U.S. Supreme Court Rules in Ledbetter v. Goodyear Tire & Rubber Co. That Title VII Pay Discrimination Claims Must Be Filed Within EEOC Statute of Limitations


Employment & Labor Law Alert

July 6, 2007

In Ledbetter v. Goodyear Tire & Rubber Co., 550 U.S. ___, 127 S. Ct. 2162 (May 29, 2007), the U.S. Supreme Court ruled in a 5-4 decision that pay-setting decisions are discrete employment events, and that accordingly, plaintiffs bringing Title VII pay discrimination claims must file with the EEOC within 180 days of the adverse pay-setting decision (300 days in New Jersey, New York, Pennsylvania and other states that have work-sharing agreements with the EEOC), or otherwise have their claim barred. The Court’s May 29, 2007 decision will insulate employers from being forced to defend “stale” pay discrimination claims, and may save employers years of back pay in pay discrimination suits.

The Facts

Lilly Ledbetter worked for Goodyear Tire and Rubber Company as a supervisor at its Gadsden, Alabama plant for 19 years, from 1979 until 1998. See 167 L. Ed. 2d at 988. For most of these years, she was employed as an area manager, a predominantly male job classification. Ledbetter alleged that although initially her compensation was comparable to that of male managers performing similar work, over time, a substantial pay gap emerged as she received smaller raises due to allegedly discriminatory performance evaluations, which were used to determine the amount of managers’ raises. By 1997, Ledbetter was the only woman employed as an area manager along with 15 men, and was the lowest paid in this position. At that time, she earned $3,727 per month. The next lowest paid (male) employee was paid $4,286 per month, and the highest paid (male) area manager received $5,236 per month.

The Procedural Background

In March 1998, Ledbetter submitted a questionnaire to the EEOC alleging sex discrimination and four months later, in July 1998, she filed a formal EEOC charge. After taking early retirement, in November 1998, Ledbetter filed suit in the U.S. District Court for the Northern District of Alabama in Birmingham, asserting a Title VII pay discrimination claim and an Equal Pay Act claim, among others.

The District Court granted summary judgment in favor of Goodyear on several of Ledbetter’s claims, including her Equal Pay Act claim, but allowed her Title VII pay discrimination claim to proceed to trial. At trial, Ledbetter introduced evidence that during the course of her employment with Goodyear, several supervisors had given her poor evaluations because of her sex. Ledbetter alleged that as a result of these negative evaluations and the correspondingly smaller raises she received, her salary had not increased as much over the years as it would have had she been evaluated in a non-discriminatory fashion. Because each year’s pay decision was based on her most recent salary, Ledbetter claimed that the past discriminatory evaluations continued to impact her compensation throughout her employment with Goodyear, and that toward the end of her tenure with Goodyear, she was paid significantly less than any of her male colleagues in the same position. Goodyear defended that the evaluations had been non-discriminatory. However, the jury found for Ledbetter and awarded her back pay and damages in excess of $3 million, an amount then reduced to $360,000 by the trial judge.

On appeal to the U.S. Court of Appeals for the Eleventh Circuit, Goodyear argued that Ledbetter’s pay discrimination claim was time barred with respect to all pay decisions made prior to September 26, 1997 — 180 days before she filed her pay questionnaire with the EEOC — and that no discriminatory act relating to Ledbetter’s pay occurred within the statute of limitations period. The Eleventh Circuit reversed, holding that a Title VII pay discrimination claim cannot be based on a pay decision that occurred outside the EEOC charging period. The Eleventh Circuit went on to find that there was insufficient evidence to show that Goodyear had acted with discriminatory intent in making the two pay decisions that occurred within the applicable 180-day statute of limitations — a 1997 decision to deny Ledbetter a raise and a similar 1998 decision.

The Supreme Court Decision

Ledbetter filed a petition for a writ of certiorari seeking review of the following question: “Whether and under what circumstances a plaintiff may bring an action under Title VII of the Civil Rights Act of 1964 alleging illegal pay discrimination when the disparate pay is received during the statutory limitations period, but is the result of intentionally discriminatory pay decisions that occurred outside the limitations period.” The Supreme Court granted a writ of certiorari based on a Circuit split as to the proper application of the statute of limitations in Title VII pay discrimination cases.

In addressing the question of what unlawful employment practice occurred within the 180-day limitations period, Ledbetter pointed to two practices. First, she contended that each paycheck issued to her during the 180-day period preceding her EEOC questionnaire was a separate act of discrimination. Second, Ledbetter asserted that a 1998 decision denying her a raise unlawfully “carried forward intentionally discriminatory disparities from prior years.”

The Supreme Court affirmed the judgment of the Eleventh Circuit. Writing for a 5-4 majority, Justice Alito, joined by Chief Justice Roberts and Justices Kennedy, Scalia, and Thomas, held that the “central element” of any Title VII disparate treatment claim is discriminatory intent, and that Ledbetter had failed to assert that “the relevant Goodyear decisionmakers acted with actual discriminatory intent either when they issued her checks during the EEOC charging period or when they denied her a raise in 1998.” The majority found that it was not enough that past discriminatory acts that occurred outside the 180-day charging period may have had “continuing effects” during that period, ruling that “current effects alone cannot breathe life into prior, uncharged discrimination.” Instead, the Court held that “a pay-setting decision is a ‘discrete act’”, akin to a termination, a failure to promote, a denial of transfer or a failure to hire. As such, and consistent with the Court’s past decisions regarding “discrete acts” of discrimination, “the period for filing an EEOC charge begins when the act occurs,” i.e. when the employer’s allegedly discriminatory decision relating to Ledbetter’s pay was made. Accordingly, Ledbetter “should have filed an EEOC charge within 180 days after each alleged discriminatory pay decision was made and communicated to her.”

In a strongly-worded dissent delivered orally from the bench, Justice Ginsberg, joined by Justices Breyer, Souter, and Stevens, criticized the majority’s application of precedent and lack of attention to the realities of pay discrimination cases. In particular, the dissent noted that employees frequently are not privy to information about their colleagues’ compensation, making it unrealistic to expect an employee, particularly one who is attempting to succeed in a nontraditional position, to file a charge of discrimination within the EEOC charging period: “Comparative pay information … is often hidden from the employee’s view. Employers may keep under wraps the pay differentials maintained among supervisors, no less the reason for those differentials. Small initial discrepancies may not be seen as meet for a federal case, particularly when the employee, trying to succeed in a nontraditional environment, is adverse to making waves.”

Implications for Employers

Although the Ledbetter decision can generally be viewed as a victory for employers, protecting companies from having to defend “stale” pay discrimination claims brought under Title VII and pay years of back pay, the long-term repercussions of the holding are less than clear. The decision may have the effect of pressuring employees to file EEOC charges more quickly, once they have any inkling they are being paid less than colleagues, rather than waiting to obtain more conclusive evidence. As a result, employers could actually be forced to litigate a greater number of pay discrimination suits. In addition, the decision may simply encourage employees to challenge pay discrimination based on sex through other avenues, namely the Equal Pay Act and state laws. The Equal Pay Act, for example, allows employees the benefit of a longer, two or three year statute of limitations and does not require filing a charge with the EEOC or proof of intentional discrimination.

Moreover, the impact of the Ledbetter decision could be short-lived if anticipated Congressional efforts to overturn the decision by amending Title VII are successful. Congressional Democrats have indicated that they will introduce legislation to overturn the Court’s interpretation of Title VII and enable employees to recover for past discriminatory pay decisions that carry forward with each pay check. Such legislation, if passed, would restart the statute of limitations with each payment of a discriminatory wage.