The Court deals a blow to pay discrimination plaintiffs.

For lawyers representing plaintiffs in civil rights cases, Ledbetter v. Goodyear Tire & Rubber Co., was one of the most important--and troubling--decisions of the year. (1) In a 5-4 ruling, the Supreme Court held that the statute of limitations for pay discrimination claims under Title VII of the 1964 Civil Rights Act begins running when the pay is set. The Court rejected the plaintiff's claim that each additional paycheck is a separate violation.

Generally, discrimination claims must be filed with the Equal Employment Opportunity Commission (EEOC) within 180 days of the discriminatory act. Often, however, people do not know the salary of other employees in the workplace. In fact, Justice Ruth Bader Ginsburg, in her dissenting opinion, pointed out that "one-third of private-sector employers have adopted specific rules prohibiting employees from discussing their wages with coworkers; only one in 10 employers has adopted a pay openness policy." (2)

The crucial question for litigation now is whether the statute of limitations is tolled until the employee reasonably could have known of the pay discrimination and, if so, how that point is to be determined.

Lilly Ledbetter worked as a supervisor at Goodyear's Gadsden, Alabama, plant from 1979 until 1998. In March 1998, she submitted a questionnaire to the EEOC alleging sex discrimination, and four months later she filed a formal EEOC charge.

For most of her years with Goodyear, Ledbetter worked as an area manager, a position typically held by men. The evidence at trial indicated that her salary initially was similar to that of her male colleagues, but over time a significant discrepancy developed. By the end of 1997, "Ledbetter was the only woman working as an area manager, and the pay discrepancy between Ledbetter and her 15 male counterparts was stark: Ledbetter was paid $3,727 per month; the lowest-paid male area manager received $4,286 per month, the highest paid, $5,236." (3) A jury found for Ledbetter, and a judgment was entered in her favor.

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The Supreme Court, however, found that her claims under Title VII were time-barred. Justice Samuel Alito--writing for the Court and joined by Chief Justice John Roberts and Justices Antonin Scalia, Anthony Kennedy, and Clarence Thomas--explained that Ledbetter's claim was for disparate treatment, which requires proof of discriminatory intent. (4)

Alito pointed out that the statute of limitations begins to run with a "discrete discriminatory act"--that is, when the worker's pay is set. As Alito explained:

A new violation does not occur, and a new charging period does not commence, upon the occurrence of subsequent nondiscriminatory acts that entail adverse effects resulting from the past discrimination. But of course, if an employer engages in a series of acts each of which is intentionally discriminatory, then a fresh violation takes place when each act is committed. (5)

The Court expressly rejected Ledbetter's claim that each additional paycheck is a new discriminatory act that separately triggers the statute of limitations. Alito wrote, "Ledbetter should have filed an EEOC charge within 180 days after each allegedly discriminatory pay decision was made and communicated to her. She did not do so, and the paychecks that were issued to her during the 180 days prior to the filing of her EEOC charge do not provide a basis for overcoming that prior failure." (6)

Two decades ago, in Bazemore v. Friday, the Supreme Court allowed a pay discrimination claim on the theory that each additional check was a new violation. (7)

In that case, Justice William Brennan declared, "Each week's paycheck that delivers less to a black [employee] than to a similarly situated white [employee] is a wrong actionable under Title VII, regardless of the fact that this pattern was begun prior to the effective date of Title VII." (8)

But the Court in Ledbetter distinguished Bazemore, saying the earlier case was a challenge to a discriminatory pay structure, whereas Ledbetter was a challenge only to discriminatory pay decisions. Alito wrote:

   Bazemore stands for the proposition that an employer violates Tide
   VII and triggers a new EEOC charging period whenever the employer
   issues paychecks using a discriminatory pay structure. But a new
   Title VII violation does not occur and a new charging period is not
   triggered when an employer issues paychecks pursuant to a system
   that is "facially nondiscriminatory and neutrally applied." (9)

Hidden discrimination

There is no doubt that the Supreme Court s decision in Ledbetter will create a significant obstacle to plaintiffs bringing pay discrimination claims under Title VII. Most employees simply do not know the salaries of others in the workplace and are unlikely to be able to bring a pay discrimination claim within 180 days of when their salary is set. Ginsburg, in a strong dissent, made exactly this point:

   The problem of concealed pay discrimination is particularly acute
   where the disparity arises not because the female employee is
   flatly denied a raise but because male counterparts are given
   larger raises. Having received a pay increase, the female employee
   is unlikely to discern at once that she has experienced an adverse
   employment decision. She may have little reason even to suspect
   discrimination until a pattern develops incrementally and she
   ultimately becomes aware of the disparity. (10)

Fortunately, lawyers representing plaintiffs in pay discrimination claims may be able to limit Ledbetter's impact. First, the decision applies only to pay discrimination claims under Title VII; it does not apply to similar claims brought under the Equal Pay Act (EPA) of 1963. (11) The latter does not require proof of discriminatory intent, so the reasoning of Ledbetter would not apply. However, the EPA applies only to gender discrimination in wages and salaries, while Title VII prohibits employment discrimination based on race, gender, and religion. So the EPA provides only a partial solution.

Second, the crucial issue after Ledbetter is whether the statute of limitations is tolled until the employee reasonably could have discovered the pay discrimination, and, if so, how a court should determine when the employee could have made this discovery. The Supreme Court expressly did not decide this question. In a footnote, Alito wrote: "We have previously declined to address whether Title VII suits are amenable to a discovery rule. Because Ledbetter does not argue that such a rule would change the outcome in her case, we have no occasion to address this issue." (12)

Precisely because most employees don't know of pay discrimination at the time salaries are set, it will be crucial for plaintiff lawyers to argue that their clients could not have discovered the discrimination at that time and that the statute of limitations was therefore tolled. Courts should be receptive to this argument because, in other contexts, the law generally allows for equitable tolling until a plaintiff reasonably could have discovered his or her injury. Courts will need to decide how to determine when an employee should reasonably have known of the salary discrimination, especially in workplaces where rules or customs prohibit discussion of salaries.

The October 2006 term was characterized by an unusually high percentage of 5-4 decisions: 24 of 68 cases were resolved by this one-vote margin. In almost all of these rulings, the conservative position prevailed, with the majority composed of Roberts, Scalia, Kennedy, Thomas, and Alito. Ledbetter fit this pattern and was a significant loss for plaintiffs bringing pay discrimination claims under Title VII.

Notes

(1.) 127 S. Ct. 2162 (2007).

(2.) Id. at 2182 n. 3 (Ginsburg, J., dissenting).

(3.) Id. at 2178 (Ginsburg, J., dissenting).

(4.) Id. at 2167.

(5.) Id. at 2169.

(6.) Id.

(7.) 478 U.S. 386 (1986).

(8.) Id. at 395.

(9.) 127 S. Ct. at 2174.

(10.) Id. at 2181 (Ginsburg, J., dissenting).

(11.) 29 U.S.C. [section] 206(d) (2006).

(12.) 127 S. Ct. at 2177 n. 10.

ERWIN CHEMERINSKY is the Alston & Bird Professor of Law and Political Science at Duke University.