Publication

June 29, 2007Client Alert

Supreme Court Requires Complaint When Paid: Congress Steps in With More Liberal Standard

If you get your paycheck and you are convinced you have been paid less because of your gender or other protected trait, how long do you have to file a discrimination complaint? That was the straightforward question before the United States Supreme Court in a case they decided on May 29, 2007. In that case, a female employee claimed that a series of performance evaluations tinged with sex-based, subjective decision making led to reduced pay raises and eventually resulted in a pay gap between her and her male colleagues. (Ledbetter v. Goodyear Tire & Rubber Co., Inc., No. 05-1074 U.S. Supreme Court.) Such a person must file a discrimination in pay claim when the discriminatory decision is made or within 180 days of such decision, and if not, the claim is time barred (cannot be brought) pursuant to Title VII’s 180-day statute of limitation.

This Alert briefly describes the facts of the case and the state of the law regarding discriminatory pay claims. This Alert also provides practical suggestions for management to help ensure nondiscriminatory pay practices and insulate their pay decisions from legal claims.

Mary Ledbetter worked at Goodyear’s tire and rubber plant in Alabama for over 20 years, and over time rose to the rank of supervisor. She was the only female production supervisor in the plant. Each year her performance was evaluated, which in turn determined whether she would receive a pay raise, if any. A few months before she retired she submitted a questionnaire with the Equal Employment Opportunity Commission ("EEOC") and then four months later filed a charge of discrimination with that agency. In each submission to the EEOC, she alleged that several supervisors had given her poor evaluations because of her gender and as a result her pay was not increased as much as it would have been had she been evaluated fairly. She filed a lawsuit, and after trial, a jury found that she had been discriminated against and awarded her back pay and damages in excess of $3 million.

On appeal, Goodyear contended that her pay discrimination claim was time barred with respect to all pay decisions prior to 180 days before she filed the questionnaire with the EEOC. Within that time period, Goodyear argued that no discriminatory pay decisions had been made and therefore her lawsuit must be dismissed. The Eleventh Circuit Court of Appeals agreed with Goodyear and dismissed Ms. Ledbetter’s lawsuit. That court did analyze two pay decisions which had been made within the 180-day time period but concluded that there was insufficient evidence to prove discriminatory intent and the jury’s finding was simply not supported by the evidence. On Ms. Ledbetter’s appeal to the U.S. Supreme Court, the high court reached the same conclusion: that the discriminatory pay claim must be brought within 180 days of the alleged discriminatory decision.

Practically, this decision means that employees who believe a pay decision is discriminatory must complain soon after the payroll is issued. In Wisconsin, the statute of limitations would be 300 days since Wisconsin has a cross-filing relationship with the EEOC. To be confident that subsequent questioning of a pay decision is prevented, employers should take steps to be sure there is documentation or proof of the timing of pay decisions. In the vast majority of situations, employers conduct regular performance evaluations, tie future pay to that performance record, and communicate pay decisions verbally or in writing to their employees. Typically, that communication is made before the payroll is issued. Employers should continue to communicate the basis for the pay decision and include "proof" of the communicated decision – whether that be an email, paper memorandum, or payroll stuffer confirming the pay decision. Of course, the underlying process in which pay decisions are made needs to continue to be evaluated for any bias or impact along gender or other protected traits. Mirroring of decision makers and evaluated employees is always helpful in rooting out potential bias or assumptions.

So the bottom line is that employees cannot sit on their hands if they have a wage complaint but must make contemporaneous complaints to their employer first, and then to the agencies if no relief is forthcoming. If anything, the Ledbetter decision is another in a long line of decisions from the federal courts urging employees to first attempt to resolve their disputes directly with the employer before involving the agencies or courts. Some commentators predict dire consequences arising from this decision mostly along the lines that some discrimination may be so subtle that the victim does not notice its effects or become aware of it until later, and by then the time in which to file a charge has passed. It is argued that this concern is heightened, in pay decisions because employees may not have a basis of comparison of pay among similarly situated employees. I would suggest those commentators are conveniently ignoring the robust communication among employees about pay, benefits, good and bad bosses, etc., that occurs daily in just about every workplace.

The long-term impact of the Ledbetter decision, however, could be a yawner. No sooner did the ink dry on Justice Alito’s majority opinion than did Congress start holding hearings on legislation that would overrule the Court’s ruling. Justice Ginsburg rallied the Hill in her dissent when she wrote, "Once again the ball is in Congress’ court. As in 1991, the Legislature may act to correct this Court’s parsimonious reading of Title VII." A Congressional bill, H.R. 2831, known as the "Ledbetter Fair Pay Act," was introduced on June 22, 2007, and is on a fast track. The House Education and Labor Committee held a hearing on the Ledbetter decision (without an introduced bill) shortly after the decision was reached, and a Committee vote is scheduled on June 27. H.R. 2831 does more than just "fix" the Ledbetter case, (as is often the case) and instead effectively eliminates the statute of limitations for workplace pay decisions, eases the ability of plaintiffs to bring "pattern and practice" cases, and gives broader authority to the EEOC in investigating pay claims. For a business perspective on the perils of H.R. 2831, the U.S. Chamber of Commerce has posted information on its web site, www.uschamber.com.

Ultimately, the Supreme Court’s decision in Ledbetter may be less about when an employee needs to file a claim of suspected pay discrimination, and more about a more liberal Congress’ desire to amend the law as interpreted by a more conservative Supreme Court. Employers may want to voice their concerns to the Congress – for as it’s been said of the legislative process, "If you’re not at the table, you may be on the menu." Employers should stay tuned as the politics play out.

For further information, please contact Scott C. Beightol, a partner in Michael Best's Labor and Employment Relations Practice Group at 414.271.6560, or scbeightol@michaelbest.com.

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