Sept. 18, 2014 – A state appeals court has upheld an employee’s claim that Rice Lake Harley Davidson engaged in wage discrimination on the basis of sex.

In addition, in Rice Lake Harley Davidson v. LIRC, 2014AP13 (Sept. 16, 2014), a three-judge panel for the District III Wisconsin Court of Appeals ruled that Diane Mack, the complainant, was entitled to more attorney’s fees than the circuit court awarded.

Diane Mack worked as a motorcycle salesperson for more than five years. When she was fired in 2009, Mack filed a complaint. She said Rice Law Harley terminated her employment on the basis of sex, and paid her less than a male salesperson.

The Equal Rights Division (ERD) did not find that termination was discriminatory, but the ERD did find that Mack received a discriminatory wage. An administrative law judge (ALJ) heard the wage discrimination claim and a factual record was established.

Rice Lake Harley hired Mack at a starting salary of $28,000 per year. A year later, her salary increased to $34,000. Rice Lake Harley also hired a sales manager, Harold Dodge, starting at $56,000, but he was later demoted to salesperson.

Mack admitted that Harley told her Dodge would receive twice her pay as a sales manager. Mack said she did not complain while working for fear that she would be fired.

Despite the demotion, Dodge’s salary remained at $56,000 until 2006. In that year, Mack’s annual salary decreased to $24,000 plus commissions, and Dodge’s salary decreased to $36,400 plus commissions. Mack’s salary soon increased to $27,040.

The same year, Rice Lake Harley also hired a new male salesperson at the same pay rate as Mack. In 2009, Rice Lake Harley terminated Mack’s employment.

Administrative Law Judge

After the administrative hearing, Rice Lake Harley argued that Mack’s wage discrimination claim was untimely because she knew more than 300 days before filing the claim that she was making less than Dodge, her male counterpart on the sales staff.

The ALJ rejected that argument, citing the federal Lilly Ledbetter Fair Pay Act of 2009, which adheres to a so-called “paycheck accrual rule.” Under the paycheck accrual rule, a discriminatory act takes place every time a wage, benefit, or other compensation is paid that is based on a discriminatory decision.

The clock starting ticking anew each time Mack received a paycheck, the ALJ concluded, and she received her last paycheck within 300 days of filing the complaint.

The ALJ also ruled that Rice Lake Harley discriminated against Mack starting in 2005, when Dodge was demoted to salesperson but retained a higher salary than Mack, who was performing the same duties as Dodge.

The ALJ ordered back pay from two years before the complaint was filed to her termination date, based on the difference between her pay the and average salary of her male counterparts. That amounted to $8,834. The ALJ also awarded Mack $26,235 in attorney fees – two-thirds of that requested – based on “partial success.”

LIRC and Circuit Court

The Labor and Industry Review Commission affirmed, noting that the Wisconsin Fair Employment Act (WFEA) precludes back pay more than two years prior to complaint date. However, LIRC ruled that the agency judge improperly relied on the Ledbetter Act.

LIRC said its decision was based on interpretations of the Wisconsin Fair Employment Act. LIRC also awarded $9,815 in attorney fees, ruling that Mack achieved full, not partial success. On appeal, the Barron County Circuit Court affirmed LIRC’s decision.

Like LIRC, the circuit court awarded Mack more attorney fees for circuit court litigation. Unlike LIRC, which tied the fee award to full success, the circuit court reduced the attorney’s fees by one-third, consistent with the administrative law judge’s award.

Appeals Court

In reviewing the LIRC decision, the appeals court made several rulings. First, the panel decided that LIRC’s decisions should receive due weight deference, despite arguments.

“Although it is undisputed that LIRC’s decision in this case conflicted with its previous decisions, no deference is appropriate only where an agency’s position has been so inconsistent that it provides no real guidance,” wrote Judge Lisa Stark.

Next, the panel ruled that Mack’s complaint was timely because it was filed within 300 days of when the discrimination “occurred,” relying on Abbyland Processing v. LIRC, 206 Wis. 2d 309. 557 N.W.2d 419 Ct. App. 1996).

“Abbyland clearly held that compensation discrimination is actionable if an employee received payment within the 300-day period before filing his or her complaint pursuant to a discriminatory compensation decision,” Judge Starks explained.

“If the employee received even one paycheck pursuant to the discriminatory compensation decision within 300 days before filing his or her complaint, the complaint is timely,” Starks wrote. “Abbyland is binding precedent and is directly on point.”

The appeals panel noted that LIRC based its decision on Abbyland, not the Ledbetter Act. Rice Lake Harley argued that LIRC improperly incorporated the Ledbetter Act into WFEA in making its decision. But the appeals panel disagreed with that argument.

“Although LIRC observed in passing that Abbyland appeared consistent with Congress’s decision to adopt the Ledbetter Act, that is a far cry from incorporating the Ledbetter Act into the WFEA,” Judge Stark wrote.

The panel also rejected Rice Lake Harley’s argument that the Wisconsin Legislature did not disturb the 300-day statute of limitations when it enacted a 2011 law that eliminated compensatory and punitive damages for employment discrimination under the WFEA.

“According to Rice Lake Harley, this shows the legislature intentionally decline to adopt a paycheck accrual rule like the one in the Ledbetter Act,” Starks wrote. “However, Rice Lake Harley does not cite any legislative history supporting this argument.”

Finally, the appeals court panel ruled that there was enough evidence to support a claim that Rice Lake Harley engaged in wage discrimination on the basis of sex.

That is, the panel found that Rice Lake Harley paid Mack a lower wage than a male colleague, both employees performed equal work with equal responsibility and skill, and Rice Lake Harley could not meet its burden to show the disparity was justified.

Attorney Fees

Although WFEA entitles a prevailing party to reasonable attorney’s fees, Rice Lake Harley argued that LIRC and the circuit court erred by awarding attorney’s fees. Harley said Mack did not get the full back pay she sought, so she did not “prevail.”

But the panel noted that a prevailing party is someone who succeeds on a significant issue and achieves some of the benefit sought in bringing suit, citing prior case law.

“Mack qualifies as a prevailing party under this definition,” Judge Stark wrote. “She prevailed on her wage discrimination claim – the only claim before the ALJ, LIRC, and the circuit court – and she was awarded back pay as a remedy.”

The appeals court also rejected Rice Lake Harley’s claim that Mack should only get 10 percent of the fee, because she only received 10 percent of the back pay she wanted.

“By holding Rice Lake Harley accountable for the wage discrimination it committed, Mack has helped deter future discrimination by both Rice Lake Harley and other employers. This further justifies the attorney fees awarded to Mack,” Stark wrote.

Finally, the appeals panel agreed with Mack that the circuit court wrongly reduced the attorney fees award by one-third of what she requested.

“Mack achieved full success in the circuit court proceedings, where she prevailed on every issue raised,” Judge Stark noted. “Thus, the single factor that justified the ALJ’s one-third reduction in attorney fees was not present in the circuit court proceedings.”

The three-judge panel also said the circuit court, on remand, should apply the lodestar method to determine the attorney fees for this appeals, “keeping in mind that Mack has fully prevailed on each issue raised.”