Pay equity disputes are rarely about a single salary decision. They turn on whether an employer’s explanation for a pay gap holds together once the facts are examined.
A recent Seventh Circuit decision shows how reorganizations that blend promotions and transfers into the same role can expose cracks in that explanation.
TL;DR: After a company reorganized its sales department and created a new role, two female employees alleged they were paid less than male counterparts performing the same job. The Seventh Circuit reversed summary judgment on Equal Pay Act and Title VII pay claims, but only as to comparisons with male employees who were promoted into the role. The employer prevailed as to transferred employees whose salaries were maintained, but factual disputes over the timing and amount of raises for promoted comparators required a jury to decide the rest.
A reorganization created a new role – and a pay gap
In 2021, the employer reorganized its sales department and created a new Key Account Director role across two divisions. The position carried a higher paygrade than the roles the plaintiffs previously held.
The plaintiffs were promoted into the new role from lower-graded positions with base salaries in the low-to-mid $90,000 range. They did not receive raises at that time. Their salaries were later increased to $98,000, effective December 26, 2021.
At the same time, nine male employees on another side of the business moved into the same role. Two were promoted. Seven were transferred. The transferred employees received no raises and retained salaries ranging from just over $100,000 to well into the $140,000s.
The employer’s explanation
To justify the differences in pay, the employer pointed to how employees entered the new role. According to the employer, employees who were transferred retained their existing salaries, while employees who were promoted received raises.
That distinction framed how the court analyzed both pay claims.
Why timing mattered
On December 6, 2021, the plaintiffs and other employees raised concerns with Human Resources about pay disparities among employees holding the new role. Management said it would investigate. Ten days later, the employer announced salary increases for the plaintiffs, effective December 26.
That sequence mattered. If promotions came with raises, a jury could reasonably conclude the plaintiffs should have received a raise when they assumed the new role, not only after they complained.
Equal Pay Act and Title VII: same facts, different burdens
Both pay claims turned on the same factual divide, even though the legal standards differ.
Transfers.
For the men who were transferred into the new role without raises, the court held summary judgment was appropriate. Maintaining prior salary through a transfer was a permissible, sex-neutral approach, and there was no evidence that the underlying salary history reflected discrimination. The employer therefore prevailed under both statutes as to those comparisons.
Promotions.
For the men who were promoted into the role, the analysis changed. The timing allowed a jury to find that promoted male employees received raises immediately upon promotion, while the plaintiffs received raises only after raising concerns. The employer also failed to explain why one promoted male employee landed at a substantially higher salary than the plaintiffs.
Those unresolved questions prevented summary judgment under both statutes. Under the Equal Pay Act, the employer could not establish its explanation as a matter of law. Under Title VII, the same inconsistencies could support an inference that the explanation was pretextual.
Employer takeaways
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Decide in advance how pay will be set in reorganizations.
If transfers retain salary and promotions trigger raises, define that rule clearly and apply it consistently. -
Align timing with your stated rationale.
If promotions come with raises, make sure compensation changes occur when the promotion takes effect, not only after concerns are raised. -
Document the reason for differences at the time decisions are made.
When employees in the same role land at different pay levels, have a contemporaneous explanation tied to experience, scope, or business need. -
Pressure-test pay decisions before rollout.
Ask whether the explanation would make sense to someone outside the company, not just inside HR. -
Treat reorganizations as pay-equity risk events.
New titles, blended roles, and harmonized paygrades are moments when disparities surface and should be reviewed proactively.
Bottom line
The employer’s salary-history approach worked for transferred employees. It did not resolve the case for promoted comparators, where timing and unexplained pay differences left key questions unanswered.