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The U.S. Supreme Court’s decision in Ledbetter v. Goodyear Tire & Rubber Co. Inc., 127 S. Ct. 2162 (2007), which set the limitations period for a pay discrimination claim brought under Title VII of the Civil Rights Act of 1964, has elicited immediate and strong reactions from employers, labor organizations, commentators and politicians. Such reactions and promised legislative action suggest that Ledbetter may not be the law for long, so the more interesting question is not as much its actual holding as the way it illustrates the ongoing problem of deciding the seemingly simple question of when an act of pay discrimination actually occurs. Plaintiff Lilly Ledbetter retired from her job in 1998 and then promptly filed a charge of pay discrimination with the Equal Employment Opportunity Commission (EEOC), asserting that, since 1980, she had received lower pay than male counterparts in her position as area manager for Goodyear’s factory in Gadsden, Ala. In support of her assertion that her lower pay resulted from sex discrimination, Ledbetter cited instances when certain individuals at various, isolated times since 1980 had expressed discriminatory animus toward her because she was a woman. None of these events, however, nor any of the pay decisions she thought were tainted by discriminatory motives, occurred within 180 days preceding her EEOC complaint, which is the applicable limitations period. (In states that, unlike Alabama, have their own employment discrimination laws, the period for filing an EEOC charge is 300 days.) Rather, the only alleged discriminatory acts occurring within the limitations period were the periodic issuance of pay checks that Ledbetter claimed were lower than they would have been if she had not been subjected to discriminatory treatment years earlier. The jury found for Ledbetter, awarding her more than $3 million in back pay and damages (reduced to $360,000 by the trial court to comply with Title VII’s cap on damages). The 11th U.S. Circuit Court of Appeals, however, reversed the jury verdict because Ledbetter, it ruled, had filed her claim too late. The Supreme Court affirmed. Court rejected plaintiff’s continuing-effects theory In a 5-4 vote, with Justice Samuel A. Alito Jr. authoring the majority opinion and Justice Ruth Bader Ginsburg issuing a vocal dissent from the bench, the court held that Title VII could not support a pay discrimination claim unless there are “two elements” � “an employment practice and discriminatory intent” � and unless each of those two elements occurred within the limitations period. The Supreme Court had previously held in Nat’l R.R. Passenger Corp. v. Morgan, 536 U.S. 101 (2002), that the prerequisite to any Title VII claim based on a single, discrete act of discrimination was the occurrence of that act within the limitations period, rejecting what had until then been known as a “continuing violation” theory of Title VII liability. Accordingly, each issuance of a disproportionately lower paycheck to Ledbetter was merely the lingering effect of a prior illegal act and, “current effects alone cannot breathe life into prior, uncharged discrimination.” 127 S. Ct. at 2169. In her dissent, Ginsburg highlighted the large disparity between Ledbetter’s pay and that of the other, all-male, managers that had arisen by the end of her career. Ginsburg argued that because pay disparities often come “in small increments[,] cause to suspect that discrimination is at work develops only over time. Comparative pay information, moreover, is often hidden from the employee’s view.” Id. at 2178-79. Such practical realities, according to the minority, meant that Title VII pay discrimination claims based upon “the current payment of salaries infected by gender-based (or race-based) discrimination” should be permitted. Id. at 2179. Like the majority, Ginsburg also cited to Morgan, but to that portion of it that allowed workplace harassment claims if the latest offensive conduct occurred within the limitations period (even if the harassment had started years earlier). Ginsburg argued that the harm of ongoing pay disparities, like that of workplace harassment, “rest[s] . . . on the cumulative effect of individual acts,” and she called on Congress “to correct this Court’s parsimonious reading of Title VII.” Id. at 2181, 2188. One of the ironies in Ledbetter is that in relying on Morgan, Ginsburg ignored the dissent of then-Justice Sandra Day O’Connor, who objected to the special rule for workplace harassment fashioned by the majority on the ground that it subjected employers to potentially stale claims protected only “by the uncertain restrictions of equity.” 536 U.S. at 125 (O’Connor, J., dissenting). O’Connor’s dissent also highlighted that a “discovery rule” might exist under Title VII, allowing seemingly stale claims to be brought if the employer had concealed the facts of discriminatory intent, which would conceivably have been available for Ledbetter but for some reason was never invoked. It is noteworthy that the “every paycheck” concept was first articulated by the high court before compensatory and punitive damages were available in Title VII cases. From the jury verdict, it is clear that what drove her suit was not the redress of pay disparities, which could be awarded only for a period of up to two years, but the prospect of mental-anguish and punitive damages. Nonetheless, individual legislators were quick to respond to Ginsburg’s invitation to congressional correction. Several Democratic leaders, including Representative George Miller, D-Calif., Senator Hillary Rodham Clinton, D-N.Y., and Senator Ted Kennedy, D-Mass., released statements expressing their dismay with Ledbetter within 24 hours of its issuance. Already legislation has been introduced overruling the decision, and Ledbetter herself has testified before the House Committee on Labor and Education about the difficulties faced by employees who report discrimination and the continuing effects that the discrimination she faced had on her pension and Social Security benefits. All this has echoes of things past. In 1991, with a Republican president named George Bush facing increasing unpopularity and the prospect that his party might lose the White House in the upcoming election, wide-ranging revisions to Title VII were enacted in the Civil Rights Act of 1991, which was intended by a Democratic-controlled Congress to correct what it perceived to be unduly restrictive interpretations of Title VII by the Supreme Court in the preceding few years. One target was Lorance v. AT&T Technologies Inc., 490 U.S. 900 (1989), which had held that a Title VII claim filed when the effects of a discriminatory seniority system were first felt by certain women workers was untimely because the discriminatory act was the adoption of the seniority system years earlier, not the later effect it had on the women when they brought their claim. One provision of the new act enacted 42 U.S.C. 2000e-5(e)(2), which effectively overruled Lorance. As things now stand, there are a variety of federal statutes to address pay discrimination notwithstanding the holding in Ledbetter. Women paid less than men for the same work can sue under the Equal Pay Act (EPA), 29 U.S.C. 206(d). EPA claims require only a showing of pay disparity based on gender, not intentional discrimination. The limitations period is two years, or three years for willful violations. Oddly, Ledbetter herself had asserted an EPA claim, but it was dismissed by the trial court because Goodyear had stated that her recent pay disparity had resulted from “Ledbetter’s consistently weak performance, and not her sex,” and for some reason Ledbetter accepted that result, proceeding to trial only on her Title VII claim. Also, racial and ethnic minorities can bring pay discrimination claims under 42 U.S.C. 1981. The statute of limitations is four years, and compensatory damages for those claims are not capped. Both sides recognize the need for a cutoff point The Ledbetter decisions highlight cross-currents of concern involved in pay discrimination claims. Both the majority opinion and the dissent recognized that there must be some point beyond which dilatory plaintiffs cannot take advantage of discrimination laws to bring stale claims. The fundamental divide is whether the employer should be allowed to show that the employee unduly delayed and it was harmed as a result, or whether the employee who complains about long past conduct must show why he or she waited so long to assert a claim. The prospect of stale claims is less daunting for employers when all that is at stake is back pay for the period of disparity. But when compensatory damages are also allowed and the underlying events occurred so long ago that critical defense witnesses are unavailable or dead (as was the case in Ledbetter), the balance shifts decidedly against asserting today claims of discrimination based on intentional acts committed long ago. It is also true that, unlike the victims of a discriminatory discharge or a refusal to hire or promote, victims of pay discrimination are not likely to know how much less they are paid than their counterparts or that discriminatory animus was at play. Still, unless some absolute date from the last discriminatory act � not just its continuing effect in a current paycheck � is set for such claims, or some limit on compensatory damages is also established, legislative enactment of the “last paycheck” rule advocated by Ginsburg burdens employers more than needed to redress the underlying problem, while not giving adequate recognition to Title VII’s goal of prompt resolution of employment discrimination disputes. Michael Starr ([email protected]) is a partner in the labor and employment group of Hogan & Hartson, resident in New York. Christine M. Wilson ([email protected]) is an associate in that group, also resident in New York.

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