Tuesday, May 29, 2007

U.S. Supreme Court limits pay discrimination claims

Today, the United States Supreme Court, in Ledbetter v. Goodyear Tire & Rubber Co., ruled in a 5-4 decision that in cases alleging discrimination in pay, the federal statute of limitations begins to run when the pay-setting decision is made. Thereafter, an aggrieved employee has only 180 days or 300 days (depending on the particular state) in which to file an EEOC charge, or forever be time barred from challenging the discriminatory pay setting decision under federal law.

In Ledbetter, Lilly Ledbetter, an 19-year Goodyear employee, alleged that Goodyear had discriminatorily denied her raises throughout her tenure, because of her sex and in violation of Title VII. She filed her EEOC charge well in excess of 180 days past the last denial of a raise. Ledbetter did not claim that the relevant Goodyear decision makers acted with discriminatory intent either when they issued her checks during the EEOC charging period or when they denied her a raise in 1998. Instead, she claimed that her charge (and therefore her lawsuit) was timely because each paycheck she received with the allegedly discriminatory pay rate was, in and of itself, an act of discrimination for purposes of challenging the long-ago decisions. Thus, each paycheck was unlawful because each would have been larger if she had been evaluated in a nondiscriminatory manner prior to the EEOC charging period and during her entire tenure. Thus, according to Ledbetter, her 1998 rate of pay was unlawful because it carried forward the effects of the prior 18 years of uncharged discriminatory pay decisions. The District Court agreed with her and permitted her claim to proceed to a jury, which awarded her more than $3 million in back pay, compensatory, and punitive damages.

The Supreme Court, however, overturned that decision, and in doing so diverged with the vast majority of the appellate courts that have looked at this issue. Writing for the majority, Justice Alito opined that “current effects alone cannot breathe life into prior, uncharged discrimination.... 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.” According to the Court, its narrow reading of the statute of limitations "reflects Congress’s strong preference for the prompt resolution of employment discrimination allegations through voluntary conciliation and cooperation."

Ohio is a deferral jurisdiction, so employees in this State have 300 days to file EEOC charges of discrimination. This case has important implications under federal employment discrimination law, because a charge of discrimination is a prerequisite for the filing of any lawsuit under Title VII. I question, however, the overall effect this decision will have on companies that do business in Ohio. Under Ohio law, an employee can bypass the Ohio Civil Rights Commission and the EEOC and simply institute a private cause of action under Ohio Revised Code 4112.99 for all acts of discrimination. Such lawsuits have an astounding 6 year statute of limitations for all forms of discrimination, except age discrimination, which has a 6 month statute. This statute of limitations and the lack of any administrative exhaustion is one of the few areas where Ohio law differs from its federal counterpart. Until the Ohio legislature closes this anomaly, local businesses will probably not feel much effect from Ledbetter.