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Supreme Court Rules Against Cumulative Pay Discrimination

May 29, 2007
Related Topics: Discrimination and EEOC Compliance, Wages and Hours, Latest News
In a decision hailed as a victory for employers, the Supreme Court ruled on Tuesday, May 29, that a former Goodyear worker could not sue the company for the cumulative effect of paying her less than it paid men for the same job over several decades.

By a 5-4 vote, the court held that a company is not liable for pay discrimination that occurs outside the federal statute of limitations for such cases, which is either 180 or 300 days, depending on the state.

In the action before the court, Lilly Ledbetter, a former floor manager at a Goodyear Tire & Rubber Co. plant in Gadsen, Alabama, argued that the company’s original decision to pay her less than her male colleagues resulted in lower compensation each time she received a check. At the end of her tenure, Ledbetter was paid $3,727 per month, while the lowest-paid male manager received $4,286.

Ledbetter, who started with Goodyear in 1979, filed her claim with the Equal Employment Opportunity Commission on March 25, 1998. She said that each paycheck she received while at Goodyear constituted a separate violation of federal anti-discrimination law.

A trial jury sided with Ledbetter, who was eventually awarded $360,000. But the 11th U.S. Circuit Court of Appeals in Atlanta overturned the verdict, citing the 180-day limitation.

Writing for the court majority, Justice Samuel Alito upheld the appellate decision, saying that the “EEOC charging period is triggered when a discrete unlawful practice takes place.”

Current effects alone “cannot breathe life into prior, uncharged discrimination,” Alito wrote. “Ledbetter should have filed an EEOC charge within 180 days after each allegedly discriminatory employment decision was made and communicated to her.”

But in a dissenting opinion, Justice Ruth Bader Ginsburg argued that pay discrimination is different from a discriminatory act such as termination or the denial of a promotion.

“Pay disparities often occur, as they did in Ledbetter’s case, in small increments; cause to suspect that discrimination is at work develops only over time,” Ginsburg wrote.

“Comparative pay information, moreover, is often hidden from the employee’s view. Small initial discrepancies may not be seen as meet for a federal case, particularly when the employee, trying to succeed in a non-traditional environment, is averse to making waves.”

The fact that Alito’s view prevailed is a big win for employers because it will narrow the scope of class-action pay cases, according to employment lawyers.

“If you’re an employer, you’ve got to love it,” says Gerald Maatman Jr., a senior partner and co-chair of the class-action practice at Seyfarth Shaw in Chicago. “Any employer would welcome it, and particularly those that operate in multiple states and that are in the cross hairs of pay actions today.”

Unlike several other employment law decisions in the court during the two years that Chief Justice John Roberts has presided, this one came down pretty clearly on the side of companies.

“It gives certainty to employers and it ensures they don’t have to defend against stale pay claims,” says Debra Friedman, a partner at Cozen O’Connor in Philadelphia.

Although the ruling may put employers on firm ground, it loosens the earth under women and minorities, according to an advocacy group. 

“It’s a deeply disappointing decision which represents a setback for women and a setback for civil rights,” says Jocelyn Samuels, vice president for education and employment at the National Women’s Law Center in Washington. “It completely ignores the realities of the workplace.”

In most offices, employees have limited access to pay information, so they don’t know they’re being subjected to discrimination, Samuels says. Now the Supreme Court ruling has thrown up another roadblock.

“It encourages employers basically to hide the ball and try to disguise discrimination rather than to uncover and address it,” Samuels says.

Such an outcome highlights the importance of the court’s political makeup, Samuels says. The five justices in the majority were the conservatives—Alito, Roberts, Clarence Thomas, Antonin Scalia—and a moderate, Anthony Kennedy. The liberal bloc dissented—Ginsburg, David Souter, Stephen Breyer and John Paul Stevens.

“The fact that this was a 5-4 decision illustrates how significant a single vote can be,” Samuels says.

But future decisions may revert to unanimous or nearly unanimous votes. “It’s not a portent of things to come for employers—that everything comes down to one swing vote,” Maatman says.

Despite a ruling in their favor, employers must stay on the offensive against pay disparities, Friedman says. The legal clock can start ticking every 180 or 300 days if a company doesn’t treat all employees fairly.

“The statute will start over again,” she says. The Supreme Court decision “is not a license to discriminate.”

--Mark Schoeff Jr.

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