconsistent since in actual operation the work and role of the male employees — "trainees" cannot be distinguished from the female workers who do the same jobs and who are likewise learning and growing in the business but without the title of trainee.

Representative Donahue speaking in behalf of this legislation characterized the need for the Equal Pay Act to eliminate these assumptions:

The Congressional purpose is clear whether divined by traditional doctrines of statutory construction or, more plausibly, the legislative history with respect to the statutory exception. This legislative intent is expressed by the report of the House committee that favorably reported the bill to the floor:

"This language recognizes that there are many factors which may be used to measure the relationships between jobs and which establish a valid basis for a difference in pay. These factors will be found in a majority of the job classification systems. Thus, it is anticipated that a bona fide job classification program that does not discriminate on the basis of sex will serve as a valid defense to a charge of discrimination.

Three specific exceptions and one broad general exception are also listed. It is the intent of this committee that any discrimination based upon any of these exceptions shall be exempted from the operation of this statute. As it is impossible to list each and every exception, the broad general exclusion has been also included. Thus, among other things, shift differentials, restrictions on or differences based on time of day worked, hours of work, lifting or moving heavy objects, differences based on experience, training, or ability would also be excluded. It also recognizes certain special circumstances, such as "red circle rates." This term is borrowed from War Labor Board parlance and describes certain unusual, higher than normal wage rates which are maintained for many valid reasons. For instance, it is not uncommon for an employer who must reduce help in a skilled job to transfer employees to other less demanding jobs but to continue to pay them a premium rate in order to have them available when they are again needed for their former jobs."

109 Cong.Rec. 9210.

Important as are the exceptions, to sustain these so-called training programs as a justification for disparate pay would mean that "the exception will swallow the rule." Weeks v. Southern Bell Tel. Tel. Co., 5 Cir., 1969, 408 F.2d 228, 235. And, this "rule" — equal pay for equal work — was not laid down simply out of concern about the injustice of discrimination, important as that was. It was also laid down out of concern about the economic and social consequences of disparate wages paid to a major portion of the nation's labor force. Such wages not only depressed the living standard of those who received them, they also depressed wages for all workers and particularly workers in certain industries.

The Chairman of the Senate Subcommittee that reported the bill said:
The purpose of the Act as set out in the statute is:
President Kennedy, in signing the Equal Pay Act, summarized the conditions which necessitated such a law, as follows:
During the debate of the bill on the House floor Congressman Ryan said that "wage discrimination based on sex should have no place in our American economic structure. As long as such discrimination exists, whether against men or women, the American economy will suffer." Statement by Rep. Ryan, 109 Cong.Rec. 9212. During the debate of the 1962 bill, which was substantially similar to the final legislation, it was said that men "workers as well as women workers, their families, and employers benefit from equal pay. Women benefit by receiving the rate for the job instead of a lower rate based on sex. Men benefit through increased job security since employers are discouraged from replacing them with lower paid women." Statement by Rep. Pucinski, 108 Cong.Rec. 14757.

Nor is any such swallowing of the "rule" compelled or suggested by our recent construction of that other rank in the phalanx of legislation designed to protect the employment rights of women — equal job opportunity — conferred by Title VII of the Civil Rights Act of 1964, 42 U.S.C.A. § 2000e et seq. In Phillips v. Martin Marietta Corp., we held that there was no discrimination based on sex when another criterion of employment, even one related as closely to sex as motherhood, is coupled with sex. 411 F.2d at 3-4. Here, however, under the training program relied upon as the justification for unequal pay there was lacking "any factor other than sex", since the work performed and the employment roles of the male and female employees were the same. Thus it was sex itself.

The basic prohibition in Title VII — § 703(a) of the Statute — provides:
5 Cir., 1969,

This is borne out also by the discriminatory manner in which these training programs were administered. Since the commencement of this proceeding both banks made female employees officers. Both banks thus obviously recognized that some of their women employees had the capacity and the drive to become officers. Both banks, nevertheless, included none of these women in the "training programs". Thus the system starts with discrimination on sex with no showing yet that any exception would justify it. This will be true whether this is an Equal Pay Act problem or a Title VII problem and whether the differential justification is based on the exceptions in the Equal Pay Act, the business-justification exception of § 703(e) of Title VII, 42 U.S.C.A. § 2000e-2(e), or concepts akin to Phillips v. Martin Marietta Corp., supra.

For example, the American Bank employed Lillian Berger for $300.00 per month in January, 1966. (Table C, Item 5, col. b). She had worked in five departments of the bank, the Vice President in charge of personnel testified she was considered officer material, and she had been with the bank since September 1962. Yet, Lester Dorton who was employed in February 1963 and had worked in four departments received $400.00 per month (Table D, Item 1, col. c).
The American Bank of Commerce had, at the time this case was tried, made Mrs. Jane Lassman an Assistant Cashier and indicated that Mrs. Lillian Berger would soon become an officer. The First Victoria Bank had two female officers, Miss McMullen and Mrs. Hildebrand, both Assistant Cashiers.
Although we need not here decide whether or to what extent, it appears that Title VII overlaps the coverage of the Equal Pay Act since both apply to disparate wages. Title VII § 703(a) in part provides that it is unlawful to discriminate with respect to "compensation, terms, conditions, or privileges of employment * * *" on the basis of sex.

These vague, almost illusory, training programs that were applied in a discriminatory manner may have been "a better reason" than the maleness or femaleness of employees for the inequality in pay. But, they were not "factors other than sex" within the meaning of the Equal Pay Act.

In its opinion the District Court said:

Reversed and remanded.

This record rules out the training program as an effective (iv) exception. On remand the Court, on this record or as appropriately amplified, will determine whether the differentials can be justified on the basis of job comparison or under (i) (ii) (iii) or otherwise under (iv) as "any factor other than sex".

FIRST VICTORIA NATIONAL BANK (a) (b) (c) (d) (e) 1. Gary Prai $300 325 340 340 350 hired 6/58 (pr (pr (pr (note (drive-in teller teller) teller) teller teller) since since 1/61) 1/66) 2. LaRose Halsey $290 290 300 300 300 hired 1/46 (pr (pr (pr (pr (pr teller teller) teller) teller) teller) since 4/46) 3. Rubye O'Neill $270 290 305 305 305 hired 5/53 (pr (pr (pr (pr (pr teller teller) teller) teller) teller) since 9/54) 4. Patsy Sanders $250 270 285 285 285 hired 11/55 (pr (pr (pr (pr (pr teller teller) teller) teller) teller) since 1/57) 5. Florence Payne $270 300 315 325 325 hired 8/53 (mail (mail (mail (mail (mail teller teller) teller) teller) teller) since 1/59) 6. Vivian Campbell $260 280 290 300 300 hired 8/58 (mail (note (note (note (note teller teller) teller) teller) teller) since 1/59) 7. Elaine Shutter $265 285 295 295 305 hired 4/49 (exch. (exch. (exch. (exch. (exch. with interruptions teller teller) teller) teller) teller) totalling since 2-1/2 years 1/61) 8. Jean Ann Payne $260 290 305 315 315 hired 2/51 (note (sav. (sav. (sav. (sav. with interruptions teller teller teller) teller) teller) totalling since since 7 years 10/57) 1/64)
Table B Employee and Item Date of Hiring 4/65 7/65 1/66 4/66 7/66 10/66 James Novak (a) (b) (c) (d) (e) (f) 1. 240 250 275 285 300 315 hired 12/64 (pr (pr (comm. (comm. (comm. (comm. teller teller) teller teller) teller) teller) since since 1/65) 1/66) 2. Evelyn Langston $230 240 250 250 260 260 hired 12/64 (pr (pr (pr (pr (pr (pr teller teller) teller) teller) teller) teller) since 12/64) 3. Sarah Gastings $230 240 250 250 260 270 hired 1/65 (pr (pr (pr (pr (pr (pr teller teller) teller) teller) teller) teller) since 4/65) 4. Jalayne Alkak $230 230 240 250 250 260 hired 10/64 (book-keeper (book-keeper) (book-keeper) (pr (pr (pr since teller) teller) teller) 1/65)

The comparative rates of pay for the American Bank of Commerce are set out in the following tables in which the male employees are listed in italics and future references will be to the line and column.
AMERICAN BANK OF COMMERCE
Table C Employee and Item Date of Hiring Monthly Salary and Work Assignments Held

(a) (b) (c) (d) 6/65 1/66 6/66 1/67

1. Edwin Wagner $325 325 350 350 (hired 5/65) worked as bookkeeper, drive-in teller, note teller

2. Earl Smith $ ___ 325 350 ___ (hired 10/65) worked as bookkeeper, drive-in teller, note teller

3. Sandra Hester $275 290 290 325 (hired 6/61) worked as bookkeeper, proof operator, drive-in teller

4. Velma Hennig $250 275 275 300 (hired 12/55 with worked as bookkeeper, paying and interruptions receiving teller, head teller totaling 3 years)

5. Lillian Berger $280 300 300 350 (hired 9/62 with worked as proof operator, bookkeeper, 3 years previous collection teller, note employment at teller, paying and receiving teller same bank)

6. Frances Steffens $245 270 270 300 (hired 9/63) worked as paying and receiving teller, collection teller, drive-in teller

7. Beatrice Ryback $240 255 255 270 (hired 10/63) worked as bookkeeper

8. Ruby Mallette $ ___ 217 230 270 (hired 11/65) worked as drive-in teller

9. Helen Billo $ ___ 217 230 245 (hired 10/65) worked as bookkeeper

10. Bernice Hoxworth $ ___ ___ ___ 250 (hired 10/66) worked as drive-in teller
11. Ferrell Matthews $ ___ 217 230 260 (hired 12/65) worked as bookkeeper and drive-in teller


ON PETITIONS FOR REHEARING AND PETITIONS FOR REHEARING EN BANC


The Petitions for Rehearing are denied and no member of this panel nor Judge in regular active service on the Court having requested that the Court be polled on rehearing en banc, (Rule 35 Federal Rules of Appellate Procedure; Local Fifth Circuit Rule 12) the Petitions for Rehearing En Banc are denied.


Summaries of

Shultz v. First Victoria National Bank

United States Court of Appeals, Fifth Circuit
Jan 12, 1970
420 F.2d 648 (5th Cir. 1970)

In First Victoria National Bank, the training program "consisted of little more than the recognition of the ability of employees to work their way up the ranks * * * [although it] was supposed to provide rotation for the `trainee' through the various departments of the bank so [that] the employee would more fully comprehend the banks' operations."

Summary of this case from Hodgson v. Security National Bank of Sioux City

discussing market-correcting purposes of Equal Pay Act and concluding that “[t]he Congressional purpose is clear whether divined by traditional doctrines of statutory construction or, more plausibly, the legislative history with respect to the statutory exception”

Summary of this case from Sauceda v. Univ. of Tex. at Brownsville

In Schultz v. First Victoria Nat. Bank (420 F.2d 648) the employer attempted to justify the difference in salary between male bank tellers and female bank tellers because the male tellers were being trained for eventual promotion to executive positions.

Summary of this case from Mize v. State Division of Human Rights
Case details for

Shultz v. First Victoria National Bank

Case Details

Full title:George P. SHULTZ, Secretary of Labor, United States Department of Labor…

Court:United States Court of Appeals, Fifth Circuit

Date published: Jan 12, 1970

Citations

420 F.2d 648 (5th Cir. 1970)

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