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November 03, 2008
Biased Policy's Gone: Can They Sue Anyway?
A group of Hispanic grocery store employees in Arizona, believing they were underpaid for years, have asked to be certified for a class action suit against their employer. They say the employer, in running three different store chains, paid higher wages to employees in the two chains that generally didn't employ Hispanics. A federal district court judge said they couldn't sue because by the time they filed their case, the chains' owner had made pay scales equal across the board.

What happened. Bashas' operates about 150 grocery stores in the state, but they do business under three different names--Bashas', A.J.'s Fine Foods, and Food City. Some 75 percent of Food City employees are Hispanic, while only about 15 percent are in the other two store chains. José Parra, Gonzalo Estrada, and Aurelia Martinez filed suit in 2002 on behalf of all Food City employees since 1998, asking for class status. The district judge ruled that, because the wage policy had been changed by the time he considered their case in 2003, he could not be certify them as a class because they no longer had commonality with one another, since all similarly situated employees are now paid similar wages across the three chains. The employees appealed to the 9th Circuit, which covers Alaska, Arizona, California, Hawaii, Idaho, Montana, Nevada, Oregon, and Washington.

What the court said. Predictably, Bashas' had bought the A.J.'s and Food City stores in a series of acquisitions, leaving both the prior names and pay scales in place. And, the demographics of the three chains' employees and customers differed widely. Employee job requirements, however, were "practically indistinguishable," according to appellate judges. Hourly pay disparities for comparable jobs in the three chains differed by as little as $0.15/hour to as much as $2.94/hour.

The standards for commonality are established under a particular part of the Federal Rules of Civil Procedures, which judges ruled the district judge had misinterpreted. Judges pointed to earlier circuit rulings about commonality, finding, "The existence of shared legal issues with divergent fact[s] is sufficient, as is a common core of salient facts coupled with disparate legal remedies." Based on underpayments in the past, which judges said can be calculated without undue hardship, they sent the case back to the district court for reconsideration of the plaintiffs' charges. Parra et al.v. Bashas', U.S. Court of Appeals for the 9th Circuit, No. 06-16038 (2008)

Point to remember: Promptly equalizing pay scales for similar jobs after a merger is vital to guard against violating the Equal Pay Act.

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