A recent Supreme Court case regarding discrimination and equal pay has garnered a significant amount of attention from the media. Ledbetter v. The Goodyear Tire & Rubber Co., Inc., 550 U.S. ___ (May 29, 2007). Despite the fact that the decision closed one avenue for employees to claim disparate treatment, it serves as a reminder to employers that there are still ample vehicles for employees to bring a disparate treatment claim, whether it be for pay disparity, overtime compensation, or any other kind of discrimination.

Ledbetter Decision
Title VII of the Civil Rights Act prohibits discrimination against any individual with respect to their compensation because of an individual’s race, color, sex, religion, or national origin. 42 U.S.C. § 2000e-(2)(a)(1). Generally, an individual seeking to challenge discrimination in pay must file a charge with the Equal Employment Opportunity Commission (EEOC) within 180 days “after the alleged unlawful employment practice occurred.” 42 U.S.C. § 2000e-5(e)(1).

Lilly Ledbetter worked as an area manager for Goodyear Tire in a position largely occupied by men. Initially, her salary was in line with her male peers, but over time a disparity in her pay became evident: near the time of the complaint, she was paid $3,727 per month, while the lowest paid male manager was paid $4,286 and the highest was paid $5,236. Ledbetter took early retirement in November 1998 and filed a discrimination claim with the EEOC. She claimed that she had been given poor performance evaluations because she was a woman, that her pay was adversely affected because of those poor evaluations, and that the past pay decisions continued to affect her pay throughout her employment. In essence, she claimed that although a decision to pay her less may have been made years ago, each successive paycheck was discriminatory because it contained less compensation than she deserved.

At the heart of the Ledbetter decision is the concept of “continuing violations.” Continuing violations arise in the context of an alleged discriminatory act. With a continuing violation, the statute of limitations begins on the date of the most recent discriminatory violation. For instance, in an equal pay case where there is an alleged unlawful disparity in pay, it is usually treated as a continuing violation because there is a disparity in pay for every day worked and every check received. When each subsequent paycheck is treated as a discriminatory act, the statute of limitations provides little help for employers facing lawsuits from current employees. The issue presented before the Supreme Court was whether, when current pay disparities within the statute of limitations are the result of a discriminatory act that occurred beyond the statute of limitations, a plaintiff may bring legal action against the employer.

The Supreme Court Decision
A five-member majority of the Supreme Court held that Ledbetter could not pursue legal action against Goodyear Tire under Title VII because the statute of limitations had run out on her claim. The Court, quoting prior precedent, noted: “A discriminatory act which is not made the basis for a timely charge…is merely an unfortunate event in history which has no present legal consequences.” Ledbetter, slip. op. at 6 (quoting United Air Lines, Inc. v. Evans, 431 U.S. 553, 558 (1977)).

The reason, explained the Court, is that disparate treatment claims under Title VII require proof of discriminatory intent. The Court reasoned that Ledbetter was not claiming that Goodyear decision makers acted with discriminatory intent every time they issued her a paycheck. Id. at 5. Rather, the initial action with discriminatory intent was a discrete act or single occurrence that took place at a particular point in time. Id. at 8. That discriminatory act, in Ledbetter’s case, was beyond the statute of limitations and could not lead to a Title VII action. The Court concluded:

The 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 the past discrimination. But of course, if an employer engages in a series of acts each of which is intentionally discriminatory, then a fresh violation takes place when each act is committed. Id. at 8-9.

Court Addresses Other Avenues for Making Claims
The Court did address concerns that employees like Ledbetter would be left with no recourse if they did not file timely Title VII claims for disparate pay. The Court noted that Ledbetter had, during the litigation process, dropped her claim based on the Equal Pay Act (EPA). The EPA does not require discriminatory intent, making it a completely different analysis than under Title VII. Id. at 21. Under the EPA, continuing violations occur when individual checks are issued. The Court concluded: “If Ledbetter had pursued her EPA claim, she would not face the Title VII obstacles that she now confronts.” Id.

In addition, the Court pointed to the Fair Labor Standards Act (FLSA) as an example of a statute where continuing violations could occur, but again distinguished such claims from Ledbetter’s case because FLSA claims do not require a showing of discriminatory intent. Id. at 22. With the FLSA, however, the continuing violation concept is really a misnomer. In the case of failure to pay overtime compensation or the minimum wage, each individual failure to pay is a new violation of the FLSA which triggers a new statute of limitations. See National Parks Conservation v. Tennessee Valley Auth., 480 F.3d 410, 417 (6th Cir. 2007). Rather than seeking redress for a continuing violation, FLSA complainants are really seeking recovery for a series of repeated violations (with or without intent) of an identical nature, each of which gives rise to a new cause of action. Id.

Impact of Decision on Wisconsin Employers
Notwithstanding sensational headlines in national and local newspapers, the Ledbetter decision does not eliminate employers’ liability for pay discrimination. Employees have statutes such as the EPA, FLSA and other laws which can be used to pursue claims. Employers must be especially aware of the mandates of such laws. For example, if an employer erroneously—with or without intent—misclassifies an employee as an exempt employee, each successive paycheck is a separate violation which triggers a new statute of limitations period.

This issue, however, is not over. Employers must keep a careful watch on future proceedings in Congress regarding the issue of continuing violations under Title VII. The dissenting Justices in Ledbetter noted that Congress can take action to overrule the Court’s decision. Congress could amend Title VII to encompass the theory of continuing violations. In fact, Senator Hillary Rodham Clinton has already expressed her intent to introduce legislation which would effectively overturn the Ledbetter decision. (Linda Greenhouse, “Justices’ Ruling Limits Suits on Pay Disparity”, N.Y. Times, May 30, 2007, at 1.)

The bottom line is employers must continue to be aware of potential “continuing violations,” especially in the realm of overtime compensation under the FLSA. Notwithstanding Ledbetter, the concept of continuing violations can also occur in an pay discrimination case under the EPA.

For more information, please contact a member of the Godfrey & Kahn Labor & Employment Law Team.