Woman denied higher starting salary ‘because’ husband had a job wins reversal in pay discrimination case

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A Muncie teacher who sued her employer after being told that her starting salary didn’t need to be higher because her husband had a job has secured a reversal in her favor on her pay discrimination claims.

When Cheryl Kellogg was hired in 2006 by the Indiana Academy for Science, Mathematics and Humanities on the Ball State University campus, she was told by the academy’s executive co-director David Williams during negotiations that he wouldn’t increase her $32,000 starting salary “because then [she] would be making as much as his Ph.D instructors … .” Kellogg testified that he also “offhandedly told [her] that [she] didn’t need any more money, because he knew [her] husband worked at Ball State, so [they] would have a fine salary.”

In 2017, Kellogg complained that she received less pay than her similarly situated male colleagues and was informed that “[t]he issue [wa]s salary compression, which means those who [we]re hired after [Kellogg] began at a higher salary.” She was also told that her salary increased by 36.45% during her time at the academy while her colleagues’ salaries increased by less.

Kellogg, however, sued the academy for violating Title VII and the Equal Pay Act by engaging in sex-based pay discrimination, but the Indiana Southern District Court granted the academy’s motions for summary judgment. The district court concluded the academy had provided undisputed gender-neutral explanations, including salary compression and qualification differences.

But the 7th Circuit Court of Appeals disagreed, reversing in a Tuesday decision.

Boiling down its review of the district court’s ruling to one question, the 7th Circuit asked whether the academy’s nondiscriminatory explanations for Kellogg’s pay were in dispute.

“We hold that they are because the Academy blatantly discriminated against Kellogg by telling her that, because her husband worked, she did not need any more starting pay. Such clear discrimination calls the sincerity of the Academy’s rationales into question,” Judge Michael Kanne wrote for the unanimous 7th Circuit panel.

Finding that Kellogg brought forth evidence to “create a triable issue of fact with respect to her burden of demonstrating that [the Academy’s nondiscriminatory] reasons are pretextual,” the 7th Circuit pointed out that Kellogg’s testimony about Williams’ comment on her husband’s job created a dispute over whether the academy “honestly believed in the nondiscriminatory reasons” that it offered.

The panel rejected the academy’s argument that Williams’ statement was simply a “stray remark” with no “real link” to Kellogg’s pay, declining to categorize his statement as “watercooler talk.”

“It was a straightforward explanation by the Academy’s director, who had control over setting salaries, during salary negotiations that Kellogg did not need any more money ‘because’ her husband worked at the University. Few statements could more directly reveal the Academy’s motivations,” Kanne wrote.

Additionally, the 7th Circuit disagreed with the academy’s request that it skirt Williams’ statement because it occurred outside the statute of limitations period and therefore could not establish liability. On that point, the panel initially noted that under the paycheck accrual rule, as codified by the Lilly Ledbetter Fair Pay Act of 2009, Williams’ statement can “establish liability.”

“All of Kellogg’s pay from the Academy resulted, at least in part, from that decision because the Academy admittedly based Kellogg’s later pay on raises from her starting salary. … Thus, each of Kellogg’s paychecks gave rise to a new cause of action for pay discrimination. And like the plaintiff in (Groesch v. City of Springfield, 635 F.3d 1020, 1027 (7th Cir. 2011)), Kellogg can rely on Williams’s initial discriminatory statement, even though it occurred outside the limitations period, to seek damages from any paychecks that she received within the statute of limitations window,” Kanne wrote.

The 7th Circuit also found Kellogg could rely on Williams’ statement to show that the academy’s explanations were pretextual because “time-barred acts [are allowed] as support for a timely claim.”

Rejecting the academy’s final argument that the paycheck accrual rule does not apply because the Ledbetter Act did not amend the Equal Pay Act, the 7th Circuit countered that the rule does, in fact, apply to EPA claims.

“Williams’s alleged discriminatory statement casts doubt on the Academy’s nondiscriminatory explanations for Kellogg’s salary, and Kellogg can rely on the statement even though Williams uttered it outside the limitations window. The district court’s decision to set aside Williams’s statement thus requires remand,” Kanne concluded.

In a final note, the 7th Circuit held as incorrect the district court’s finding that Kellogg could rely on the treatment of just one comparator employee to prove her claims. It found that the notice pleading standard set forth in Federal Rule of Civil Procedure 8 does not require plaintiffs like Kellogg to identify all possible comparators in a complaint. Neither did she relinquish her ability to bring up other comparators later, it found.

Lastly, the 7th Circuit noted it was not concerned that the academy would suffer any unfair surprise from Kellogg’s reliance on other comparators.

It therefore reversed and remanded in the case of Cheryl Kellogg v. Ball State University, d/b/a Indiana Academy for Science, Mathematics and Humanities, 20-1406.

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