Quick Hits

• The Sixth Circuit upheld a jury verdict against a school psychologist who alleged Equal Pay Act violations after she was offered a lower salary than the salary paid to a male psychologist two years earlier.
• The court upheld the jury verdict, determining that a reasonable juror could conclude, based on the evidence of budget constraints and market forces, that the pay differential was based on a legitimate business reason other than sex.
• The case highlights the fine line between legitimate business reasons and discriminatory practices in setting new hire compensation.

On April 2, 2025, a Sixth Circuit panel issued a decision in Debity v. Monroe County Board of Education. The court upheld a magistrate judge’s decision to deny a female school psychologist’s motion for a judgment as a matter of law as to whether the board successfully established its affirmative defense that the pay differential was based on a reason other than sex. The Sixth Circuit further affirmed a magistrate judge’s decision to throw out the jury’s $195,000 damages award for the plaintiff as it was inconsistent with the jury’s finding on liability.

Much of the Sixth Circuit’s decision focused on whether the magistrate judge had properly handled an inconsistent jury verdict in which the appellate court agreed with the magistrate judge’s ultimate conclusion to throw out the damages award.

But the Sixth Circuit additionally found that “a reasonable juror could find that the Board offered” the female school psychologist “a lower salary … for a reason other than sex,” providing an example of how, in some circumstances, budget constraints and market pressures can appropriately influence compensation decisions.

Background

Marina Debity applied for a school psychologist position with Monroe County schools in Tennessee after completing an internship with the district. She alleged she was offered a lower salary than the salary paid to a male psychologist hired two years earlier, who negotiated for his pay. She alleged that when she requested equal pay, the county board of education withdrew her job offer. Debity then brought claims for sex discrimination and retaliation in violation of the Equal Pay Act (EPA), Title VII of the Civil Rights Act of 1964, and the Tennessee Human Rights Act.

Supply and Demand

The Sixth Circuit upheld the jury’s determination that market forces of supply and demand could constitute a legitimate, non-sex-based reason for the pay disparity, an affirmative defense under the EPA. The court’s analysis focused on the testimony of a school district administrator, who testified that when the school hired the previous male school psychologist in 2019, the board was in a “desperate” situation where one of the district’s four psychologists was retiring and another was moving to part-time. This urgency, combined with the lack of applicants, led the board to offer a higher salary. In contrast, Ferguson testified that when Debity applied in 2021, the school already had four full-time psychologists and had not previously employed five.

“It would be reasonable for a juror to conclude that Monroe County had a low demand for psychologists in 2021 with the same supply, one person, to fill the opening,” the Sixth Circuit said. “Therefore, a reasonable juror could believe that market forces of supply and demand caused Debity’s lower offer, not her sex.”

While the Sixth Circuit noted employers “may not use supply and demand as an excuse to discriminate generally by sex just because there are more people from a certain sex applying for a given job,” the school district administrator’s testimony showed there was not this type of “generalized discrimination.” The court said the question of whether Ferguson would have treated a woman applying in 2019 the same as the male psychologist, who was offered more money, was a matter for the jury.

Budget Constraints

The Sixth Circuit further said that an employer’s desire for cost savings can be a legitimate business justification for a pay differential. The school administrator’s testimony showed that the board was “genuinely concerned about the budget.” According to the decision, the administrator “testified that he tried to find enough room in the budget to hire Debity … but could not” because it was a higher priority to hire a full-time teacher at the elementary school.

The court rejected Debity’s arguments that the board could have shifted unused funds from elsewhere, stating that it is not the court’s role to second-guess the board’s budget decisions. “It is irrelevant whether the Board’s budgeting decision was wise or even based on a correct understanding of the facts,” the Sixth Circuit said. “The EPA does not outlaw incompetence—it prohibits discrimination by sex.”

Next Steps

The Debity case highlights the fine line between legitimate business reasons and discriminatory practices in setting new hire compensation. Budget constraints and market forces may, in some situations, be legitimate, nondiscriminatory business reasons that justify certain pay disparities between males and females. In the Debity case, the Sixth Circuit focused on testimony about the low supply of applicants and the immediate need to hire a school psychologist when it hired the male psychologist two years earlier as evidence as to why the male comparator was offered higher pay.

While the Debity decision is a favorable one for employers, employers facing similar market forces and budget limitations when making compensation decisions may still wish to proceed with caution. Employers may want to avoid overreliance on budget constraints and market pressures as vague, general justifications for compensation decisions. Instead, if a pay differential is necessary, despite the employer’s efforts to avoid one, employers may want to keep detailed records of budgetary decisions and the specific circumstances at play.