Supreme Court Rules Pay Discrimination Claims Are Subject to Limitation Period

A May 2007 decision by the United States Supreme Court states that pay discrimination claims brought under Title VII must be filed with the EEOC within 180 days of the allegedly unlawful act.

In Ledbetter v. Goodyear Tire & Rubber, a 5-4 Court upheld a stringent time limit of 180 days for filing discrimination claims based on unequal pay. In doing so, it rejected a plaintiff’s ability to seek recovery for any alleged act of pay discrimination that occurred more than 180 days prior to filing a complaint with the EEOC.

The plaintiff worked for Goodyear for a total of 19 years from 1979 to 1998. Shortly before her retirement in 1998, she submitted a questionnaire to the EEOC alleging sex discrimination, which was followed by a formal charge of discrimination. After exhausting the administrative process, she filed suit and asserted a claim for pay discrimination that spanned the duration of her 19-year career. Goodyear, on the other hand, contended that the plaintiff’s pay discrimination claim was time barred with respect to all pay decisions made before September 1997 (i.e., 180 days before making her complaint to the EEOC).

At trial, the plaintiff established that in 1997, her salary was less than that of a male in the same job and same department. She also established that she earned anywhere from 15% to 40% less than males with equal or less seniority. This evidence led to a favorable finding by the jury, which awarded the plaintiff $3.5 million in punitive damages and back pay. The Court of Appeals for the Eleventh Circuit reversed the jury’s verdict, holding that a Title VII pay discrimination claim cannot be based on any pay decision that occurred prior to the last pay decision that affected the employee’s pay during the EEOC charging period. The Court of Appeals then concluded that the evidence submitted did not establish any discriminatory pay decisions within the 180-day charging period.

The Supreme Court affirmed the decision of the Court of Appeals, holding that “the later effects of past discrimination do not restart the clock for filing an EEOC charge.” In issuing its ruling, the Court took the position that each paycheck constituted a “separately actionable intentionally discriminatory act” that requires an employee to file a charge within 180 days of that act. The Court rejected the plaintiff’s argument that each paycheck was a new violation of Title VII which triggered a new EEOC charging period that renewed all prior violations (although this remains the case under the Equal Pay Act). As support for its ruling, the Court noted Congress’ “strong preference for the prompt resolution of employment discrimination claims,” and that a contrary ruling would undermine that intent and require employers to defend against claims from the distant past.

Justice Ginsburg wrote a vigorous dissenting opinion stating that the majority ignores the broad remedial measures of Title VII and “overlooks common characteristics of pay discrimination.” She noted that given the secrecy in most workplaces about salaries, many employees would have no idea within 180 days that they had received a lower raise than others, as compared to the obviousness of a termination or denial of a promotion. Moreover, she argued that an initial disparity, even if known to the employee, might be small, thereby leading an employee-particularly a woman or a member of a minority group “trying to succeed in a nontraditional environment”-to avoid “making waves.”

Justice Ginsburg concluded by signaling that the “ball is now in Congress’ court” to “correct this Court’s parsimonious reading of Title VII,” and Congressional Democrats clearly got the message. Within days of the Court’s ruling, Senators Edward Kennedy (D-Mass.), Tom Harkin (D-Iowa), Hillary Rodham Clinton (D-N.Y.), and Barbara Mikulski (D-Md.) vowed to introduce legislation next week that clarifies federal law to state that the statute of limitations would restart for each payment of a discriminatory wage. Moreover, the plaintiff is scheduled to testify on June 12, 2007 before the House Education and Labor Committee.

What Should Employers Take From This Decision?

After rejoicing in the victory that substantially limits all pay discrimination claims under Title VII (not just sex discrimination), prudent employers will still remember that:

• The Equal Pay Act (a) provides a longer period of time in which to file a claim (up to two years), and (b) permits a claim to be “renewed” with each paycheck. The good news here is that the damages that a plaintiff can recover under the EPA are more limited than what is provided for under Title VII.
• The charging period may be extended up to 300 days in those states that have their own counterpart state agency to the EEOC.
• Instead of waiting on their damages to accrue and build, mindful plaintiffs (or their counsel) may simply file their charges with the EEOC more quickly than before. This could actually lead to an abundance of pay discrimination claims that might end up being premature or not supported by the entirety of the evidence.
• This decision may be mooted by Congress if it enacts legislation permitting a plaintiff to seek all lost back pay as long as a complaint was made with the EEOC within 180 days (or 300 days, if applicable) of the last violation.

Click here to read the full opinion.

Click here to learn more about Fish’s Employment and executive mobility group.