With the recent signing of the Lilly Ledbetter Fair Pay Act, President Obama effectively overturned a U.S. Supreme Court ruling in 2007 that severely restricted the amount of time an employee had in which to assert a pay discrimination claim. An employee can now file a complaint of pay discrimination long after learning of any pay discrepancy.
The President's signing of the Lilly Ledbetter Fair Pay Act was the culmination of efforts in both the House and Senate to redress what many in Congress believed to be an erroneous interpretation of existing anti-discrimination laws by the Supreme Court in its 5-4 ruling in Ledbetter v. Goodyear Tire & Rubber Co., 550 U.S. 618, 127 S.Ct. 2162 (U.S. 2007). This legislation has the effect of restoring the law to where it had been before Justice Samuel Alito issued the opinion of the majority in Ledbetter v. Goodyear Tire & Rubber Co.
The facts in Ledbetter surrounded Lilly Ledbetter, who worked as a supervisor at a Goodyear Tire & Rubber plant in Alabama from 1979 until her retirement in 1998. During her employment with Goodyear, Ms. Ledbetter worked as an area manager – a position largely held by men at the Goodyear plant. While Ledbetter's salary was initially consistent with what men earned who held the same position, over time, her pay became less than what men of equal or less seniority earned. By the end of 1997, Ms. Ledbetter discovered that she was earning $3,727 per month while her 15 male counterparts employed at the same Alabama Goodyear plant were earning anywhere from $4,286 to $5,236 per month.
Upon the discovery of this pay discrepancy, Ledbetter submitted a questionnaire to the Equal Employment Opportunity Commission (EEOC) in March 1998. A formal charge by Ledbetter followed in July 1998. Upon Ledbetter's retirement in November 1998, she filed suit against Goodyear under Title VII of the Civil Rights Act of 1964 as well as the Equal Pay Act of 1963 (EPA), 29 U.S.C. Section 26 (d).
The District Court in Alabama dismissed the Equal Pay Act claim, but allowed the Title VII pay discrimination claim to proceed to trial. At trial, Ledbetter contended that several of her past supervisors gave her poor performance evaluations based not on any deficiency in her work performance but on her gender. As a result of those initial poor performance evaluations, throughout the entirety of her nearly 20-year employment relationship with Goodyear, her pay continued to lag behind her male counterparts'.
In its defense, Goodyear contended that all of its evaluations of Ledbetter were non-discriminatory. The jury disagreed. It found for Ledbetter and awarded back pay and other damages.
On appeal, Goodyear claimed that the pay discrimination claim was time barred with regard to all pay decisions made before September 26, 1997 – 180 days before Ledbetter filed her EEOC questionnaire – and that no discriminatory acts occurred after that date. Agreeing with Goodyear, the Eleventh Circuit reversed, holding that a Title VII pay discrimination claim cannot be based on discriminatory events that occurred before the last pay decision that affected the employee's pay during the EEOC charging period.
In affirming the Eleventh Circuit's reversal of the trial court award in favor of Ledbetter, the U.S. Supreme Court relied on a series of earlier opinions that had held that the EEOC "charging period" was triggered only when a discrete unlawful practice occurred. Further, the court held that a new charging period does not commence upon the occurrence of a subsequent non-discriminatory act that entails adverse effects resulting from past discrimination.
Applying this holding to the facts in Ledbetter, the Supreme Court found that 1.) Goodyear's earlier sex discrimination that resulted in Ledbetter receiving unequal pay in the past, and 2.) the adverse impact of that earlier discrimination (i.e., keeping her in a perpetual state of lagging behind her male co-workers for the remainder of her career at Goodyear) did not trigger a new EEOC charging period when 3.) Ledbetter received paychecks in 1997 and 1998 that were less than what her co-workers received due to the earlier discrimination.
The Supreme Court ruling in Ledbetter v. Goodyear Tire & Rubber Co. required that employees, such as Ledbetter, who were subjected to discrimination in years past had to file a claim within 180 days of the employer's original decision to pay them less – even if the employee continued to receive reduced paychecks and even if the employee did not discover the discriminatory reduction in pay until much later.
The significance of the passage of the Lilly Ledbetter Fair Pay Act cannot be underestimated. The Act's implementation will have far reaching consequences for both employers and employees. It is critical for employers to appreciate that under this new legislation, each and every discriminatory paycheck received by an employee triggers a new EEOC charging period – even if the discriminatory conduct occurred many years ago. It no longer matters when the discriminatory conduct occurred. What matters is whether an employee's current paycheck reflects the past discriminatory conduct in the form of lower wages than what would have been received "but for" the past discrimination.
Originally published 21 May, 2020
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