Seyfarth Synopsis: A recent decision from the U.S. District Court in Kansas—Spears v. Thermo Fisher Scientific—ruled that a pay equity analysis conducted primarily for business purposes was not protected by attorney-client privilege or the work product doctrine. The court further held that, even if privilege had applied, it was waived when the company disclosed summary findings in its publicly available Corporate Social Responsibility Report. This case underscores a critical takeaway for employers: how a pay equity study is structured, its stated purpose, and the way results are communicated can determine whether it is shielded from discovery in future litigation.
Summary
Plaintiff, a 56-year old African American woman with extensive experience in microbiology and pharmaceuticals, brought claims for race, sex, and age discrimination, as well as retaliation, against her former employer. She alleged that despite her qualifications and tenure, she was repeatedly passed over for promotions and placed in a lower pay band without appropriate compensation.
During discovery, Plaintiff sought production of a Pay Equity Study (“the Study”) the Company engaged a third party consulting firm to conduct. The Company asserted that the Study was protected by attorney-client privilege, the work product doctrine, and self-critical analysis privilege. The Magistrate Judge rejected these assertions and ordered the Company to produce the Study, finding that it was not privileged because its primary purpose was business-related and not legal advice. The Judge also found that, even if it was privileged, the Company waived privilege by disclosing the results in its publicly available Corporate Social Responsibility Report (the “Report”). The District Court agreed, upholding the order to produce the Study.
Application of Privilege Over Pay Equity Study
The Company asserted privilege over the Study stating that it was conducted with the primary purpose of assisting in-house counsel in providing legal advice with respect to whether the Company’s pay practices complied with the law. The Court noted that, while the first engagement letter between the Company and its consultant stated the purpose of the engagement was to assist in-house counsel in providing legal advice, a subsequent engagement letter lacked any reference to “legal advice.” Further, the Court found that the Company’s public use of the Study in its Corporate Social Responsibility Report demonstrated that the Study was primarily conducted for business purposes, pointing to statements linking the Study to diversity and inclusion initiatives rather than legal advice.
Waiver of Privilege
The Court further ruled that, even if the Study was protected by privilege, the Company waived any such privilege by going beyond “only the broad topics the Study examined” and publishing specific findings, such as “[o]ur pay equity analysis showed that non-executive colleagues who are women earned 98% of the total pay earned by men in similar roles” and “[r]acially and ethnically diverse colleagues earned 99% of the total pay earned by White/Caucasian colleagues in similar roles.” The Company also disclosed their median unadjusted pay gap results in the Report.
The Court clarified that, had the Company only revealed the general topic of the Study and underlying facts, not the Study’s substance (i.e., the specific analysis and results), the Company’s argument against waiver may have been accepted.
Key Takeaways and Recommendations for Employers
Proactive, privileged pay equity studies remain a valuable tool for employers to ensure compliance with and mitigate legal risk under federal, state, and local equal pay and anti-discrimination laws. However, this case underscores the importance of establishing and preserving privilege over the studies to avoid disclosure of the underlying analyses and related legal advice. It is important to note that merely involving legal counsel or labeling something as “privileged” does not necessarily protect it from disclosure, and publicly disclosing details of the study—even in the interest of transparency—can waive privilege.
Employers seeking to undertake a privileged pay study should consult counsel on approaches to effectively protecting the project under privilege, which may include:
- Clearly establishing the objective is to obtain legal advice;
- Engaging legal counsel to direct and oversee the audit;
- Limiting internal and external disclosures regarding the findings;
- Carefully crafting any disclosures to avoid discussing specifics of the analysis, including results; and
- If needed for both legal advice and business purposes, consider undertaking separate reviews to preserve privilege over the legal recommendations based on the findings.
For more information on attorney-client privileged pay equity studies, please contact the authors of this alert, members of Seyfarth’s People Analytics Group, or your Seyfarth attorney.
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