Madison State Hospital had a nursing shortage on its night shift. To solve the problem, the state of Indiana commissioned a compensation study that helped it decide to raise the wages it paid to night shift nurses.
Karen Ferguson, a nursing supervisor, filed a complaint with the State Employees’ Appeals Commission (SEAC), claiming that in many cases night nurses earned more than nursing supervisors. When the SEAC sided with the state, Ferguson filed suit in state court.
The trial court agreed with Ferguson, and the state appealed. The appeals court noted the many steps the state had taken to arrive at its pay structure: commissioning a compensation survey, fashioning the policy to respond to market conditions and instituting the program on a nondiscriminatory basis. On that basis, the court concluded that the fact some night shift nurses earned more than some nursing supervisors did not make the plan illegal.
Note: Changing a compensation structure can be tricky. Indiana took the proper steps in this case. But courts are increasingly wary of the effects of pay changes on older workers and minorities. The U.S. Supreme Court has ruled that older workers (those over 40) and minorities can file disparate-impact civil rights lawsuits if pay changes adversely affect them—even if that was not the employer’s intent.
Advice: When changing pay structures or systems, make sure you have all supporting data in place. And consult your attorney before instituting the new plan.