New England Biz Law Update
In a controversial 5-4 decision, the U.S. Supreme Court recently limited the amount of time an employee can file a pay discrimination claim under Title VII.
In the majority opinion, authored by Justice Samuel A. Alito Jr., the court rejected the so-called continuing violation doctrine, holding that a discriminatory wage claim under Title VII is triggered when an employer makes a discriminatory pay decision. An employee aware of possible pay discrimination cannot sue after the limitations period based on pay policies from the past.
For the claim to be timely, the employee must file with the EEOC within 180 days (or 300 days, depending upon the state) of the employer’s initial decision. Ledbetter v. Goodyear Tire & Rubber Co., 550 U.S. ___, 27 S. Ct. 2162 (2007).
The court also held that the mere fact that an employee receives a paycheck reflecting discriminatory wages within the 180-day or 300-day charge-filing period is not itself actionable.
Glass ceiling?
The plaintiff, Lilly Ledbetter, was one of only a few female managers who worked for Goodyear at its tire production plant in Alabama. Over the course of her employment (1979-1998), she was paid progressively less than men in the same position.
For most of her employment, the wages at the plant were set annually based on supervisors’ evaluations of employee performance. For the last two years of her employment, she received no raises because her job was slated for layoff. By the end of her employment, there was a large pay gap between her and her male counterparts.
Ledbetter filed her EEOC charge in 1998 and her civil action in 1999, contending she was paid less because of her gender. She sought damages for the disparity in wages over the course of her employment.
The jury ruled in her favor on the Title VII claim and awarded back pay, emotional distress damages and punitive damages. Goodyear appealed to the 11th Circuit, contending Ledbetter’s claim was untimely because all decisions about her pay had been made outside of the charge-filing period.
The 11th Circuit sided with Goodyear and reversed the verdict. Ledbetter then appealed to the Supreme Court.
Significant departure
The Supreme Court’s ruling is a significant departure from how the EEOC and many courts had previously analyzed the timeliness of disparate pay claims. Many courts and the EEOC had applied the principle that each new paycheck affected by past discriminatory pay decisions triggered a new charge-filing period.
Many courts had also applied the continuing violation theory to pay claims. The Supreme Court had itself upheld the timeliness of a Title VII wage claim in a situation where African-American employees claimed their wages were lower than white employees based on pay disparities that were attributable to an old, segregated pay structure in effect before 1965. Bazemore v. Friday, 478 U.S. 385 (1986) (per curiam).
In Justice William Brennan’s separate opinion in that case, he noted that “[e]ach week’s paycheck that delivers less to a black than to a similarly situated white is a wrong actionable under Title VII.” Id. at 395 (Brennan, J. concurring). Based on the then-prevailing legal analysis, disparate pay claims had been particularly challenging for employers to defend.
The appropriate legal analysis became murkier in 2002, with the Supreme Court’s ruling in National Railroad Passenger Corporation v. Morgan, 536 U.S. 101 (2002). In that case, the Supreme Court considered the applicability of the continuing violation theory to various forms of discrimination, holding that “discrete” acts of discrimination were not subject to the continuing violation theory. Morgan called into question whether courts would continue to follow their earlier readings of Bazemore.
Clarifying this uncertainty, the majority in Ledbetter ruled that each discriminatory pay decision is a discrete act, and an employee who feels that he or she is aggrieved, must file a claim challenging that decision within the appropriate limitations period.
The court limited Bazemore to situations where an employer uses a facially discriminatory pay structure within the appropriate charge-filing period.
The Ledbetter majority also rejected any application of the continuing violation doctrine, holding that discriminatory paychecks reflected only continuing effects of earlier discriminatory pay decisions, and that any such continuing effects were not actionable.
‘Parsimonious reading’
Justice Ruth Bader Ginsberg, joined by Justices Stevens, Souter and Breyer, argued that the unlawful practice at issue was the current receipt of salary infected by a discriminatory pay decision, even if that decision occurred outside of the charge-filing period.
Justice Ginsberg wrote that disparate pay decisions were akin to hostile work environment claims, for which the continuing violation theory applies, because employees might not realize they are receiving discriminatory wages until they see the cumulative effect of multiple decisions.
Justice Ginsberg urged Congress to intervene to address “this Court’s parsimonious reading of Title VII.”
Full reach of decision still uncertain
The court’s decision significantly limits the scope of an employer’s liability for pay discrimination claims brought under Title VII. However, several countervailing factors could limit the reach of the decision.
First, the majority opinion noted that Ledbetter did not claim any delay in learning of the discrimination. The majority expressly stated it was not addressing whether Title VII claims are amenable to the discovery rule. Accordingly, an employee might claim that a pay claim is timely, even if brought outside of the applicable charge-filing period, because the employee was not on notice of the discrimination until later.
Of note, the Massachusetts Supreme Judicial Court has held that discrimination claims under the Massachusetts anti-discrimination statute are subject to the discovery rule. Wheatley v. American Tel. & Tel. Co., 418 Mass. 394, 398 (1994).
Second, the court noted its ruling does not affect the analysis of claims brought under the Federal Equal Pay Act, which does not require proof of intentional discrimination. Accordingly, it appears that employees may still bring federal Equal Pay Act claims (which covers gender discrimination), even for pay decisions made outside of the appropriate limitations period.
Third, the dissent specifically invited Congress to act and correct the errors that the dissent perceived in the majority’s opinion. As a result, the Court’s ruling could potentially be subject to Congressional action.
Fourth, employers should note the Supreme Court’s decision dealt only with federal law under Title VII, and therefore leaves open the question whether Ledbetter will apply to pay disparity claims under cognate state claims.
In Massachusetts, for example, the SJC, in a post-Morgan, but pre-Ledbetter decision, appeared to adopt reasoning similar to the Ledbetter majority in holding that equal pay claims are “discrete” acts and not subject to the continuing violation theory. Silvestris v. Tantasqua Regional School District, 446 Mass. 756, 768-70 (2006) (construing the Massachusetts Equal Pay Act).
In general, while state courts often look to federal courts’ analysis of Title VII and related statutes for guidance in construing their own analogous laws, they can also decline to follow federal precedent. As a result, it will be necessary to see how state courts analyze pay disparity claims going forward. Even if the courts had previously allowed such pay disparity claims to go forward, the Ledbetter decision calls into question whether they will continue to do so.
Richard D. Glovsky, chair of the employment law group, and Laurie F. Rubin are partners at Prince, Lobel, Glovsky & Tye in Boston, a law firm providing a broad range of services to Fortune 1000 companies, closely held and family-owned businesses, and high-net-worth individuals. A nationally recognized trial and employment law attorney, Mr. Glovsky’s primary expertise is advising businesses on how to deal with problem employment situations and defending claims of discrimination on behalf of employers. Ms. Rubin, a co-author of the Massachusetts Practice volume on employment law, is widely recognized as one of Massachusetts’ foremost experts on employment-related issues. She focuses her practice on employment discrimination and wrongful termination issues. Learn more about the firm at www.plgt.com.
