Company’s Reaction to Claim of Unequal Pay Provides Lessons for Employers

Complaints of unequal pay should not be taken lightly, and certainly should not be met with an immediate adverse employment action. The U.S. Court of Appeals for the Eighth Circuit recently reinstated a female office worker’s equal pay retaliation claim that had been dismissed by a federal district court, and is allowing that case to move forward to a jury. Donathan v. Oakley Grain, Inc., No. 15-3508 (June 28, 2017).

Factual Background

Shana Donathan, a female office employee with a “good work ethic” and no prior poor reviews or prior discipline, complained to her employer of unequal pay. Eight days later, she was laid off along with three seasonal workers and an individual fired for documented performance issues. Three days after the five workers’ employment had been terminated—and on the first workday after their discharge—the three seasonal workers were rehired, along with a replacement for Donathan.

Donathan’s replacement was not licensed to do the job that Donathan had held and did not possess experience similar to Donathan’s. Donathan filed a charge with the U.S. Equal Employment Opportunity Commission (EEOC) and, ultimately, a federal court lawsuit which included retaliation claims under Title VII of the Civil Rights Act of 1964 and the Equal Pay Act.

The district court dismissed the claims in response to a motion for summary judgment filed by the employer. Donathan appealed to the Eighth Circuit, which reversed the dismissal of the retaliation claim.

The Eighth Circuit’s Decision 

A plaintiff’s ultimate burden in a Title VII retaliation case is to prove that an impermissible retaliatory motive was the “but-for” cause of the adverse employment action, which is a relatively high bar—higher than simply having to prove that the protected activity of the plaintiff was one of the “motivating factors” of the firing. But in this case, the court held that Donathan’s case should be decided by a jury for the following reasons:

• The business reason provided by the company for Donathan’s layoff was “economic necessity tied to a seasonal downturn” in business, but Donathan’s office position never had been included in a seasonal layoff in the prior years during which Donathan had worked for the company.
• Donathan had no prior negative reviews or disciplinary actions.
• A replacement was hired for Donathan by the very next workday.
• The temporal proximity between Donathan’s complaint of pay inequality and her layoff (there was evidence of a phone call between managers regarding the layoffs just after, and on the same day, as Donathan’s complaint and the layoffs occurred eight days later) was “strong evidence” of retaliation.

Key Takeaways

This case provides a checklist of “don’t do” actions for employers. First, and importantly, there was no factually supported business-related reason for terminating Donathan’s employment. She was a successful employee without prior disciplinary or negative evaluations, and her office position had never before been included in seasonal layoffs. Next, the business rationale given by the company (seasonal slowdown) was immediately clouded by the fact that the three seasonal workers laid off with Donathan were rehired on the very next business day. Finally, at the same time that it brought back the three seasonal workers, the company hired an individual whose qualifications were measurably lower than Donathan’s rather than rehire Donathan, again weakening its “legitimate business reason” for the termination.

While the dissent in this case suggests that “the majority opinion is a victory for inferring retaliatory intent from temporal proximity,” such a characterization overlooks the fact that temporal proximity was only one of a number of factors on which the court’s decision was based.

Employers should recognize that thoughtful and careful consideration and investigation of an employee’s claim of unequal pay can help avoid a retaliation claim and the attendant legal action that most certainly will accompany it. In this case, there was no documented discussion, investigation, or consideration of Donathan’s issues prior to her dismissal and replacement.