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Employers score a win with pay bias decision

Employers score a win with pay bias decision

WASHINGTON--Employers can breathe a bit easier as a result of the closely divided Supreme Court decision that plaintiffs alleging illegal pay discrimination under Title VII of the Civil Rights Act of 1964 must file a complaint within 180 days of the alleged offense.

Employer groups had feared that a ruling in favor of the plaintiff in Lilly Ledbetter vs. Goodyear Tire & Rubber Co. would have subjected them to unjustified administrative burdens, including retaining years' worth of employment-related documents long after required by law (BI, Dec. 4, 2006). But the high court held last week the 180-day deadline for filing such complaints could not be ignored.

"It's definitely good news for employers because employers can focus on insuring that current pay-setting decisions are nondiscriminatory without the need to revisit all pay decisions during an employee's career," said Debra S. Friedman, member of the law firm Cozen O'Connor in Philadelphia. "It also ensures that employers are not exposed to stale claims of disparate pay under Title VII."

But the opinion had hardly been issued before some Democratic congressional leaders called for legislation that would in effect overturn the decision as it applies to future cases. "This ruling will force Congress to clarify the law's intention that the ongoing effects of discriminatory decisions are just as unacceptable as the decisions themselves," said Rep. George Miller, D-Calif., the chairman of the House Education and Labor Committee, in a statement.

A group of senators, including Sens. Edward Kennedy, D-Mass., and Hillary Clinton, D-N.Y., plan to introduce legislation as early as this week to change the law.

The case began in 1998 when Ms. Ledbetter, an employee at Goodyear's Gadsden, Ala., plant, 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.

Under Title VII, 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 district court jury took Ms. Ledbetter's salary history into account before awarding various damages, 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 U.S. Supreme Court.

By a 5-to-4 margin, the high court rejected Ms. Ledbetter's appeal.

Writing for the majority, Associate Justice Samuel Alito noted that Ms. Ledbetter made a "variety of policy arguments in favor of giving the alleged victims of pay discrimination more time before they are required to file a charge with the EEOC. Among other things, she claims that pay discrimination is harder to detect than other forms of employment discrimination." But Justice Alito continued that the "policy arguments for giving special treatment to pay claims find no support in the statute and are inconsistent with our precedents."

Ruling 'clear' and 'significant'

Employer groups and attorneys praised the decision.

"I think it's pretty clear that 180 days means 180 days," said Robin S. Conrad, executive vp of the National Chamber Litigation Center Inc. in Washington, which handles litigation for the U.S. Chamber of Commerce. "Employers should continue to feel comfort in relying on the claim filing deadline in Title VII, and they won't be subject to having to defend against stale claims."

"The ruling is exceedingly significant, as it arms employers with excellent ammunition to fight off theories the plaintiffs' bar has used to expand the scope and size of class actions over pay and promotions," said Gerald L. Maatman Jr., a partner at Seyfarth Shaw L.L.P. in Chicago. "Since most bet-the-company class actions alleging disparate-treatment employment discrimination focus on pay and promotional opportunities, the Ledbetter ruling ought to cut down on the expansive liability periods--and thus the size of the potential classes--faced in those types of suits."

The ruling "also counsels that risk managers and human resources professionals should ensure that their corporate antidiscrimination reporting procedures are clearly written and adequately disseminated to employees," he said. "In this manner, potential employee complaints over payroll decisions can be addressed and, if necessary, investigated, so that the employer can achieve a work environment free of discrimination while also ensuring that it can take full advantage of the statute of limitations defense recognized in the Ledbetter ruling."

The court "would have broadened employers' exposure to pay discrimination claims had the court gone the other way," said Cozen O'Connor's Ms. Friedman. "It was a straightforward decision and it was a logical extension of the court's prior precedents."

In an often sharply worded dissent, Associate Justice Ruth Ginsberg said that the majority provided a "cramped interpretation" of Title VII. The majority ruling means that "consideration may not be given to the cumulative effect of a series of decisions that, together, set her pay well below that of every male area manager," wrote Justice Ginsburg. "Knowingly carrying past pay discrimination forward must be treated as lawful conduct."

The decision represents a "painful and costly step backward," said Debra L. Ness, president of the Washington-based National Partnership for Women & Families, in a statement.

The NPWF, which had filed an amicus brief supporting Ms. Ledbetter's position, called on "Congress to act quickly to ensure that no other workers suffer the same fate."

Lilly Ledbetter vs. Goodyear Tire & Rubber Co. U.S. Supreme Court. No. 05-1074. Decided May 29, 2007.