Supreme Court Ruling Limits Pay Discrimination Suits Under Title VII

Managerial Decision-Making Skills Remain Vital

The United States Supreme Court recently decided the case of Ledbetter v. Burlington Northern and Santa Fe Railway Co. v. White, thereby limiting the time period in which employees may challenge pay decisions under Title VII of the Civil Rights Act of 1964, as amended. The Court held that employees who intend to contest a pay decision must do so within 180 days of the allegedly discriminatory pay decision (or 300 days in a deferral state) or forever forgo such claim even if the past pay decision detrimentally affects the employee's future pay.

What the Ruling Means for Employers:

The ruling is a victory for employers in that it prevents employees from challenging, under Title VII, the continuing effects of past discriminatory pay decisions. However, this case does not affect the longer time periods a plaintiff has to bring an action for pay discrimination under the Equal Pay Act or 42 U.S.C. § 1981. To maintain the work environment and avoid unnecessary litigation, organizations should continue to ensure their managers base pay decisions on legitimate business factors and properly document such decisions by consistently following the FACT Model® and the Prescriptive Rules®.

Background on the Case:

Facts: The female plaintiff claimed her employer paid her less than her male counterparts because of her sex. The plaintiff contended that during the course of her employment, several supervisors had given her poor evaluations because of her sex. According to the plaintiff, as a result of these evaluations her pay was not increased as much as it would have if she had been evaluated fairly. The plaintiff argued that these past pay decisions continued to affect the amount of her pay throughout her employment. However, none of the allegedly discriminatory pay decisions were made during the EEOC charging period; rather, all such decisions were made prior to the EEOC charging period.

Prior History: A federal jury found for the plaintiff and awarded $3.8 million. The award was reversed on appeal, and the plaintiff then appealed to the United States Supreme Court.

Supreme Court Decision: The Supreme Court rejected the plaintiff's contention that discriminatory acts that occurred prior to the charging period are actionable so long as they have continuing effects during the charging period. Instead, the Supreme Court held that an individual wishing to challenge a pay decision under Title VII must file a charge of discrimination with the EEOC within 180 days (or 300 days, as applicable) of the discriminatory pay decision. As stated by the Court: "[t]he EEOC charging period is triggered when a discrete unlawful practice takes place. A new violation does not occur, and a new charging period does not commence, upon the occurrence of subsequent non-discriminatory acts that entail adverse effects resulting from past discrimination."