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Supreme Court Examines Use of Pay Decisions Outside The Limitations Period To Prove Intentional Discrimination

The Supreme Court recently heard arguments regarding an employee’s appeal from the Eleventh Circuit’s decision limiting her right to challenge disparate pay decisions to those occurring within the 180-day period preceding the filing of her intentional discrimination charge with the EEOC. See, Lilly M. Ledbetter v. Goodyear Tire and Rubber Company, Inc., 421 F.3d 1169 (11th Cir. 2005). Ledbetter presented the Court with its first opportunity to further flesh out the parameters of Title VII’s timely-filing requirement since its 2002 decision in AMTRAK v. Morgan, 536 U.S. 101 (2002), and will likely have significant implications for future disparate pay litigation.

Lilly Ledbetter was hired by Goodyear in 1979 as a supervisor in its Gadsen, Alabama tire manufacturing plant. During her long career at Goodyear, Ledbetter’s performance was generally reviewed on an annual basis to determine her salary increase. Her last such review was in February, 1998, nineteen years after she began working for Goodyear. One month later, Ledbetter filed a charge with the EEOC complaining, among other things, that she had received a discriminatorily low salary because of her sex. She subsequently elected early retirement and left Goodyear in November, 1998.

After a jury trial in which Ledbetter was permitted to submit evidence of allegedly improper pay decisions spanning her entire 19-year career at Goodyear, the jury recommended that Ledbetter receive more than $220,000 in backpay and awarded more than $3.2 million in compensatory and punitive damages. The trial court subsequently remitted the award to $360,000; the $300,000 statutory maximum in compensatory and punitive damages plus $60,000 in backpay.

On appeal, Goodyear challenged the trial court’s decision allowing Ledbetter to introduce evidence pertaining to alleged discriminatory decisions made outside Title VII’s 180-day limitations period and contended that only her last review was actionable. (Alabama, a “non-deferral” state, is bound by Title VII”s 180 day period. In Maryland and other “deferral” jurisdictions the period is extended to 300 days). The Eleventh Circuit noted that in AMTRAK v. Morgan, the Supreme Court divided Title VII actions into two broad categories: (1) disparate treatment and retaliation claims challenging discrete discriminatory or retaliatory acts, and (2) claims alleging a hostile work environment. With respect to the former, the Supreme Court held that the timely-filing requirement barred recovery for discrete discriminatory or retaliatory acts occurring outside the limitations period.
In particular, the court noted, Morgan rejected the Ninth Circuit's "serial violations" doctrine, which held "that so long as one act falls within the charge filing period, [time-barred] discriminatory and retaliatory acts that are plausibly or sufficiently related to that act may also be considered for purposes of liability." By contrast, the Morgan Court held that where a hostile environment is alleged, "consideration of the entire scope of [the] claim, including behavior alleged outside the statutory time period, is permissible for the purposes of assessing liability, so long as an act contributing to that hostile environment takes place within the statutory time period.”
Applying the Morgan dichotomy to Ledbetter’s case, the Eleventh Circuit had no trouble determining that Ledbetter’s claims should be “governed by that part of the Morgan decision addressing claims alleging ‘discrete acts of discrimination.’" The court reasoned:

Whether it is a pay-setting decision or the issuance of a confirming paycheck that is viewed as the operative act of discrimination, the act is, like "termination, failure to promote, denial of transfer, or refusal to hire," Morgan, 536 U.S. at 114 . . . discrete in time, easy to identify, and — if done with the requisite intent — independently actionable. . . . Pay claims do not, therefore, have those characteristics that led the Court to devise a separate rule governing the timing of hostile work environment claims: The "unlawful employment practice" can be said to occur on a particular day (though it may be repeated on multiple days), and a single discriminatory act is actionable on its own. The alleged discriminatory behaviors need not accumulate to some critical mass to become actionable.

Id. at 1179-80. The court then fashioned the following rule:

We think, therefore, that at least in cases in which the employer has a system for periodically reviewing and re-establishing employee pay, an employee seeking to establish that his or her pay level was unlawfully depressed may look no further into the past than the last affirmative decision directly affecting the employee's pay immediately preceding the start of the limitations period. Other, earlier decisions may be relevant, but only to the extent they shed light on the motivations of the persons who last reviewed the employee's pay, at the time the review was conducted.

Id. at 1183. Applying this rule to the facts in Ledbetter’s case, the Eleventh Circuit reversed the trial court’s judgment. Examining only the evidence pertaining to Goodyear’s two most recent reviews of Ledbetter (one performed within the 180 day period before Ledbetter filed her EEOC charge, and the one most closely preceding the limitations period), the court held that the evidence was insufficient for a reasonable jury to conclude that either salary decision violated Title VII.

The Supreme Court accepted certiorari to decide the question of whether and under what circumstances a plaintiff may bring a Title VII case “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.” At oral argument, Ledbetter’s counsel asserted that unlike other “discrete” injuries, such as failure to promote, termination and demotion, employees are not typically aware of pay disparities when they initially occur. Instead, he argued, it is often only after discriminatory decisions have been repeated over a number of years that an employee may be able to recognize the incremental effects of discriminatory conduct. He conceded that if Ledbetter prevailed, employees would be able to challenge any past pay practice if its ripple effect carried into the current 180-day pay period. The limit on how far back in time a plaintiff could reach to look for an intentionally discriminatory act at the root of her present injury would be limited only by laches and similar equitable defenses.

Goodyear’s counsel argued that Ledbetter’s case was a bald attempt to circumvent the 180-day filing period, so that she could use events that were nearly two decades old to make the company’s current neutral acts actionable and to obtain compensatory and punitive damages. The U.S. Solicitor General’s office, arguing as amicus curiae on behalf of Goodyear, added that the Court should not create a special rule for pay cases where nothing in the language of Title VII suggests that pay cases should be treated differently than any other form of intentional discrimination. (Notably, the Solicitor’s office was in the position of opposing the EEOC which, not surprisingly, has expressed the opposite opinion on this subject). He also suggested that one way to deal with Ledbetter’s contention that employees may not be aware of pay disparity when it occurs is to allow equitable tolling in applicable circumstances.

Interestingly, Ms. Ledbetter’s complaint originally had included an Equal Pay Act Claim. Such claim was dismissed on summary judgment before trial and Ms. Ledbetter did not appeal on that issue. A desparate treatment claim under Title VII requires proof of intent to discriminate and in Ledbetter the Supreme Court will decide if a plaintiff can use acts occurring outside the limitation period as proof of the employer’s discriminatory intent. An Equal Pay Act Claim does not require proof of discriminatory intent.

If the Eleventh Circuit’s decision is affirmed, employers will be given an incentive to regularly review employees for salary increases, both to ensure that their potential liability is limited to these most recent decisions and to cut off an employee’s ability to utilize historic pay practices as evidence of discrimination. Employees, on the other hand, may be advised to pay closer attention to suspected pay discrepancies, lest their opportunity to complain fall outside the 180/300-day window. By contrast, if the Eleventh Circuit is reversed, plaintiffs will be permitted to look beyond the 180/300-day window to past pay decisions to prove a pattern of discrimination which caused the alleged present disparity. Employers will then be subjected to liability for the impact of historic pay decisions, even where the discriminatory practices have long ceased. The possibility of having to demonstrate the reasoning behind a particular pay decision made years ago may also cause employers to institute more rigorous reviews and recordkeeping requirements going forward.

Ultimately, the Court’s decision will have a significant impact on procedural issues in Title VII cases, both in terms of the scope of evidence employees are permitted to introduce to prove claims of intentional pay discrimination and the extent to which they will be allowed to pursue discovery of that evidence. The Court’s decision may also have a significant impact on the amount of damages juries will award. Title VII itself limits back pay awards to the two years prior to the filing of a charge (see 42 U.S.C. § 2000e-5(g)), and compensatory and punitive damages are limited by caps tied to the size of the defendant’s workforce. Nevertheless, the ability to present evidence of a long history of alleged wrongdoing, rather than just acts during the 180 days preceding the charge, will almost certainly enhance a plaintiff’s chances of obtaining larger compensatory and punitive damages awards within the statute’s parameters.


November 30, 2006




Chason, Todd R.
Bacharach, Charles R.