7th Circuit Reverses Summary Judgment in Pay Discrimination Lawsuit

On January 5, 2021, in its first employment law decision of 2021, the 7th Circuit reversed an order of summary judgment in favor of an employer-defendant in a sex discrimination and equal pay lawsuit under Title VII of the Civil Rights Act of 1964 ("Title VII") and the Equal Pay Act ("EPA").  Kellogg v. Ball State University, No. 20-1406 (7th Cir. 1/5/2021).  The decision turned on a single statement that the Director made to the plaintiff when he hired her, that she "didn't need any more starting salary because he knew her husband worked."  The 7th Circuit found that this statement is "evidence of unequivocal discrimination."  The statement contradicted the defendant's proffered explanations for the pay disparity, and put them into dispute.  This was so even though the statement was made long ago and well outside of the statute of limitations, because it affected paychecks that the plaintiff received within the statute of limitations.  Thus, the 7th Circuit held that the defendant blatantly discriminated against the plaintiff by telling her that, because her husband worked, she did not need any more starting pay.  "Such clear discrimination calls the sincerity of the defendant's rationales into question."

Title VII prohibits pay discrimination on the basis of sex.  The usual burden shifting framework applies.  The statement raised issues of pretext as to the defendant's proffered reasons sufficient to preclude summary judgment.  Under the paycheck accrual rule, an actionable unlawful employment practice occurs each time discriminatory compensation is paid and, therefore, each paycheck triggers a new statute of limitations period.  A new cause of action accrued each time the plaintiff received a paycheck resulting from the unlawful employment practice evidenced by the defendant's earlier statement, as long as the paycheck was within the statute of limitations.  Under Title VII, time-barred acts are admissible into evidence as support for a timely claim.

The EPA prohibits employers from paying employees different wages based on gender.  However, if the pay disparity is based on any factor other than sex, it is not actionable.  The 7th Circuit applied the same analysis to the plaintiff's EPA claim--the defendant's statement contradicted the other factors it articulated and put them into dispute, precluding summary judgment.  In addition, the 7th Circuit specifically stated that "the paycheck accrual rule does apply to EPA claims."