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Supreme Court Upholds Employers' Rights Under Title VII

June 2007

In a ruling that has been hailed as a victory for employers, the United States Supreme Court recently rejected as untimely a female employee's claim of unequal pay due to sex-related discrimination that occurred some twenty years earlier. See Ledbetter v. Goodyear Tire & Rubber Company, 127 S. Ct. 2162, 75 U.S.L.W. 4359 (2007).

The Facts of the Case

Lilly Ledbetter began working at the Goodyear Tire & Rubber Company's Gadsden, Alabama Plant in 1979. Ledbetter resigned in 1998 and filed a charge under Title VII against Goodyear, claiming pay discrimination based on her sex. Ledbetter was a salaried employee and her raises were based primarily on performance evaluations conducted by her supervisors. Ledbetter received several poor evaluations over the years that she claimed were solely as result of sex discrimination. As a result of these negative evaluations, Ledbetter's salary did not increase as much as it could have; Ledbetter argued that this affected her salary levels throughout her entire period of employment. In fact, at the end of her tenure with Goodyear, Ledbetter was being paid significantly less than any of her male co-workers with similar positions. Although Ledbetter won her case in the trial court and a jury awarded her back pay and damages, Goodyear appealed the jury's decision all the way to the U.S. Supreme Court.

The Supreme Court's Ruling

The Supreme Court held that Ledbetter's claims were barred by Title VII's limitations period: Title VII requires that a plaintiff file a charge of discrimination with a fair employment agency such as the Equal Employment Opportunity Commission or a local agency such as the Illinois Department of Human Rights in order to proceed with a discrimination case. In Alabama, the limitations period for Ledbetter was180 days before a discrimination charge is filed but in many states, including Illinois, the limitations period is 300 days.

Title VII requires proof of an employer's intent to discriminate in order for an employee to win on a claim of different and unequal treatment. The Court held that even if the poor performance evaluations Ledbetter had received years earlier were the result of sex discrimination from her supervisors, Ledbetter could not prove that the low paychecks she received in the 180 days immediately before she filed her charge of discrimination were due to any discriminatory intent by Goodyear in that time period. Therefore, the Supreme Court affirmed the Appellate Court's earlier ruling overturning Ledbetter's trial victory.

What Does this Ruling Mean to Employers?

The Ledbetter ruling is a powerful tool for stamping out stale claims of gender-based pay discrimination under Title VII. Employers must continue to be vigilant, however, as claims of unequal pay due to gender are now more likely to be brought under the Equal Pay Act, which has a two- to three-year statute of limitations and does not require proof of discriminatory intent. Similarly, claims of unequal pay due to race or national origin are now more likely to be brought under Section 1981 of the Civil Rights Act (of 1866), which has a four-year statute of limitations. Finally, Ledbetter was decided by a slim five to four majority of judges and the dissent entreated Congress to pass legislation to roll back the majority's decision. Therefore, employers should monitor developments in this area carefully in case there are any legislative actions to amend Title VII as a result of this ruling.

If you have any questions about the Ledbetter decision or how it may provide your company with a defense against threatened or pending pay discrimination claims, please contact Pedersen & Houpt's Employment Law group.

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