June 29, 2007

U.S. Supreme Court Strictly Construes Statute of Limitations for Title VII Discrimination Cases

On May 29, 2007, the U.S. Supreme Court strictly construed the statute of limitations for filing EEOC charges under Title VII, and in doing so limited employees’ abilities to bring discrimination complaints against their employers. In Ledbetter v. Goodyear, the Court held that an employee was barred from bringing a Title VII-based EEOC charge against her employer for pay discrimination on the basis of sex, where she based her claim on management decisions that occurred more than 180 days prior to the filing of the charge. Rejecting the employee’s argument, the Court held that new violations do not occur, and new charging periods do not begin, each time an employer issues a paycheck to a female employee that is less than what similarly-situated male employees receive. Ledbetter resolved a split among appellate courts, and provides additional protection to employers from discrimination claims arising long before a claim is filed with the EEOC.  

Title VII and the Continuing Violations Doctrine

Title VII prohibits workplace discrimination by employers, but provides that aggrieved employees generally must file charges containing their allegations with the EEOC within 180 or 300 days[1] of an “unlawful employment practice.” Title VII defines the term “unlawful employment practice” to include numerous adverse actions, including failure to hire, refusal to hire, refusal to promote, discharge, or other treatment discriminating against “any individual with respect to his compensation, terms, conditions, or privileges of employment.” In previous cases, most recently National Railroad Passenger Corp. v. Morgan (2002), the Supreme Court had distinguished between discrete acts of discrimination and hostile work environments, finding that the latter is generally viewed to be a single unlawful employment practice rather than a series of discrete violations. Employees may, therefore, seek to impose liability on employers for incidents extending beyond the charging period, either 180 or 300 days before on EEOC complaint is filed, so long as the incidents were a part of the hostile work environment and at least one of the incidents took place within the filing period. However, in some circumstances, when the conduct complained of is not a hostile work environment (particularly, pay differentials based on race or gender), there was still some potential confusion about the applicability of the “continuing violation” exception to the statute of limitations.

Ledbetter v. Goodyear

Lilly Ledbetter worked for Goodyear Tire and Rubber Company in Gadsden, Alabama from 1979 to 1998. Salaried employees, like Ledbetter, were given or denied raises based on supervisory evaluations of their performance. Although Ledbetter’s salary initially was comparable to those of male colleagues performing similar work, she alleged that the disparities between her salary and theirs grew over the years. At the end of 1997, as the only female area manager working in Gadsden, she was earning $500 less per month than the lowest-paid male area manager and more than $1500 per month less than the highest-paid male manager.

In July 1998, Ledbetter filed a discrimination charge with the EEOC; in November 1998, after taking early retirement, she filed suit against Goodyear, asserting among other things a sex discrimination claim under Title VII and a claim under the Equal Pay Act. Ledbetter alleged that multiple supervisors had given her poor evaluations on account of her sex, which led to lower compensation than her male colleagues, throughout the term of her employment. A jury awarded Ledbetter backpay and damages. The U.S. Court of Appeals for the Eleventh Circuit reversed, holding that she filed her claim with the EEOC too late, because it had not been filed within 180 days of any unlawful employment practice.

On appeal to the Supreme Court, Ledbetter argued that the best reading of Title VII, as well as the best policy, was to treat pay discrimination claims like hostile work environment claims, for which the 180-day limitation could be extended upon a showing that the cumulative actions of the employer constitute a “continuing violation” of the statute. Ledbetter argued that the discriminatory intent behind the initial decision setting Ledbetter’s pay was given present effect each time Goodyear issued her a paycheck, creating one cohesive, if lengthy, unlawful employment practice that reflected allegedly discriminatory pay decisions made by supervisors over her 19-year career. Ledbetter claimed that each time she received a paycheck, the clock began anew, allowing her to “properly challenge any prior discriminatory conduct that impacted the amount of that paycheck, no matter how long ago the discrimination occurred.” Title VII claims based on any of these paychecks, then, could use the initial pay decision to prove the element of discriminatory intent, even if that initial decision did not occur within the EEOC limitations period.

The Court disagreed, holding in a 5-4 decision that because Ledbetter did not allege any discriminatory intent motivating any pay decision made within the limitations period, and because she had failed to file an EEOC charge within 180 days of any specific act that caused her pay to be lower (namely, her performance evaluations), her claims were time-barred. As the Court noted, when the paychecks are issued under a system that is “facially nondiscriminatory and neutrally applied,” without demonstrated discriminatory intent on the part of the employer, each separate paycheck is not in and of itself a discriminatory act but rather is an adverse effect of the past alleged discrimination. The adverse effects stemming from pre-charging period discrimination, then, do not render each paycheck a new violation with its own charging period. The Court held that Congress, in structuring a “short deadline” for filing EEOC charges, chose to protect employers from shouldering the burden of defending employment decisions that are “long past.”

Implications of Ledbetter for Employer-Employee Relations and Future EEOC Claims

First and foremost, the decision strengthens the bar against employee Title VII claims springing from actions occurring more than 300 days[2] prior to the filing of a charge with the EEOC, and clarifies how alleged discrimination in wage cases will be treated under Title VII. Absent a facially-discriminatory pay policy, employees’ wage claims generally must be brought within 300 days of an employment decision setting their wages at a certain level in order to satisfy the statute. As the dissent noted, for many new hires, this would mean, in essence, that unless the employee files a charge within 300 days of being hired, her claim might be forever barred, “grandfathered, a fait accompli beyond the province of Title VII.”

However, the continued validity and overall importance of Ledbetter are cabined by at least two concerns. First, on June 12, 2007, the House Committee on Education and Labor called Ledbetter to testify, and Chairman George Miller (D-CA) indicated that he will introduce legislation to overturn the Court’s decision. It is unclear whether the potential legislation will succeed, and it is likewise unclear whether the White House will veto the bill if it does pass.

Second, Ledbetter does not necessarily govern the interpretation of state EEO laws. Some state courts have their own interpretations of discrimination law issues, and do not necessarily defer to the federal interpretation. For example, in Massachusetts the continuing violations doctrine for discrimination claims is generally limited to hostile work environment claims and not to equal pay claims (which is in line with the Ledbetter analysis). However, the Massachusetts Supreme Judicial Court has held that for pay claims brought pursuant to Massachusetts General Laws Chapter 151B (the state-equivalent to Title VII), the statute of limitations is governed by the “discovery rule” – that the 300-day statute of limitations for claims does not begin to run until the date at which the employee knows, or reasonably should have known, that she has suffered a discriminatory adverse action. Silvestris v. Tantasqua Regional School Dist., 446 Mass. 756 (2006). The Supreme Court noted in a footnote to Ledbetter that it had “previously declined to address whether Title VII suits are amenable to a discovery rule…. Because Ledbetter [did] not argue that such a rule would change the outcome in her case,” the Court declined once again to address it. Therefore, the existence of a discovery rule under Title VII remains an open issue.

In sum, Ledbetter emphasizes the important policy interest in requiring discrimination claimants to put their employer on notice of their claims promptly – “the right to be free of stale claims ... [should] prevail over the right to prosecute them.” In the words of the Court, the “short deadline” for filing discrimination charges “reflects Congress’ strong preference for the prompt resolution of employment discrimination claims through voluntary conciliation and cooperation.”