Pay discrimination claims after Ledbetter.

• Author: Copus, David

ON MAY 29, 2007, a bitterly and closely divided United States Supreme Court ruled that pay decisions are "discrete acts" and that a Title VII plaintiff alleging intentional pay discrimination must focus exclusively on pay-related decisions made during the 180/300-day charge filing period. (1) A Title VII plaintiff may not challenge pay-related decisions made outside that narrow limitations period even if those earlier decisions were intentionally discriminatory and reduced her subsequent pay during the charge filing period. (2) Title VII bans discriminatory decisions, i.e., "discrete acts," that affect pay, but does not ban the mere payment of discriminatorily set pay unless the pay system itself is facially discriminatory. Because Title VII bans only discriminatory pay decisions, a Title VII plaintiff must timely challenge the alleged discriminatory decision. Because Ledbetter did not claim that Goodyear's pay system was facially discriminatory and because she failed to timely challenge any alleged discriminatory pay decision, the Supreme Court rejected her claim. (3)

Although individual plaintiffs alleging pay discrimination will no doubt embrace any number of strategies in their efforts to challenge pay decisions made outside the limitations period, the primary impact of Ledbetter may well be on class claims of pay discrimination and on OFCCP's Interpretive Standards for Systemic Compensation Discrimination. (4) In addition, Ledbetter has already spawned a lively legislative response from congressional Democrats, eager to enact legislation reversing the decision. Finally, Ledbetter clarifies how employers should pro-actively monitor their pay practices.

1. Basic Facts Regarding Ledbetter's Pay

   Goodyear hired Ledbetter on Feb. 5, 1979 as a supervisor with a starting salary of $16,760. In 1985, Goodyear reclassified her to a newly created position, Area Manager. She remained in that position until shortly before she retired on Nov. 1, 1998, at which time she was earning $44,724. During Ledbetter's 19 years at Goodyear, the Company made 21 decisions related to her salary.

   1. 1979--Hired as production supervisor at starting salary of $16,760

   2. 1980--15.6% lock-step pay increase

   3. 1981--7.3% lock-step pay increase

   4. 1982--7.6% merit raise based on performance appraisal

   5. 1983--6.4% merit raise based on performance appraisal

   6. 1984--5.3% merit raise based on performance appraisal

   7. 1985--Reclassified as Area Manager (apparently no change in pay)

   8. 1986--laid off (ineligible for raise)

   9. 1987--laid off (ineligible for raise)

   10. 1988--laid off (ineligible for raise)

   11. 1989--6% merit raise based on performance appraisal

   12. 1990--laid off (ineligible for raise)

   13. 1991--8.7% merit raise based on performance appraisal

   14. 1992--6.7% merit raise based on performance appraisal

   15. 1993--5.2% merit raise based on performance appraisal

   16. 1994--5% merit raise based on performance appraisal

   17. 1995--7.9% merit raise based on performance appraisal ($44,724)

   18. 1996--0% (ineligible for raise based on timing of most recent increase)

   19. 1997--0% (ineligible for raise because slated for layoff)--180-day charge filing period begins--20.

   20. 1998--Transfer to Technology Engineer (ineligible for raise)

   21. 1998--0% merit raise based on performance appraisal

   22. 1998--Plaintiff files her EEOC charge.

2. Ledbetter's Factual Allegations and Dilemma

   At the time Goodyear denied her a merit raise in 1998, Ledbetter was the only woman working as an Area Manager. (5) Her salary was less than the lowest paid male Area Manager and substantially less than male Area Managers with equal or less seniority. Male Area Managers earned between 15% and 40% more than Ledbetter. (6) For at least some periods during her career as an Area Manager, Ledbetter earned less than the minimum salary for her pay grade. (7) One or more of her supervisors expressed negative attitudes toward her because of her gender. (8) Furthermore, over the course of years, Goodyear had employed two other women as Area Managers and had always paid them less than every male in the same job. (9) These two women testified that they were subjected to pervasive discrimination. (10)

   In response to these disturbing facts, Goodyear argued that Ledbetter could challenge only the 1998 denial of a raise because only that pay-related decision fell within the charge filing period. (11) Goodyear vigorously defended the 1998 decision by showing that her supervisor at the time rated her 23rd out of 24 salaried employees in the department and 15th out of 16 Area Managers. (12) Further, Goodyear established that in 1998 it treated her the same as it treated similarly situated male Area Managers. (13) Thus, in 1998 the company denied merit raises to the two male Area Managers ranked immediately above her and the male Area Manager ranked below her. (14)

   The Court of Appeals aptly described Ledbetter's tactical dilemma:

   The rub is that Ledbetter did not want to stop at the 1998 raise decision because doing so would have (1) limited the damages she could have recovered, (2) rendered useless evidence relevant only to other persons in the plant upon which she wanted the jury to rely, and (3) forced her to prove that [the supervisor who denied her a raise in 1998] acted with discriminatory intent. (15) III. Ledbetter's Legal Strategy

   Ledbetter did not directly challenge the 1998 decision denying her a merit raise. Indeed, she made no claim that any intentionally discriminatory conduct occurred during the 180-day charge filing period. (16) Rather Ledbetter argued that prior to 1998 several supervisors had given her poor evaluations because of her sex, that as a result of those discriminatory evaluations "her pay was not increased as much as it would have been if she had been evaluated fairly, and that these past pay decisions continued to affect the amount of her pay throughout her employment." (17)

   Relying on evidence of pervasive past discrimination, Ledbetter argued that each pay check received during the charge filing period was itself an act of discrimination because prior intentional discrimination tainted each check. (18) Alternatively, she argued that the 1998 denial of a pay raise was unlawful because it carried forward the past discrimination. (19)

   The Court of Appeals succinctly explained Ledbetter's strategy:

   Instead [of challenging the 1998 denial of a raise as intentionally discriminatory], what Ledbetter did--what the district court allowed her to do was to point to the substantial disparity between her salary and those of the male Area Managers in Tire Assembly at the end of her career, put on circumstantial evidence that persons having control over her pay earlier in her career had discriminatory animus toward women, show that other female Area Managers in the plant were paid less than their male co-workers, and then put the onus on Goodyear to provide a legitimate, non-discriminatory reason for every dollar of difference between her salary and her male co-workers' salaries. This necessarily put at issue every salary-related decision made during Ledbetter's nineteen-year career. (20) Ledbetter prevailed at trial, and the jury recommended an award of $223,776 in back pay and awarded $4,662 for mental anguish and $3,285,979 in punitive damages. (21) The trial court reduced the back pay to reflect damages during only during the two years prior to the filing of her charge and reduced the punitive damages consistent with Title VII's cap on such damages. (22) Goodyear appealed to the Eleventh Circuit, which embraced a slight variation of Goodyear's timeliness argument and ruled against Ledbetter. (23)

4. The Supreme Court's Majority Opinion

   After losing in the Court of Appeals, Ledbetter framed the Question Presented in these stark terms in her petition for certiorari:

   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. (24) In the Supreme Court, as she had from the outset, Ledbetter argued that her pay claim was authorized by Bazemore v. Friday which held that "[e]ach week's paycheck that delivers less to a black man than to a similarly situated white is a wrong actionable under Title VII, regardless of the fact that this pattern was begun prior to the effective date of Title VII."

   [In essence, Ledbetter argued that Bazemore adopted] a "paycheck accrual rule" under which each paycheck, even if not accompanied by discriminatory intent, triggers a new EEOC charging period during which the complainant may properly challenge any prior discriminatory conduct that impacted the amount of that paycheck, no matter how long ago the discrimination occurred. (26) Ledbetter also invoked public policy and sought to justify her position by asserting that "pay discrimination is harder to detect than other forms of discrimination," and pay discrimination claims should therefore be subject to an especially lenient timeliness standard. (27) Writing for the Supreme Court majority, Justice Alito would have none of it. First, the Supreme Court majority stated flatly, "Ledbetter's interpretation [of Bazemore] is unsound." (28) Bazemore, according to the majority opinion, was manifestly different because that case involved a facially discriminatory pay structure. "An employer that adopts and intentionally retains such a pay structure can surely be regarded as intending to discriminate on the basis of race as long as the structure is used." (29) The "focus in Bazemore was on a current violation, not the carrying forward of a past act of discrimination." (30)

   Second, not only was Bazemore inapposite, according to the majority opinion, but Ledbetter's "paycheck accrual" argument was "squarely foreclosed" by the Court's decisions on...