Dennis J. Merley, Editor
Felhaber, Larson, Fenlon and Vogt, P.A.

Vol. 17, No. 5
July 2007

WAGE DISCRIMINATION

No more eternal pay discrimination claims, U.S. Supreme Court says

For as long as discrimination laws have existed, workers claiming unequal pay have had a right that no other discrimination litigants ever had — the right to pursue those claims even after the legal time frame for filing charges or lawsuits had expired. The U.S. Supreme Court, however, has now ruled that most of those kinds of claims aren't indefinite and must be pursued within the same time frame as all other discrimination actions.

Series of unfortunate events

Lilly Ledbetter worked at Goodyear Tire for approximately 19 years. During that time, she received several negative performance reviews that resulted in diminished wage increases and lower earnings than many of her coworkers. She attributed the reviews to the fact that she is female and claimed that the diminished pay increases were the product of those discriminatory decisions. She therefore sued the company for violating Title VII of the Civil Rights Act of 1964 and received a jury verdict of nearly $4 million (although the judge later reduced the award to $360,000).

Goodyear appealed to the Eleventh Circuit and was successful in getting the $360,000 verdict overturned. Ledbetter then appealed to the U.S. Supreme Court.

Seeking the claim's dismissal, Goodyear argued that Ledbetter hadn't filed the required charge with the Equal Employment Opportunity Commission in a timely fashion. She countered that the courts had always treated pay discrimination claims differently than other discrimination cases.

Unlike hiring, promotion, or discharge cases, in which the discriminatory act can be pinpointed to a single decision, Ledbetter claimed that the courts had frequently viewed pay discrimination cases as a series of discriminatory acts that renewed Title VII's charge-filing period each time the individual received a paycheck. As a result, the time for filing the claims was indefinite, and employers would never be able to "close their books" on pay decisions.

It's about the employer's decision, not the effects

The Supreme Court rejected Ledbetter's approach and ruled that unequal pay claims under Title VII must be filed within the same statutory time frame as all other discrimination claims. The judges based their decision on a review of a number of their previous decisions addressing the basic principle that charges must be filed when the discriminatory act occurs, not when its effects are felt most painfully. In the past, the Court had disallowed:

• a claim by a college professor who waited to challenge a tenure denial until after his one-year "terminal teaching assignment"; and
• a claim by airline employees who challenged seniority decisions years after they were made because the decisions only recently had resulted in layoffs.

• First, this case was decided only under Title VII and doesn't affect claims under the Equal Pay Act of 1963 (EPA) or other areas of federal or state law. Therefore, workers may still file non-Title VII claims, which may result in a longer statute of limitations. Remember, though, that the EPA applies only to claims of differential pay based on sex and not on any other protected classification.
• Second, the majority in Ledbetter's case was razor thin. The 5-4 ruling demonstrates a lack of consensus among the justices, and Justice Ruth Bader Ginsburg, writing for the dissent, took the unusual step of reading her vehement dissent aloud from the bench. A single new appointment to the bench could affect this decision's continuing validity.
• Third, this ruling assumes that employees will understand that they've been victimized by possible discrimination as soon as their pay rate is set. Unlike a promotion decision, in which the employee immediately knows that the job went to someone else, a pay discrepancy is "often hidden from sight" (as the dissent claims), and workers may not understand that they've been the victim of pay bias until a pattern occurs or the legal filing period has expired. As a result, this case may not be the final answer on when pay discrimination claims must be filed, although it certainly provides the "default position" until an individual can prove a good reason why the statutory time frame shouldn't be imposed.

Copyright 2007 M. Lee Smith Publishers LLC

MINNESOTA EMPLOYMENT LAW LETTER does not attempt to offer solutions to individual legal problems, but rather, to provide information about recent developments in Minnesota employment law. Individuals having questions about specific legal issues should consult with the attorney of their choice.