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Study Two: Basis for Difference in Pay

Discrimination on the Basis of National Origin

Issue

The buyers in our company are paid according to their experience and education. One of them learned his pay was lower than some others, and is charging us with discriminating against him because he is Brazilian. Can’t we pay different employees more or less depending on their value to the company?

Case Background

According to the Equal Employment Opportunity Commission’s guidelines, Title VII’s prohibitions include making employment decisions based on an individual’s physical, cultural, or linguistic characteristics associated with an ethnic group.  In this case, the court had to decide whether a disparity in salary reflected bias or legitimate distinctions in experience and education. 

Ruben Cardoso was hired as an import coordinator by Bosch’s Brazilian subsidiary in 1995.  In 1999, following a two-year temporary training assignment with the purchasing department of the company’s South Bend, Ind., facility, he was granted a permanent buyer position in South Bend.

Bosch’s human resources department set Cardoso’s annual salary at $54, 900 by comparing his experience and skills with those of its existing buyers.  In 2000, the salaries of the other three buyers in his group were increased to a range of $56,100 to $62,700.  On January 1, 2001, Cardoso’s salary was increased to $57,600.

There also was one senior buyer in the department when Cardoso started.  Unlike buyers, senior buyers could make final purchasing decision and thus were paid a higher salary.  In late 2000 and early 2001, Bosch hired two senior buyers.  Cardoso did not apply for either position even though they were posted on the company’s intranet.  Each hire had more than 10 years’ experience. Once had an MBA and was hired at $75,000, while the other had extensive experience with the previous operator of the facility and was hired at $60,000.

Cardoso confronted his supervisor Frank Gaba about the salary discrepancies, and claims that Gaba responded by theorizing that Cardoso was hired at a lower salary “because you’re Brazilian,” and explained that human resources “thinks that if you were in Brazil, you would not be making as much money as you are already making here.”  A week later, Cardoso claimed, Gaba called him to his office and told him he convinced a Bosch vice president to “adjust [Cardoso’s] salary to the level of the other ones.”

When the salary adjustment was not forthcoming and Gaba later denied making any such statement, Cardoso sued in federal court, claiming that Bosch discriminated against him on the basis of his national origin in violation of the Title VII of the 1964 Civil Rights Act.

Comments

Cardoso failed to support his claim that he paid less than his colleagues because he is Brazilian, the U.S. Court of Appeals for the Seventh Circuit held Oct. 14 (Cardoso v. Robert Bosch, Corp., 7th Cir., No. 04-4026, 10/14/05).

Cardoso failed to point to direct evidence of disparate pay or refute Bosch’s reasons for paying him what it did, the appeals court said. Employees can be compensated differently based on their value to the company.

Cardoso’s contention that Gaba’s explanation for the pay disparity was “the smoking gun” directly linking his lower pay to “rampant antiBrazilianism at Bosch” was wrong, the court found.  Gaba did not hire Cardoso, set his salary, or have input into either decision.  Moreover, “even if we assume that Gaba interceded on Cardoso’s behalf and later denied it when the expected raise did not come through, this is far from direct evidence of discrimination,” it said.  “At most, it is direct evidence the vice president reneged, but does not say anything about the reasons why.”

As for indirect evidence, the appeals court said Cardoso’s claim that he was more qualified than his counterparts does not necessarily mean that Bosch’s different of opinion qualified as pretext for discrimination.  Even if it were true, the court said, it would not show that Bosch was lying, but instead merely offer “a list of reasons why he thinks Bosch failed to recognize his true worth and compensate him accordingly.”

Source

Adapted from the Bureau of National Affairs, Inc., Bulleting to Management (Vol. 56, No. 44)