Earlier this month, the New Jersey Appellate Division issued a significant decision in Alexander v. Seton Hall University, No. A-1251-08T3, (App. Div. Dec. 7, 2009), holding that a plaintiff cannot claim a continuing discriminatory pay violation based on salary received during the statute of limitations period, resulting from a discrete discriminatory pay decision occurring outside the limitations period. The Appellate Division chose to follow the United State’s Supreme Court’s decision in Ledbetter v. Goodyear Tire & Rubber Co., 550 U.S. 618 (2007) despite Congress’ overturning the Supreme Court’s decision earlier this year in the Ledbetter Fair Pay Act (“FPA”).

 The Facts

Seton Hall University employed plaintiffs Alexander, Coll, and Thompson-Sard as professors. At the time the complaint was filed, each plaintiff was a tenured, long-term employee in her sixties. In the fall of 2004 and 2005, the University compiled summaries of faculty information arranged according to gender, college, rank, and salary. The plaintiffs obtained copies of these summaries, which they claimed demonstrated discriminatory pay discrepancies between them and younger, less experienced, male faculty members holding the same or similar positions for shorter periods.

The Trial Court

The plaintiffs filed a complaint on July 27, 2007 alleging discrimination based on sex and age in violation of the New Jersey Law Against Discrimination (“LAD”). They argued their allegations of discrimination were timely under the “continuing violation” doctrine and that the doctrine applies to claims alleging discriminatory pay disparity.

The trial court held that Ledbetter v. Goodyear Tire & Rubber Co., 550 U.S. 618 (2007) controlled because it involved the same issue: “‘whether and under what circumstances the plaintiff may bring an action alleging -- [] illegal pay discrimination when the disparate pay is received during the statutory limitations period but is the result of intentionally discriminatory pay decisions that occurred outside of the limitations period.’” The court held “that once the statutory filing period is expired the present effects of a discriminatory salary decision have no present legal significance or consequences and therefore, such a decision cannot form the basis of a charge of discrimination.” The court also held, pursuant to Ledbetter, that “a employer’s decision to set an employee’s . . . pay or salary is a discrete act that commences the running of the limitation’s [sic] period.’”

Thus, the trial court dismissed the complaint to the extent that it was based on discriminatory acts occurring prior to July 27, 2005. It later dismissed the entire complaint because the plaintiffs certified that during the statutory period, no discrete acts of discrimination were alleged. The plaintiffs appealed.

On appeal, the plaintiffs argued that their discrimination allegations were timely under the “continuing violations” and Ledbetter was not controlling. The plaintiffs argued that the trial court misinterpreted Ledbetter by holding that discriminatory pay decision is a “discrete act” that triggered the statute of limitations.

The Appellate Division affirmed the judgment of the trial court and held the continuing violations doctrine did not apply. It reasoned that the New Jersey Supreme Court had adopted the United States Supreme Court’s formula for the “continuing violation” doctrine and emphasized the distinction between a “hostile work environment” claim and a claim based on a “discrete act” of discrimination. Therefore, the Appellate Division looked to federal pay discrimination cases, under Title VII, for guidance.

The court stated that according to the federal formula, a “discrete act” of discrimination, such as a failure to promote, denial of a transfer, and refusal to hire, constitutes a separate action such that the statute of limitations is triggered “on the day that [act] happens.” A “hostile work environment” cause of action, however, accrues on the last date of the last act in a pattern or series of acts because that claim is based on the cumulative effect of individual acts. The Appellate Division found that the plaintiffs, like the plaintiff in Ledbetter, did not allege a claim for “hostile work environment.”

Following the reasoning in Ledbetter, the Appellate Division noted that if it held each new paycheck originating from an uncharged discrimination was a new violation that would make the statute of limitations meaningless, provided the plaintiffs were being paid. The Supreme Court in Ledbetter had found the receipt of these paychecks could not give present effect to the employer’s discriminatory conduct that occurred outside of the statute of limitations period. It noted that if the employer engaged in a “series of acts each of which is intentionally discriminatory then a fresh violation takes place when each act is committed.” As in Ledbetter, since the plaintiffs did not allege discrete acts of discrimination within the limitations period, the complaint was time-barred.

The Appellate Division also addressed and rejected Congress’ amendment to Title VII in reaction to the Ledbetter decision. In January 2009, Congress passed the “FPA”, which provides that an unlawful employment practice with respect to compensation can occur “when an individual is affected by application of a discriminatory compensation decision . . . including each time wages, benefits, or other compensation [are] paid.” 42 U.S.C. 2000e-5(e)(3)(A). Given the FPA, the Appellate Division recognized that there was merit for the proposition that it should not follow Ledbetter. However, the Court decided that following Ledbetter was more faithful to state jurisprudence, which utilized federal Title VII cases for guidance to interpret the LAD. The FPA, therefore, did not affect its construction of the LAD absent a post-Ledbetter amendment to the LAD.

Conclusion

Under the Appellate Division’s decision in Alexander v. Seton Hall University, a plaintiff must file a discriminatory pay claim under the LAD within two years of the discriminatory pay decision. While this decision protects employers from liability for pay discrimination more than two years old, it can still be overturned on appeal. Moreover, New Jersey may react by passing legislation amending the LAD, as Congress did in reaction to Ledbetter. Finally, employers are still exposed to equal Pay Act claims if a basis exists for employees to file a claim under federal law.

New York Department of Labor Does Not Require Specific Wage Form

In our November 2009 Client Alert, we reported that an amendment to New York State Labor Law § 195.1 requires employers to notify newly hired employees of their rate of pay, regular pay days, and overtime pay (for non-exempt employees). We also reported that, as set forth on the U.S. Department of Labor’s (“DOL”) website, such notice must be provided on the specific form provided DOL. Since then, the DOL has changed its position with respect to requiring its specific form. The DOL website now states: “No particular form is required. Employers may create their own forms, or use and/or adapt” its form. The website also states, “[i]n the near future, sample forms for a variety of pay agreements (salaried, prevailing rate, exempt, and others) will be provided.” Please see the link below for more information: http://www.labor.state.ny.us/workerprotection/laborstandards/workprot/lshmpg.shtm