Pay Disparity: Does the High Court's Recent Decision Make It Easier for Employers to Defend Against Past Pay Discrimination Claims?

Pay Disparity: Does the High Court's Recent Decision Make It Easier for Employers to Defend Against Past Pay Discrimination Claims?

The U.S. Supreme Court in a recent decision said employees claiming they received disparate treatment based on gender or race must do so within 180 days of the original discriminatory action -- not within 180 days of their last paycheck. The New York Times reported approximately 40,000 pay discrimination cases were brought between 2001 and 2006 and many of them will likely be barred by the Court’s new interpretation of Title VII of 1964 Civil Rights Act.

The decision came in Ledbetter v. Goodyear Tire & Rubber Co., brought by Lilly Ledbetter, a manager at the Goodyear plant in Gadsden, Alabama. She claimed she was paid 15 percent to 40 percent less than her male counterparts, but the company successfully countered that her complaint was filed too late in relation to the employment decisions affecting her pay. The Court held Congress clearly intended to encourage the prompt processing of all charges for employment discrimination. Under federal law disparate-treatment claims must be filed with the Equal Employment Opportunity Commission (EEOC) within 180 or 300 days (depending on the state)from the time the discrete act of alleged intentional discrimination occurred, and not from the date when the effects of the practice was felt. The policy behind this is to protect employers from the burden of defending claims arising from employment decisions that are long past, i.e. stale claims.

Disparate Treatment Claims Under Federal Law

Under federal law a disparate treatment claim comprises two elements: an employment practice and discriminatory intent. An “employment practice” generally refers to a discrete act or single occurrence that takes place at a particular point in time. Examples from the employment setting include: termination, failure to promote, denial of transfer, and refusal to hire. The employment act is usually something that will almost always be documented and typically not be something in dispute between the employee and employer. The critical issue in disparate treatment claims is usually the discriminatory intent because the evidence is often circumstantial and fades quickly with time.

A disparate treatment claim does not encompass claims for hostile work environment. A discrete act of discrimination in itself constitutes a separate actionable unlawful employment practice that is temporally distinct. However, a hostile work environment normally comprises a succession of harassing acts, each of which may not be actionable on its own. In addition, a hostile work environment cannot be said to occur on any particular day. (See National Railroad Passenger Corp. v. Morgan, (2002) 536 U.S. 101, 114-116)

In Ledbetter the plaintiff was hindered by proving the employer’s intent existed during the charging period (180 days) of the EEOC time constraints to file a claim. The Court ultimately held a new charging period was not triggered when an employer issues paychecks pursuant to a system that “is facially nondiscriminatory and neutrally applied.” (Ledbetter, 2007 U.S. Lexis 6295, page 34) Ledbetter’s claim was barred despite the fact she may have had strong evidence to support past discrimination to account for the pay discrepancy.

Disparate Treatment Claims Under California Law

Employment discrimination in California is governed by the Fair Employment and Housing Act (FEHA) (Gov. Code, section 12900 et seq.) and disparate treatment claims in California are defined almost identically to federal law. Moreover, Title VII of the Civil Rights Act and other federal antidiscrimination statues are similar in objectives and wording to FEHA. Thus, California courts often look to federal decisions interpreting these statutes to provide guidance in interpreting FEHA.

Impact of Ledbetter on California

The key impact Ledbetter may have on California law is whether an employer may be held liable for unlawful actions occurring outside the limitations period. The statute of limitations for FEHA claims is not 180 days. It is one year from the date the discriminatory act allegedly occurred or 90 days past the one year limitation if the aggrieved person first obtained knowledge after the expiration of the one year period.

Currently in California, the California Supreme Court has chosen to apply the “continuing violation doctrine” to evaluate if unlawful employer’s conduct occurring outside the statue of limitations is sufficiently connected to the conduct inside the limitation period to determine if employer can be held liable for past discrepancies. (Richards v. CH2M Hill, Inc. (2001) 26 Cal.4th 798, 801). California has often looked to federal law for guidance in this area and scholars have noted this doctrine is arguably one of the most muddled in all of employment discrimination law.

In Richards, the Court looked to federal law and reviewed four different approaches to the continuing violation doctrine. Of the four different approaches analyzed, the California Supreme Court chose to follow the Berry test. (See Richards, supra, at 824) This three part test first considers the subject matter, i.e. do the alleged acts involve the same type of discrimination, tending to connect them to a continuing violation? Second the test considers the frequency and if the alleged acts reoccur. The third part of the test considers the permanence such to trigger the employee’s awareness of and duty to assert her rights. (Berry v. Board of Sup’rs of L.S.U (5th Cir. 1983) 715 F.2d 971)

The Berry test applied in the context of sexual or racial harassment claims, similar to Ledbetter, often lack the permanence to start the running of the statue of limitations. Thus, the recent decision in Ledbetter will no doubt test the Court’s position in California that disparate treatment claims for gender or race discrimination often do not start the statute of limitations running and allow employees to maintain stale claims of past discrimination.

Practical Applications for Employers

On the surface Ledbetter provides the statute of limitations period is to run from the time the discrete act of the alleged intentional discrimination occurred and not from the date when the effects of the practice was felt, but this does not mean employers will get a free pass on past discrimination. The High Court’s decision in Ledbetter and the Berry test are likely to be tested to determine exactly how disparate treatment and claims outside the limitations period should be applied in California.

If you have questions about changes to your pay policies or concerns they may discriminate or discriminated in the past, even unknowingly, it is best to contact an experienced employment law attorney to guide you through the appropriate steps to avoid facing future litigation.


This article appeared in the June 18, 2007 the San Diego Business Journal

For more information about this topic, please contact one of our business attorneys at 619.238.1712

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