On The Case

7th Circuit: Courts must examine deep roots of pay inequality

(Reuters) - Back in 2006, when Cheryl Kellogg was negotiating her starting salary as a life science teacher at an elite Indiana residential high school on the campus of Ball State University, the school’s co-director offered her $32,000 a year. Kellogg, who has a master’s degree and had been teaching for more than a decade in the medical laboratory technology program at a small college in Wyoming, said the offer seemed low. The school’s co-director, according to Kellogg, batted away her protest. He knew her husband worked at Ball State, the director allegedly told Kellogg. So she didn’t need any more money.

Kellogg accepted the job and worked at the school, the Indiana Academy for Science, Mathematics and Humanities, until 2018. Her salary went up by nearly 37%, to about $44,500, during that time. But Kellogg learned she was making far less than a male colleague who was doing exactly the same work. She protested to the Academy’s head, a Ball State dean. He told her the problem was her starting salary – because she was hired at a lower salary, her pay was “compressed.”

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Kellogg sued in 2018, alleging that the school was liable for gender discrimination under the Equal Pay Act and Title VII of the Civil Rights Act. Among other evidence, she cited that 2006 conversation in which the school’s then co-director justified her low salary because of her husband’s job.

The school moved for summary judgment, arguing that any disparities between Kellogg’s salary and that of her male colleagues was due to reasons other than gender discrimination. The 2006 conversation, the school said, was irrelevant: Not only was it an offhand comment, as Kellogg herself had acknowledged, but it was far outside of the statute of limitations for Kellogg’s gender discrimination claims. U.S. Magistrate Judge Tim Baker of Indianapolis agreed with the school. Last February, he granted summary judgment, concluding that the school had offered sufficient evidence that Kellogg’s salary disparity was not attributable to gender discrimination but to gender-neutral factors.

Judge Baker acknowledged Kellogg’s assertion that the school underpaid her from the beginning because of her husband’s job. But he said Kellogg’s 2006 conversation with her boss could not be the basis of her claim for discrimination because it took place so long ago.

In other words, under the school’s rationale and Judge Baker’s acceptance of it, women can be twice victimized by employers who regard them as secondary wage-earners. Unless they claim gender discrimination from the outset, they can be subjected to years of underpayment – and then rebuffed for waiting too long when they try to set things right.

The 7th U.S. Circuit Court of Appeals was having none of that. As my Reuters colleague Dan Wiessner reported Tuesday, the appeals court reversed the grant of summary judgment and sent Kellogg’s case back to the trial court. But that’s not all. The appeals court made clear that when a plaintiff alleges long-ago discrimination underlies years of pay inequality, courts must pay heed to the roots of the problem. After-the-fact rationales, the 7th Circuit said, cannot justify actions that began with discrimination.

“The Academy blatantly discriminated against Kellogg by telling her that, because her husband worked, she did not need any more starting pay,” wrote Judge Michael Kanne for a panel that also included Judges Amy St. Eve and Michael Scudder. “Such clear discrimination calls the sincerity of the Academy’s rationales into question.”

The 7th Circuit based its decision on the 2009 Lilly Ledbetter Fair Pay Act, which, you’ll recall, was passed in response to the U.S. Supreme Court’s 2007 decision in Ledbetter v. Goodyear Tire. In that case, the Supreme Court ruled that employees cannot sue for past acts of discrimination outside of the statute of limitations, even if they contend those acts contributed to their timely claims. The Ledbetter Act restored the so-called paycheck accrual rule, which holds that the statute of limitations resets every time an employee receives a paycheck tainted by past discrimination, even if the discriminatory acts began years ago.

Kellogg’s allegations, the 7th Circuit said, are precisely what the Ledbetter Act was meant to address. And though the law targeted Title VII, and did not specifically talk about the Equal Pay Act, the 7th Circuit said there should be no doubt that the paycheck accrual principle applies to both kinds of claims. Whatever justification the Academy might offer in response to Kellogg’s assertions of unfair pay, the appeals the court said, must be viewed in the context of that 2006 conversation with her boss.

“(His) statement was not watercooler talk,” Judge Kanne said. “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.”

It’s disheartening that we still have suits like Kellogg’s – that women still raise credible allegations that they’ve been thwarted by gender discrimination that stretches back through decades of inequitable pay. But thank goodness for judges who understand that rot spreads from its source. To get rid of it, you have to dig deep.