United States Supreme Court Rules That Past Acts of Pay Discrimination Are Not Actionable Each Time a New Paycheck Is Issued Unless the Pay Structure Is Itself Discriminatory

Volume 6, Issue 5
June 19, 2007

On May 29, 2007, in a divided 5-4 ruling, the United States Supreme Court in Ledbetter v. Goodyear Tire & Rubber Co., Inc., 550 U.S. ____ (May 29, 2007), rejected the pay discrimination claim of a retired female employee finding that the time for filing such a claim under Title VII ran 180 days (or 300 days in a deferral state like Nevada) from the original pay decisions. The Court expressly rejected the argument that in pay cases there is a new violation and new charge filing deadline each time a subsequent paycheck is issued, except when there is evidence that the pay structure itself was created in a discriminatory manner.

Lilly Ledbetter worked for Goodyear Tire and Rubber Company at its Gadsden, Alabama plant beginning in 1979. Close to her retirement in November 1998, Ledbetter discovered, by way of an anonymous letter, that she was making less than her male counterparts and filed a charge with the EEOC. After retiring, Ledbetter filed a lawsuit to try and remedy the situation.

Ledbetter claimed several supervisors had given her poor evaluations because of her sex, and that as a result of these evaluations her pay was not increased as much as it would have been if she had been evaluated fairly. Toward the end of her employment with Goodyear, Ledbetter was paid $3727.00 a month, while the lowest paid male earned $4286.00 a month, and the highest paid male earned $5236.00 per month. Goodyear argued that the pay discrimination claim was time barred as to all pay decisions made before September 26, 1997 - 180 days before Ledbetter filed her EEOC questionnaire - and that no discriminatory act took place following that date.

The jury found it more likely than not that Goodyear paid Ledbetter a lower salary because of her sex, and awarded Ledbetter back-pay and damages, plus costs and attorneys fees. However, the Eleventh Circuit Court of Appeals reversed the jury's decision holding that a Title VII pay discrimination claim cannot be based on allegedly discriminatory events that occurred outside the charging period, and that there was insufficient evidence to prove that Goodyear acted with discriminatory intent in making the only two pay decisions within the charging period.

The Supreme Court agreed with the Eleventh Circuit Court noting that in plaintiff's state an EEOC charge must be brought within 180 days after the alleged unlawful employment practice occurred. The Court rejected the argument that each paycheck she received following the alleged discriminatory act triggered a new EEOC charging period. The Court distinguished Ledbetter's case from its decision in Bazemore v. Friday, 478 U.S. 385 (1986) where the Court ruled that whenever an employer issues paychecks using a discriminatory pay structure, each paycheck issued triggers a new EEOC charging period. Ledbetter did not present any evidence that Goodyear initially adopted its performance-based pay system in order to discriminate based on sex or that it later applied this system to her within the charging period with discriminatory animus.

Justice Ginsberg wrote a sharp dissent, noting that comparative pay information is often hidden from the employee's view and that pay disparities often occur in small increments, causing an employee to suspect discrimination only after time. She argued that because pay disparities differ significantly from other easily identifiable adverse actions such as termination, failure to promote or refusal to hire, plaintiffs should not be forced to file an EEOC charge within 180 days after each allegedly discriminatory employment decision was made and communicated to her, as suggested by the majority. Finally, the dissent clearly urged lawmakers to react to the ruling stating: "the ball is in Congress' court. As in 1991, the Legislature may act to correct this Court's parsimonious reading of Title VII."

While this case is an important victory for employers, Ms. Ledbetter has already testified before the U.S. House of Representatives' Education and Labor Committee with some House Democrats vowing to "fast track" legislation to undo the Supreme Court's decision. Regardless, this case underscores the need for employers to periodically review its pay practices and decisions to determine if they are vulnerable to pay discrimination allegations.

KZA Employer Report articles are for general information only; they are not intended and should not be construed to be legal advice. Reading or replying to such articles does not establish an attorney-client relationship. In addition, because the subject matters and applicable laws discussed in Employer Report articles are often in a state of change and not always applicable to every type of business entity or organization, readers should consult with counsel before making decisions based on the same.