In a controversial landmark decision, the United States Supreme Court rejected the pro-employee paycheck-accrual theory of pay discrimination previously accepted by many courts under Title VII of the Civil Rights Act of 1964 (“Title VII”). In Ledbetter v. Goodyear Tire & Rubber Co., Inc., 127 S. Ct. 2162 (2007), a sharply divided Court agreed with respondent Goodyear that “later effects of past discrimination do not restart the clock for filing an EEOC charge.” As a result of the Ledbetter decision, employees must file an EEOC charge within 180 or 300 days (depending on the state) after each allegedly discriminatory pay decision or forever lose their claim.
Lilly Ledbetter worked for Goodyear for nearly 20 years, beginning in 1979. During much of that time, salaried employees (like Ledbetter) were given or denied raises based on their supervisors’ evaluation of their performance. Towards the end of her tenure at Goodyear, Ledbetter discovered that she was being paid significantly less than her male counterparts (15 to 40% less). Ledbetter submitted a questionnaire to the Equal Employment Opportunity Commission (“EEOC”) in March 1998, filed a formal charge of discrimination in July 1998 and accepted an early retirement package later that year.
The District Court dismissed Ledbetter’s Equal Pay Act and other claims, but allowed her to proceed on her Title VII claim and present evidence of sex discrimination in pay throughout her entire 19-year career at Goodyear. The jury ruled in Ledbetter’s favor and awarded her both compensatory and punitive damages. The Eleventh Circuit Court of Appeals reversed the jury verdict, holding that a Title VII pay discrimination claim cannot be based on any pay decision that occurred outside the EEOC charging period.
The Supreme Court affirmed the Eleventh Circuit’s decision. The 5-4 majority held that the time within which an employee may file a discrimination charge “is triggered when a discrete unlawful employment practice takes place.” Because “a pay-setting decision is a discrete act that occurs at a particular point in time,” the limitations period for filing an EEOC charge for pay discrimination under Title VII “begins when the act occurs.” Conversely, “[a] new violation does not occur, and a new charging period does not commence, upon the occurrence of subsequent nondiscriminatory acts that entail adverse effects resulting from past discrimination.” The Court held that Ledbetter’s allegations amounted “not to a single wrong consisting of a succession of acts,” but rather “a series of discrete discriminatory acts . . . , each of which was independently identifiable and actionable.” Where a plaintiff alleges “a series of actionable wrongs, a timely EEOC charge must be filed with respect to each discrete alleged violation.” Because Ledbetter failed to do so, her claims arising prior to September 26, 1997 (180 days prior to the filing of Ledbetter’s EEOC questionnaire) should appropriately have been dismissed.
Justice Ruth Bader Ginsburg, writing for the dissent (joined by Justices John Paul Stevens, David H. Souter and Stephen G. Breyer), argued that in contrast to adverse actions such as termination and failure to promote, “[p]ay disparities often occur . . . in small increments” and “cause to suspect that discrimination is at work develops only over time. Comparative pay information, moreover, is often hidden from the employee’s view.” The “repetition of pay decisions undervaluing [Ledbetter’s] work gave rise to the current discrimination of which she complained” in her EEOC questionnaire and charge. Although “component acts fell outside [Ledbetter’s] charge-filing period, . . . each new paycheck . . . contributed incrementally to the accumulating harm.” The dissent reasoned that discriminatory disparities in pay, like hostile work environment claims, rest not on “one particular paycheck, but on ‘the cumulative effect of individual acts.’” Ginsburg called the majority decision a “cramped interpretation of Title VII, incompatible with the statute’s broad remedial purpose” and invited the United States Congress “to correct this Court’s parsimonious reading of Title VII.”
In the wake of the Ledbetter decision, Democrats in the United States Congress have been outspoken and quick to oppose the Supreme Court’s ruling. On July 31, 2007, the House of Representatives approved the Lilly Ledbetter Fair Pay Act by a 225-199 vote, which would allow employees to reclaim lost pay if a claim is filed within 180 days of the issuance of a discriminatory paycheck, regardless of when an initial violation may have occurred. In support of the bill, the Speaker of the House of Representatives, Nancy Pelosi, stated that “[t]he Supreme Court’s decision ignored the reality that most workers do not discuss their paychecks with their colleagues, which makes it extremely difficult for employees to know if they have been the victim of pay discrimination. By rectifying the Court’s decision, the Lilly Ledbetter Fair Pay Act restores balance in the law and allows victims of wage discrimination to seek justice in the courts.”
Senator Edward M. Kennedy (D-MA) has introduced a companion bill in the Senate entitled the Fair Pay Restoration Act. The Bush Administration has made it known that it strongly opposes such legislation and has threatened a veto of the bill, should it be approved.
Ledbetter protects employers from having to defend compensation decisions made years prior to the filing of a charge of discrimination. Even assuming that it survives the current legislative efforts, however, one less anticipated legacy of Ledbetter may be to encourage employees to pursue claims of pay discrimination before facts are fully developed, rather than risk losing the ability to sue on such claims because of the statute of limitations.