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May 24, 2012
Could Big Pay Differences Be Explained?

An Illinois business manager quit her job after 6 years and then sued the company for creating a work environment that was hostile to women and paying women much less than men in the same job. The success of her suit varied according to which judges were considering it.

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What happened. “Kerns” joined Acosta Sales and Marketing, a food broker, in 2001 as a business manager. That meant she represented a group of food producers in Acosta’s sales of their products to supermarkets and other bulk purchasers. For the first 3 years of her work, she complained, a male co-worker sexually harassed her. He was disciplined and stopped the misconduct in 2004. But Kerns alleged that other male managers made disparaging comments about their female colleagues. And, the disparities in pay between male and female business managers were too big to be ignored.

But in federal district court, the judge rejected both her claims: The co-worker harassment had ended 2 years before Kerns filed a charge with the Equal Employment Opportunity Commission, and the other men’s stray comments after that weren’t severe or pervasive. On the issue of pay disparities, the judge accepted Acosta’s argument that male business managers had more education and experience than women. Kerns appealed to the 7th Circuit, which covers Illinois, Indiana, and Wisconsin.

What the court said. Appellate judges reviewed the salaries of 11 male and 8 female Acosta business managers in 2007: Kerns’ starting salary rose by less than $7,000 in 6 years, while a male manager’s salary rose by $20,000 in 2 years, and another man’s by more than $14,000 in 3 years. In addition, the salaries of five men exceeded the top end of the pay grade, and approximately seven men were paid more than the target median.

By contrast, Kerns and all but one of the other women were paid below the low end of the same pay grade, and all were below the target median. Judges said education and experience could have played a legitimate role in starting salaries but that those factors should not have had anything to do with subsequent raises.

Furthermore, since Kerns sued also under the Equal Pay Act, Acosta carried a broader burden to prove there was no gender discrimination in its pay rates. So that part of Kerns’ suit will be sent back for a jury trial in the district court. King v. Acosta, U.S. Court of Appeals for the 7th Circuit, No. 11-3617 (3/13/12).

Point to remember: Not only did Acosta management acknowledge that Kerns was one of its most successful business managers but the general manager who set starting salaries and raises admitted that his decisions were entirely subjective.

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