In a favorable ruling for employers, the Tenth Circuit recently affirmed the dismissal of claims for an allegedly discriminatory demotion, as barred by the 300-day statute of limitations that applies to the filing of a charge of discrimination. In doing so, the Court ruled the 2009 Lilly Ledbetter Fair Pay Act only changed the statute of limitations for claims of discriminatory compensation, and not other types of claims that may also affect employees' compensation. Almond v. Unified School District #501, 2011 WL 5925312 (10th Cir. Nov. 29, 2011). Other types of claims still require the filing of a charge within 300 days after the alleged unlawful action is announced or the employee knew or reasonably should have known of it.
In Almond, due to budget cuts, the School District told two employees it was terminating their jobs, but that they could transfer to lower paying positions. The School District agreed to red-circle their pay from their former positions for two years, before reducing it to the regular compensation level of their new jobs. The two employees took the transfers, and two years later, the School District reduced their pay, as agreed. It was only then that the employees filed EEOC charges, contending that their demotions and pay cuts were based on age discrimination. Notably, they did not argue that their new pay rates were lower than those of others in their new positions.
Before the Ledbetter Act, the general rule was that the statute of limitations began to run when the adverse employment action was announced. If it was not announced, then it started as soon as the employee knew or should have known of the injury. Applying this traditional rule, the employees knew two years before their salaries were reduced that this would happen, and therefore, the 300-day "clock" started back when they were demoted. (The employees did not assert claims for hostile work environment, which are governed by a different rule.)
The Court in Almond held that the Ledbetter Act did not require a different result. Congress passed the Act in response to a U.S. Supreme Court decision involving claims of pay discrimination. The Act states that in cases involving a discriminatory compensation decision, a claim arises when the decision is made, when a person becomes subject to the decision, or each time the discriminatory compensation occurs. The employees in Almond argued that this language meant a claim arose each time they received a lower paycheck in their new positions.
The Tenth Circuit rejected the employees' theory, however. Accepting their argument would mean most claims resulting in compensation changes would be subject to the Act, which would be a "revolution" in how statutes of limitations work. Instead, the Act was held to apply only to claims of unequal pay between members of a protected class and similarly-situated employees. Because the employees were not asserting such a claim, they could not take advantage of the extra time provided by the Act to file their delinquent charges.