In a decision important to employers, a 5-4 majority of the U.S. Supreme Court ruled that plaintiffs relying on a Title VII disparate treatment discrimination theory (race, sex, etc.) must timely challenge pay decisions, and cannot rely upon the “continuing violation” theory to challenge allegedly discriminatory decisions that were made prior to the time period for filing a charge with the Equal Employment Opportunity Commission (300 days in Ohio). Ledbetter v. Goodyear Tire and Rubber Company (May 29, 2007). The Court’s decision overturned a $3.5 million jury award (including nearly $3.3 million in punitive damages) which had been reduced to $360,000.00 by the trial court due to the statutory damages limits.

For purposes of Title VII’s filing requirement, the Court has distinguished unlawful actions of two kinds: (1) discrete acts and (2) acts that recur and are cumulative in impact (such as hostile environment claims). Discrete acts must be timely challenged within the charge filing period. The Court has reasoned that timely filings further the Congressional intent of encouraging the prompt processing of charges.

Ms. Ledbetter was employed by Goodyear from 1979 until she retired in 1998. Ms. Ledbetter filed a charge with the EEOC alleging that in years past she received lower performance evaluations because of her gender, which resulted in lower merit pay increases that reduced her pay throughout her career. Ms. Ledbetter did not claim that the company decision-makers acted with discriminatory intent either when she was issued checks or when she was denied a raise during the EEOC charge filing period. Rather, Ms. Ledbetter argued that discriminatory decisions regarding an employee’s pay, although made many years ago, had continuing effects that were repeated each time a paycheck was issued to the affected employee. As a result, she claimed she could challenge the discriminatory pay at any time within the charge filing period (180 days in Alabama) after a paycheck was issued to her.

The Supreme Court disagreed, finding that the time for filing a Title VII charge of employment discrimination with EEOC begins to run when the discriminatory act occurs. An EEOC charge must “identify with care the specific employment practice at issue.” This requirement applies to any discrete act of discrimination, such as claims relating to hiring, promotions, and terminations. The Court ruled that this requirement applies equally to employer decisions regarding an employee’s pay.

The decision has drawn sharp criticism from women’s rights groups and applause from business groups. The decision will have an immediate impact on EEOC charges seeking redress for pay and related discrimination based on decisions that were made years earlier. It is likely that employee groups will move quickly to mount a legislative campaign to amend Title VII to reverse the Ledbetter decision. Previously such efforts have been successful in reversing employeefriendly decisions interpreting Title VII, such as the amendments made in 1991 that reversed several Supreme Court decisions.