Supreme Court Puts a Limit on Suing for Pay Discrimination

by Jon Mark Hogg

Ledbetter v. Goodyear Tire & Rubber Co.

Since at least 1986, the EEOC and most labor lawyers have operated under the assumption that in Title VII cases alleging disparate treatment in pay, there was a “paycheck accrual rule.”  We believed this rule was that each separate paycheck that paid an employee less than another employee because of a protected trait was a separate violation of Title VII that related back to the original discriminatory decision.  In Ledbetter v. Goodyear Tire & Rubber Co., the Supreme Court disabused us of this notion.

Lilly Ledbetter worked for Goodyear from 1979 to 1998.  In 1998, she filed a charge of discrimination with the EEOC alleging sex discrimination in her pay.  Her charge asserted that during her employment, previous supervisors had given her poor evaluations because of her sex.  This resulted in her pay not increasing as much as it would have been had she been evaluated fairly.  Ledbetter did not dispute that the results of these evaluations were communicated to her and she did not file charges of discrimination at the time of those evaluations.

In her 1998 charge and subsequent lawsuit, however, Ledbetter sought and obtained damages going all the way back to the time of the discriminatory evaluations.  Ledbetter claimed that she was entitled to do so under the “paycheck accrual rule” because the past evaluations and pay decisions continued to affect the amount of her pay throughout her employment.  Therefore, each subsequent paycheck was a separate violation based on the original discriminatory evaluations.  Goodyear defended by asserting that Ledbetter was only entitled to recover for any discrimination that occurred within 180 days before she filed her charge.

The Supreme Court resolved a split in the appellate courts and disregarded the EEOC’s interpretation of Title VII, which favored Ledbetter's position, and held Ledbetter's claims were barred by the 180 days statute of limitations.  The Court reasoned that a new violation does not occur and a new charging period does not start over simply because a non-discriminatory act occurs that gives present adverse effects to past discrimination that occurred outside the charging period.  While not disavowing its prior precedents, the Court disagreed with the notion that it had previously created a “paycheck accrual rule.”  After distinguishing its prior cases on this point, the Court stated that these opinions did not stand for the proposition that an action was chargeable just because it was related to some past act of discrimination.

Thus, in this case, the Court does not really appear to be doing away with the “paycheck accrual rule” so much as it is telling us that such a rule never really existed in the first place. The Court noted that the result here might have been different if Ledbetter had not abandoned her claim under the Equal Pay Act that does not have the same limitations and requirements as Title VII.

The implications of this decision go far beyond this one case. Ledbetter has called into question how the EEOC, OFCCP, and other federal and state agencies handle disparate pay discrimination.  This is of particular importance to the efforts of these agencies to address pay discrepancies based on sex.  For years, most agencies have operated under the assumption that each paycheck related back to the discriminatory act and constituted a separate violation.  Now, the ground rules have apparently changed, at least for the time being. Senator Hillary Clinton has already vowed to introduce a bill to overturn this decision and reinstitute, or perhaps “create,” the “paycheck accrual rule.”

If you have any questions regarding this e-Alert, contact Jon Mark Hogg at 325.481.2560 or jmhogg@jw.com.

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