In Ledbetter v. Goodyear Tire & Rubber Co., 127 S. Ct. 2162 (2007), a sharply divided U.S. Supreme Court came down on the side of employers and held that a new time limit for filing a charge of discrimination under Title VII (which is 300 or 180 days, depending on the jurisdiction) does not start each time an employee receives a pay check, even if the amount of the check is lower than it should be based on a past discriminatory pay decision. Rather, the court held that the initial pay decision itself constitutes the “discriminatory act” and that the time limit for filing starts running when the employee learns of that decision.

The Ledbetter Decision

Lilly Ledbetter first started working for Goodyear in 1979. In her discrimination suit filed decades later, she presented evidence that she and other female workers were paid significantly less over the years than their comparable male co-workers. Although the pay decisions that caused the disparities had been made years before Ledbetter filed her discrimination claim, she argued that the time period for filing her claim started over each time she received a paycheck. The jury agreed and awarded her over $200,000 in back pay for the years during which she experienced a pay differential. The 11th Circuit Court of Appeals disagreed, reversing the judgment for Ledbetter.

The Supreme Court held that the time limit for filing a charge of discrimination “is triggered when a discrete unlawful employment practice takes place.” The court found that the time limit does not start over “upon the occurrence of subsequent nondiscriminatory acts that entail adverse effects resulting from past discrimination.” Because no new discriminatory pay decision had been made within 180 days of the date on which Ledbetter filed her discrimination charge, the court upheld the 11th Circuit’s reversal of the judgment in Ledbetter’s favor.

The Take Away

The Ledbetter decision significantly reduces employers’ potential liability for previous discriminatory pay decisions. That relief may be short-lived, however, based on Congress’ negative reaction to the decision. A bill has been introduced that would circumvent Ledbetter and provide that each paycheck affected by a previous discriminatory pay decision constitutes a separate and distinct discriminatory act upon which a charge may be filed. The bill seeks to amend the Age Discrimination in Employment Act, the Americans with Disabilities Act and the Rehabilitation Act, and Title VII.

The prospects for passage are unknown at this point. Regardless of the outcome, however, employers are well-advised to continually monitor their pay practices and the pay decisions of managers to assure they are being made in a defensible and non-discriminatory manner.