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Supreme Court Upholds Strict Time Limit for Filing Pay Discrimination Claims

Labor and Employment Update

May 30, 2007

In a 5-4 decision, the U.S. Supreme Court ruled on Tuesday that claims of pay discrimination brought under Title VII of the Civil Rights Act of 1964 must be filed with the EEOC within 180 days after the last allegedly unlawful pay decision was made. This is an important ruling because some federal courts previously had required employers to defend allegations of pay bias that were based on salary and raise decisions implemented many years earlier.  

In the case before the Court, Ledbetter v. Goodyear Tire & Rubber Co., Inc., No. 05-1074, the employee, Lilly Ledbetter, had worked as the only female supervisor in her department at the company’s plant in Gadsen, Alabama. After 19 years on the job, she retired in 1998 and filed a pay discrimination suit against Goodyear, alleging that she had been paid substantially less than many of her male counterparts because of her sex.  

Among its defenses, Goodyear argued that the difference in pay was justified on the basis of the better performance reviews received by the male supervisors, and that, in any event, Ledbetter should not be permitted to rely on alleged discrimination that had occurred almost two decades ago. In response, Ledbetter argued that her poor evaluations were themselves the result of sex discrimination and therefore her salary had not increased as much as it would have had she been evaluated fairly. She further contended that she should be allowed to recover for past discrimination because she had no prior knowledge of the pay disparity and that the earlier alleged discriminatory acts affected her salary up until her retirement. 

The trial court allowed the case to proceed to trial, where a jury awarded her almost $4 million (later reduced by the trial court to $360,000). On appeal, the U.S. Court of Appeals for the Eleventh Circuit sided with Goodyear, holding that Title VII requires pay discrimination claims to be brought within 180 days after the last pay decision that affected the employee’s salary. The Court further ruled that Ledbetter failed to prove that Goodyear intentionally discriminated when it denied her two raises during that time period (1997 and 1998). The Supreme Court agreed to hear the case to resolve the conflict between the strict interpretation applied by the 11th Circuit and the more liberal construction applied by some other circuits. 

Writing for the slim majority, Justice Samuel A. Alito, Jr. rejected Ledbetter’s argument that each paycheck that is based on an earlier, allegedly discriminatory act triggers the 180-day filing period. Joined in his opinion by Chief Justice Roberts and Justices Scalia, Kennedy and Thomas, Alito wrote that “later effects of past discrimination do not restart the clock for filing an EEOC charge.”  Rather, as the 11th Circuit had ruled, each pay decision is a “discrete act,” which requires an employee to file a formal charge with the EEOC within 180 days after the pay rate is set. Reasoning that the “short deadline reflects Congress’s strong preference for the prompt resolution of employment discrimination allegations,” the majority emphasized that allowing claims such as Ledbetter’s would unfairly require employers to defend against claims “arising from employment decisions that are long past.” 

In a sharply worded dissenting opinion, Justice Ruth Bader Ginsburg chastised the majority for its “cramped” interpretation of Title VII, and for ignoring “the realities of the workplace,” including the fact that “compensation disparities are often hidden from sight,” and therefore employees often do not know what their colleagues are being paid. Moreover, Ginsburg reasoned, differences in pay raises among employees may initially be inconsequential and may only become significant over many years. Ginsburg, who was joined in her dissent by Justices Stevens, Souter and Breyer, noted that Ledbetter had been hired at the same salary as her male counterparts, but over the years received smaller raises. Thus, by the time she filed her lawsuit, Ledbetter was earning roughly 40 percent less than her male counterparts. 

In light of these “realities,” Ginsburg opined, pay discrimination is unlike more obvious “discrete acts” of discrimination, such as a termination or the denial of a promotion, and therefore should be treated more as a series of ongoing and cumulative acts of discrimination, similar to the way in which the Court evaluates “hostile work environment” claims. Justice Ginsburg urged Congress to pass legislation nullifying the majority’s “parsimonious reading of Title VII.”  

Bottom Line 

The Court’s ruling is clearly a major victory for employers, especially because the 180-day filing limit applies to all Title VII pay claims, including those alleging discrimination on account of race and national origin.  Some caveats, however, warrant all employers’ attention:

  • Pay discrimination claims arising from alleged sex discrimination may still be brought under the Equal Pay Act (EPA). Although the EPA provides for more limited damage awards than are permitted under Title VII, the EPA provides for a longer period of time in which to file a claim. Moreover, under the EPA, a claim accrues anew with each paycheck. 
  • Many states have their own counterpart agency to the EEOC.  In those states, if an employee timely files a claim with the appropriate state agency, the employee will have 300 days in which to file a claim with the EEOC.
  • The EEOC reports that, in Fiscal Year 2006 alone, it received more than 4,900 pay discrimination claims. About 2,300 were based on sex bias and over 2,000 were based on race. While the Ledbetter decision may help employers prevail in many of these cases, the ruling also is now likely to encourage some employees to file a pay bias claim more quickly than they might otherwise have done.

Thus, for a variety of reasons, the Ledbetter decision, though significant, will not insulate employers from all discrimination suits. Accordingly, employers should continue to review their compensation and other employment practices to ensure that they comply with the mandates of Title VII and other anti-discrimination laws.