Strange Wording in a Pay Discrimination Case

by Art Gutman Ph.D., Professor, Florida Institute of Technology

The case is King v. Acosta Sales & Marketing, decided by the 7th Circuit on March 13, 2012 [2012 U.S. App. LEXIS 5156]. The plaintiff, Susan King, lost on summary judgment at the district court level on claims of both sexual harassment and pay discrimination based on sex. Summary judgment was upheld on the harassment claim, which does not concern us here. More importantly, summary judgment was overturned on pay discrimination under Title VII and the Equal Pay Act (EPA). What’s interesting here is not so much the ruling; for reasons described below, it makes sense. Rather, there is some questionable language used by Chief Judge Easterbrook who, speaking for Judges Posner and Wood, wrote the court’s opinion.

The facts are that King, a female business manager for Acosta, a food broker, claimed that she was underpaid relative to males, even though her job was equal in skill, effort, responsibility, and working conditions to that of male comparators. Acosta acknowledged that King was one of their best producers, thereby negating a defense based on merit/productivity. Instead, Acosta used the FOS (Factor Other Than Sex) statutory defense from the EPA and explained (without proof) that the men, all hired at higher salaries than King, were better educated and/or had more experience.

To begin with, it’s important to distinguish between how Title VII and the EPA deal with wage disparity claims. Acosta explained (or articulated) without proof, a reason why King had a lower starting salary then the male comparators. That satisfies the defense burden in Title VII and forces the plaintiff to prove that the explanation by Acosta is pretext. In comparison, under the EPA, the statutory FOS defense requires more than an articulation; it requires factual proof that the explanation is the true reason for the wage difference. Thus, regardless of all else, the case should be remanded for Acosta to factually prove its explanation and for King to prove that the explanation, as offered, is pretext. Left as such, this is a relatively ordinary reversal of summary judgment in a pay discrimination case. But there is more.

Judge Easterbrook also ruled that even if the differences in starting salaries could be factually supported, there were questions remaining as relating to discrimination in raises favoring men. It is here that Judge Easterbrook makes a questionable statement that is sure to attract the interest of the legal community. He draws an analogy to LSAT scores in law school, suggesting that higher LSAT scores can explain entry into law school, but that once accepted, LSAT scores no longer matter, and it is performance that determines grades. It is based on this analogy that Easterbrook states:

[I]f men arrive at Acosta with higher salaries because of education, but men and women are equally good on the job, women should get more rapid raises after employment and the salaries should tend to converge.

This statement is clearly questionable. If two employees are hired at different starting salaries, and both are given (say) 5% raises year after year, the initial disparity will actually get larger. The only way the salaries could converge if there was a policy of giving higher percentage raises to lower salaried employees.

However, ignoring this part of the ruling, it turns out that King does have a good case for disparity in salary increases. All it takes in a pay claim is a single comparator. There are actually several possible comparators, but one stands out. King started at Acosta in 2001 with a salary of $40,000.01 and ended 2007 with a salary of $46, 850.23. In comparison, a male employee (Pfister), started with the same salary ($40,000.01) in 2005, and ended 2007 with a salary of $60,000. In other words, based on the same starting salaries, it took King six years to increase her salary by only 17%, whereas it took Pfister only two years to increase his salary by 50%. That’s all that’s necessary to overturn the summary judgment. Easterbrook’s statement relating to how salaries should converge or diverge are totally irrelevant to this point. More important is Easterbrook’s charge to the district court on remand. Accordingly:

King's claim under the Equal Pay Act must be returned to the district court for a trial at which Acosta will need to prove, and not just assert, that education and experience account for these differences. The Title VII claim also must be tried, because King has marshaled evidence that would permit a trier of fact to conclude that Acosta's explanations are smokescreens.

Sounds to me like a warning for Acosta to settle.

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