Dividing 2-1 on the question, an Eighth Circuit panel holds that it can be considered an "adverse employment action" under Title VII and section 1981 for an employee to be hired at - or even above - his or her asking salary, at least when another person outside the protected group is hired for similar work but at a higher pay grade and salary.
Smith v. URS Corp., No. 13-2645 (8th Cir. Oct. 14, 2015): There employees were hired within seven months as a "Training Specialist" for employees on an Arkansas construction project. plaintiff Smith, a black applicant, was placed at grade S5.12 with an annual salary of $57,668 per year, which was $11,667 more than his asking figure. A second black applicant, Ellis, was hired in the same title, grade and salary of $57,668 (though this was thousands less than his asking salary).
The third hire was a white applicant named Griffin. Though originally hired at the same grade and title, when he came on board the company assigned him as a "grade S5.13 with the 'Working Title' 'Sr. Training Specialist,' the 'Classification Title and Job Code' 'Staff Training Specialist (65010),' and a salary of $65,000 per year."
The applicants' backgrounds and job duties were comparable. "At the time of hire, Ellis possessed a master's degree and was working towards a Ph.D. Smith and Griffin both possessed bachelor's degrees. Smith, Griffin, and Ellis all had extensive experience." Moreover, "[written descriptions for the S5.12 and S5.13 positions listed duties in mostly identical terms."
When in 2009 Smith complained about the disparity to his Training Manager, named Howard, and asked for a promotion to S5.13, "Howard responded that the client (who in this case was the United States Army) 'might frown at that.'" During a later reduction in force, Smith and Ellis were the first Training Specialists fired, based on a subjective ranking of the trainers by Howard.
In his subsequent lawsuit for race discrimination and retaliation, the district court granted summary judgment. It held that because Smith was hired at a salary greater than his asking amount, he suffered no discrimination at all.
The Eighth Circuit, 2-1, reverses. It rejects the basis of the district court's opinion, noting that it erroneously assumed that the claim was failure-to-hire:
"Smith's complaint, however, did not allege that URS failed to hire him; Smith alleged disparate treatment based on the fact that he, Griffin, and Ellis all applied to work as Training Specialists but that Griffin was assigned a higher position with pay grade S5.13 whereas Smith and Ellis were hired as Training Specialists and assigned pay grade S5.12."
The panel majority holds that the plaintiff did make out a prima facie case of discrimination by showing that a white applicant for the same job was hired into a higher pay grade and position:
"Taken in a light most favorable to Smith, the summary judgment record shows two black men applied for positions and received the positions for which they applied, one at a salary higher than requested, and one at a salary lower than requested. Between the hiring of these two men, a white man without meaningfully different qualifications applied for a position in the same department to perform the same work and received a higher-ranking and higher-paying position than the black men (a position, in fact, higher-ranking than the position for which he had applied)."
The panel majority also rejects the employer's suggestion that plaintiff was obliged to prove the "relative qualifications" of the black and white applicants in the prima facie case. Yet:
"Even if such proof were required at this stage, however, a question of fact would exist as to whether the men were similarly situated. Smith and Ellis both testified that all There men performed the same duties. The men worked under the same supervisors, and the formal, written job descriptions contained in the record show the positions have materially similar duties. further, while we do not suggest the men's past experience is identical, and we acknowledge some differences in the written job descriptions (if not in the actual duties performed), URS has not explained how any differences that may exist are material."
It also found that Smith presented sufficient evidence to rebut the employer's avowed legitimate, non-discriminatory reasons for instantly promoting and paying more to Griffin. In particular, the panel majority noted the evasiveness of the employer's explanation. It noted the mystery "that the letter initially offering [Griffin] employment listed the S5.12 pay grade ... is inconsistent with URS's insistence that Griffin applied exclusively for an S5.13 position." Also, whatever differences that might have been between Smith, Ellis and Griffin, "URS did not explain the relevance of any differences in background for the positions involved."
Most curiously, Howard denied in the discovery process that he was even involved in the subjective-ranking process, in the face of documentary evidence to the contrary. Thus, "a jury could view Howard's false denial of involvement with the ranking process, when coupled with his seemingly defensive reaction to Smith and [a lower-level shift supervisor] Charles Smith, as evidence of a desire to hide an impermissible motive."
Because the district court cut the case off at the prima facie stage, it had no further cause to analyze the retaliation claim separately, so the panel majority remanded that as well.
In dissent, Judge Shepherd would have held that There was no discrimination at all. "Smith's salary was never decreased nor diminished. In fact, it is undisputed that Smith's salary was significantly higher than the salary he requested in his job application."