The U.S. Supreme Court’s May 29 decision in Ledbetter v. Goodyear Tire & Rubber Co., Inc., 550 U.S. ___ (2007), should bring a sigh of relief to employers who feared that a contrary decision could have meant exposure to liability under Title VII of the Civil Rights Act of 1964 for allegedly discriminatory compensation decisions made long ago.
In a 5-4 decision, the Supreme Court held that a Title VII claim for pay discrimination is time-barred unless it relates to a “discrete act of alleged intentional discrimination” occurring within the Equal Employment Opportunity Commission (“EEOC”) charging period of either 180 or 300 days, depending on the state (the period is 300 days in California), and that a nondiscriminatory act such as the issuance of a paycheck which merely “entail[s] adverse effects resulting from past discrimination” does not restart the time period for bringing a claim. Even a quick reading of the Court’s opinion shows the strain between the majority’s interest in assuring “repose” for stale claims and the dissent’s desire not to allow employers to “wipe the slate clean” for the effects of past discrimination.
Plaintiff Lilly Ledbetter worked for Goodyear Tire and Rubber Company (“Goodyear”) from 1979 until 1998. Ledbetter submitted a questionnaire to the EEOC in March of 1998 and a formal charge in July of that same year. In November of 1998 Ledbetter sued Goodyear, asserting several claims, including violations of Title VII and the Equal Pay Act of 1963. Ledbetter claimed she was given poor evaluations throughout the her employment because of her sex and that she received smaller pay increases because of those evaluations. When she retired in 1998, Ledbetter earned significantly less than any of her male coworkers.
The District Court granted summary judgment in favor of Goodyear on the Equal Pay Act claim, but allowed the Title VII claim to go to trial. The jury found in Ledbetter’s favor that she had been the victim of intentional discrimination in compensation on account of sex and awarded both back pay and damages on her Title VII claim. The Court of Appeals for the Eleventh Circuit reversed, holding that Ledbetter’s claim was time barred because she had not sued within the required 180 days of an intentional discriminatory decision by Goodyear about her pay, and that there was insufficient evidence to show discriminatory intent in the only two pay decisions made during the 180 days prior to the EEOC charge--decisions to deny Ledbetter a raise in 1997 and 1998.
Ledbetter appealed to the U.S. Supreme Court to determine whether a plaintiff can bring an action under Title VII alleging pay discrimination when compensation is received within the EEOC charging period but is the result of discriminatory decisions that did not take place within that period. Ledbetter’s chief argument before the Supreme Court was that each individual paycheck received by her was itself a discriminatory act and thus triggered a new charging period. She also argued that the denial of a raise in 1998 triggered a new charging period.
The Supreme Court majority rejected Ledbetter’s principal argument, finding that the EEOC charging period begins when a “discrete act of alleged intentional discrimination” occurs, not when the effects of the actions are later felt. Here, the discrete act was the decision to set Ledbetter’s pay at a certain level, not the issuance of each individual paycheck. As the pay-setting decisions at issue were made outside of the 180-day EEOC charging period, Ledbetter’s action was time barred. The Ledbetter majority stated that “It would be difficult to speak to the point more directly” than to say, quoting from its prior holding in United Air Lines v. Evans, 431 U.S. 553, 558 (1977), that: “A discriminatory act which is not made the basis for a timely charge . . . is merely an unfortunate event in history which has no present legal consequences.” The Supreme Court also rejected Ledbetter’s second argument, explaining that she could not attach the discrimination involved in past decisions to later pay decisions. To allow this would impose liability when decisions were, in fact, made without discriminatory intent.
A spirited dissent takes issue with the Court’s majority opinion, based in part on the Court’s prior holding in Bazemore v. Friday, 478 U.S. 385 (1986) in which the Court stated: “Each week’s paycheck that delivers less to a black than to a similarly situated white is a wrong actionable under Title VII.” In Bazemore, the employer adopted a facially discriminatory pay structure in which employees were placed on different pay scales according to race. However, the majority’s opinion in Ledbetter distinguishes Bazemore, finding that Ledbetter did not demonstrate that Goodyear was using a facially discriminatory pay scale in such a way as to create a “continuing” violation extending into the 180-day EEOC charging period. Rather, the Court observed, she had argued that she was individually discriminated against in the course of discrete annual performance reviews, and received a reduced salary as a result. The Court also rejected the dissent’s argument that pay discrimination claims should be treated like hostile working environment claims which are based on a series of acts which occur over time, finding that when an employee alleges a “series of actionable wrongs,” an EEOC charge needs to be filed for each discrete action. The Court cautioned however that “of course, if an employer engages in a series of acts each of which is intentionally discriminatory, then a fresh violation takes place when each act is committed.”
The Ledbetter decision may protect employers from compensation claims stemming from decisions made years before the actual filing of a lawsuit. The Court explained that this approach both encourages fast processing of employment discrimination claims and prevents the blurring of facts due to the passage of time, especially where an employer’s intentions are at issue. However, the majority indicated that it was merely interpreting Title VII as written by Congress, and the dissent clearly calls for Congressional action to repeal the decision in favor of broader protection for the present effects of past pay discrimination. It is entirely possible that Congress will subsequently step in to overrule the decision in Ledbetter by amending Title VII, as some press reports have already suggested. Employers should also remember that while this decision may offer employers some protection from liability under Title VII, other federal statutes prohibiting various forms of discrimination still allow employees to bring claims which might be time barred under Title VII, and that state laws, such as California’s Fair Employment and Housing Act may offer broader protections than federal law.