Discriminatory Denial of Pay Raise Cannot be Cured by Later Raise

We just received a good result from the Eleventh Circuit Court of Appeals (the federal appeals court for the states of Georgia, Florida and Alabama) in a race discrimination and retaliation case and, at the risk of seeming immodest, we’d like to share it with you. It’s a very employee-friendly decision on the issue of what is an adverse action under the discrimination laws, and the court held that when a company makes a discriminatory decision that it later corrects, the employer’s after-the-fact corrective action does not cure the initially discriminatory act.

In the case, Crawford v. Carroll, our client, Jacquelyn Crawford, is an African American female who was employed at Georgia State University in various capacities in its human resources department. Her dispute with GSU began with a disciplinary action she received for allegedly violating the school’s bereavement leave policy. When she complained about this discipline, she claimed she was subjected to retaliation by her Caucasian supervisor in the form of unreasonable job demands and overly critical scrutiny of her work.

The dispute then escalated when Crawford was denied a promotion to a position that was posted several times during a two-year period even though several managers believed she was the most qualified applicant for the position. During this period, Crawford’s Caucasian supervisors issued her a negative performance review, which made her ineligible for a merit pay increase that she was scheduled to receive in October 2002. In response, Crawford filed an internal complaint contending that the poor performance review and resulting disqualification for the merit pay increase were racially discriminatory and retaliatory.

While her internal complaint was pending, the position that Crawford had been denied was posted for a third time. This time, Crawford was not even selected for an interview, and GSU recommended that a Caucasian male be awarded the position.

Crawford ultimately filed a charge of discrimination with the EEOC, claiming that her poor performance review and disqualification from the merit pay increase were discriminatory; she amended her charge to include a claim of retaliation when she did not receive the promotion. While her charge was pending, GSU determined that Crawford was entitled to a pay grade increase, which it made retroactive back to the date when Crawford should have initially received her merit pay increase.

In Crawford’s subsequent race discrimination and retaliation lawsuit, the lower court dismissed her claims on summary judgment, reasoning that because GSU ultimately awarded Crawford a pay grade increase retroactive to the date when the merit pay increase was initially denied, she was made whole and therefore could not establish an adverse employment action for either her discrimination or retaliation claims. The lower court relied on a line of cases from the Eleventh Circuit defining an adverse action as an “ultimate employment decision” or a “substantial employment action,” and concluded that because Crawford had received a retroactive pay increase, she could not establish a “serious and material” change in the terms and conditions of her employment sufficient to establish an adverse action by GSU.

The Eleventh Circuit reversed the lower court, holding that there was a genuine issue of material fact that precluded the award of summary judgment. The Court reasoned that the retroactive increase of Crawford’s salary did not cure the fact that Crawford’s initial poor performance review and disqualification for a merit pay raise were adverse actions in that she lost the time value of the funds that she would have had if she had received the merit pay increase when she was initially scheduled to receive it. In other words, although Crawford did not suffer a substantial loss, she did suffer an actual loss, which was enough to establish an adverse action for the purposes of both her retaliation and discrimination claims. The court also took pains to note that after-the-fact attempts by employers to cure prior discriminatory acts do not cure the discrimination, as this would allow employers to “escape Title VII liability by correcting their discriminatory and retaliatory acts after the fact.”

Although the court did not expressly overrule the “substantial employment action” doctrine, it certainly questioned it, and it also noted, in light of the U.S. Supreme Court’s decision in Burlington Northern& Santa Fe Railway Co. v. White, that the doctrine was no longer good law with respect to retaliation claims.