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Employer’s Outdated Perspective Direct Evidence of Equal Pay Discrimination

The Indiana Academy for Science, Mathematics, and Humanities (Academy), a residential high school, hired Cheryl Kellogg as a life science teacher in 2006. During the negotiations for her starting salary with the Academy’s Executive Co-Director David Williams, he told her she was making as much as his Ph.D. instructors. He also offhandedly mentioned she “didn’t need any more money, because he knew that [her] husband worked at Ball State, so [they] would have a fine salary.”

Fast forward to 2017, Kellogg complained to management that she was receiving less pay than her similarly situated male colleagues. The Dean defended the differential because those individuals came after Kellogg was hired and entered the Academy at a higher salary. According to the Dean, this “salary compression” explained the differences in salary. He noted Kellogg’s salary had increased by 36.45% during her tenure, while her male colleagues’ salaries increased by less. Kellogg sued the Academy for violation of Title VII and the Equal Pay Act.

After the district court dismissed Kellogg’s case on summary judgment, the Seventh Circuit Court of Appeals reviewed the case and reversed the lower court’s decision. The Academy justified the pay differential using salary compression and differences in qualifications. The appellate court found that William’s statement about Kellogg not needing money because of her husband’s salary created a question of fact as to whether the Academy “honestly believed in the nondiscriminatory reasons” it asserted. The Academy argued William’s offhanded remark was a “stray remark,” not enough to establish discrimination. However, the circuit court found it to be a “straightforward explanation” by the person in charge of setting her salary, and it was a direct reveal of the Academy’s motivations.

The Academy also argued the statement could not be considered because it was outside the statute of limitations. The Seventh Circuit concluded the Lilly Ledbetter Fair Pay Act of 2009 establishes liability under the paycheck accrual rule, which provides an unlawful employment practice occurs each time wages are paid as a result of earlier discrimination in compensation. Each of Kellogg’s paychecks gave rise to a new cause of action for pay discrimination within the statute of limitations window.