The statement was allegedly made by the school director during salary negotiations.
Although a school provided nondiscriminatory explanations for why a female teacher was purportedly paid less than her male colleagues, including salary compression and qualification differences, the sincerity of those rationales were called into question by the school director’s statement that the teacher did not need any more starting pay because her husband worked. Rejecting the school’s argument that the remark, made 12 years prior to the teacher’s lawsuit, was just a stray remark, the Seventh Circuit found “few statements could more directly reveal the Academy’s motivations.” Accordingly, the appeals court reversed the grant of summary judgment against her Title VII and EPA claims (Kellogg v. Ball State University dba Indiana Academy for Science, Mathematics and Humanities, January 5, 2021, Kanne, M.).
Your husband works. When she was hired in 2006 to teach at a residential high school on the campus of Ball State University, the teacher claimed the academy’s director told her, during salary negotiations, that she “didn’t need any more [starting salary], because he knew [her] husband worked at Ball State, so [they] would have a fine salary.” In 2017, she complained to the dean of the teacher’s college that she received less pay that her similarly situated male colleagues. In response, the dean told her the issue was salary compression, meaning that those hired after her began at a higher salary. Further, he claimed, her salary increased by 36.35 percent during her time there while her colleagues’ salaries increased by less.
Lower court proceedings. The following year, the teacher sued the academy alleging sex-based pay discrimination in violation of Title VII and the EPA. Granting summary judgment against her claims, the district court found the academy provided gender-neutral explanations—such as salary compression and qualification differences—for any discrepancy between the teacher’s salary and that of her colleagues. It also found that while the director’s statement about the teacher’s husband was admissible for purposes of providing background information on the factual circumstances, it could not establish liability as it was uttered outside the statute of limitations.
Title VII. On appeal, the Seventh Circuit noted that as to her Title VII claim, the “key summary judgment question” was whether the teacher sufficiently established pretext. Finding that she did, the court pointed out that the director’s statement created a dispute over whether the academy honestly believed in the nondiscriminatory reasons it offered. Although the academy argued that the statement, which the teacher described as having been made in an offhanded manner, was nothing more than a stray remark, the court disagreed. Rather, it “was a straightforward explanation by the Academy’s director, who had control over setting salaries, during salary negotiations that [the teacher] did not need any more money ‘because’ her husband worked at the University.”
Statute of limitations. Also rejected was the academy’s contention that because the statement occurred outside the statute of limitations period, it could not establish liability. Citing the paycheck accrual rule, as codified by the Lilly Ledbetter Fair Pay Act of 2009, the court noted that a new cause of action for pay discrimination arises every time a plaintiff receives a paycheck resulting from an earlier discriminatory compensation practice, including one that occurred outside the limitations period.
And here, said the court, the director’s decision regarding the teacher’s starting salary was “precisely the kind of decision covered by the Ledbetter Act” as all of her pay resulted, at least in part, from that decision as the academy admittedly based her later pay on raises from her starting salary. Thus, the court observed, each of her paychecks “gave rise to a new cause of action for pay discrimination.” Further, she could rely on the director’s statement even though it occurred outside the limitations period to seek damages from any paychecks she received within the statute of limitations window.
In addition, the court observed, she could also rely on the statement to show pretext because time-barred acts are allowed as support for a timely actions. Because the academy admitted that she timely alleged discrete discriminatory acts, the director’s statement could be used to support that claim and show the academy’s explanations were pretextual.
Equal Pay Act. Turning to the employee’s EPA claim, the court noted that while the academy claimed the teacher’s pay was based on factors other than sex, the director’s statement “shows otherwise.” Although the academy contended that the paycheck accrual rule did not apply because the Ledbetter Act did not amend the EPA, the court first noted that the rule did not need to apply for her to survive summary judgment as she could use the director’s statement to put the sincerity of the academy’s purported nondiscriminatory explanations in dispute.
Nonetheless, the court took “this opportunity to clarify that the paycheck accrual rule does apply to EPA claims.” Here, the court cited its 2011 decision in Groesch v. City of Springfield, in which it held that because the Ledbetter Act legislatively reversed the Supreme Court’s decision eschewing the paycheck accrual rule in Ledbetter v. Goodyear Tire & Rubber Co., Inc., it removed “the Ledbetter decision as an obstacle to following our earlier precedents, which recognized the paycheck accrual rule for all allegations of unlawful discrimination in employee compensation.”
Applying that holding here, the court explained that “the paycheck accrual rule applies to ‘allegations of unlawful discrimination in employee compensation’ under the EPA, just as we have held that it applies to such allegations under 42 U.S.C. § 1983 (even though that too is not listed in the Ledbetter Act).” “We see no reason … why we would treat a paycheck as a ‘discrete discriminatory act’ that triggers a new limitations period under Title VII but not under [the EPA] for the purpose of pay discrimination claims.” Accordingly, said the court, the director’s alleged discriminatory statement cast doubt on the academy’s nondiscriminatory explanations for the teacher’s salary, and she could rely on it even though it was uttered outside the limitations window.
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