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High court to rule in pay discrimination case

High court to rule in pay discrimination case

WASHINGTON—The Supreme Court could burden employers with considerable additional administrative costs if the justices decide that a plaintiff can sue for illegal pay discrimination under Title VII of the Civil Rights Act of 1964 even after the 180-day period for filing such a complaint has expired, say employment law experts.

That's the issue in Lilly Ledbetter vs. Goodyear Tire & Rubber Co., a case in which the high court heard oral arguments last week. Ms. Ledbetter worked at a Goodyear plant in Gadsden, Ala., from 1979 to 1998.

In 1998, she sued Goodyear, claiming it paid her less than her male counterparts because of her gender. Goodyear reviewed her salary annually, and Goodyear held that her case depended on whether she could prove that unlawful discrimination affected an annual salary review within 180 days of her filing her discrimination charge.

Title VII holds that a charge of unlawful employment practice must be filed with the Equal Employment Opportunity Commission within 180 days of the alleged offense. But Ms. Ledbetter argued that Goodyear made a series of intentionally discriminatory pay decisions, some of which went back 19 years, and that those decisions affected her later earnings.

A jury took into account Ms. Ledbetter's salary history before awarding her back pay, a mental anguish award and punitive damages. The judge later reduced both the back pay and punitive damage awards to $360,000 but allowed the decision to stand.

But the 11th U.S. Circuit Court of Appeals reversed the lower court in August 2005, holding that "all we need to do is examine the last salary decision Goodyear made that affected" Ms. Ledbetter's pay during the limitations period. The appeals court said Goodyear's most recent pay decision regarding Ms. Ledbetter had not been intentionally discriminatory, a decision Ms. Ledbetter appealed to the Supreme Court.

Employment law experts say that a ruling in favor of Ms. Ledbetter could mean new administrative headaches for employers, and might have an impact beyond Title VII.

There is "a significant principle at stake here for employers," which is "the certainty that statutes of limitations provide employers," said Richard Greenberg, a partner in the New York office of Jackson Lewis L.L.P. "A decision here overturning the 11th Circuit would take away that certainty."

"It's just not a monetary issue—it is an administrative burden, it is an evidentiary issue," said Robin Conrad, senior vp of the National Chamber Litigation Center Inc., the legal arm of the Washington-based U.S. Chamber of Commerce. The NCLC filed an amicus brief with the high court supporting Goodyear. Ms. Conrad pointed out that personnel who made the pay decisions in question may no longer be employed by the company. "It really places a huge burden on the employer and flies in the face of the 180-day statute of limitations period that is clear as day in Title VII."

"It is important for employers, because it has the potential to expand the number and type of claims employees can bring," said Debra Friedman, a member at the law firm of Cozen O'Connor in Philadelphia. "What the plaintiff is looking to do here is open the door for claims that could date back many years. Therefore, employers could be faced with having to deal with claims that are stale," she said.

"When we look at the practical problems of defending against stale claims, you're looking at witnesses whose memories have faded, witnesses who may not be available, either due to inability to locate them or due to death or incapacity," Ms. Friedman said.

"The other issue you have besides witnesses are documents, because currently employers are required to keep documentation for various periods of time, but generally one year under EEOC regulations. If you're allowed to go back many years to bring a disparate pay claim, employers are forced to retain documents for potentially the course of an employee's career," she said.

A top lawyer with a group that filed an amicus brief supporting Ms. Ledbetter disagreed about the impact of claims beyond the Title VII limit of 180 days.

"It does not require a huge administrative burden," said Jocelyn Frye, general counsel of National Partnership for Women & Families in Washington. "This has been the way the law has operated, and it has been clear for many years that if discrimination occurred, you're going to be liable for that discrimination as long as you pay them pursuant to a discriminatory policy."

If the court holds for Ms. Ledbetter, "there's nothing that would make that obligation any tougher than it would be already," said Ms. Frye. If discriminatory pay practices go uncorrected for years, "that's money that's building up year after year after year. It's particularly important for women to able to challenge it once they discover it," she said.

"The key issue in the case is whether the Supreme Court is going to reaffirm its holding in the Morgan case that employers' decisions about whether to hire, fire, promote or transfer would only be actionable if they occur within the limitations period and extend that holding to employers' decisions about how much to pay their employees," said Jonathan Wetchler, a partner in Philadelphia law firm Wolf, Block, Schorr & Solis-Cohen L.L.P. Mr. Wetchler was referring to the high court's 2002 decision in National Railroad Passenger Corp. vs. Abner Morgan.

"The court's decision could absolutely apply beyond Title VII, such as to claims under the Age Discrimination in Employment Act. The court typically applies the same concepts concerning continuing violations under all the federal civil rights statutes," Mr. Wetchler said. "I would be shocked if the court didn't say that the rule in Morgan applies to compensation decisions."