July 27, 2006

SUPREME COURT TO CONSIDER IMPORTANT PAY BIAS CASE

The U.S. Supreme Court recently agreed to hear an important case involving how far back in time may be considered in an employee’s lawsuit alleging discrimination in pay under Title VII (Ledbetter v. Goodyear Tire & Rubber Co., U.S. No. 05-1074, cert. granted 6/26/06).

Background:
The plaintiff, Lilly Ledbetter, was a supervisor at the Goodyear Tire and Rubber assembly center in Gadsden, Alabama for 19 years. She claimed that Goodyear paid her a smaller salary than it paid her male co-workers because of her sex. Her periodic paychecks were based on annual salary reviews in which Goodyear re-established employee salary levels over a period of years. Ledbetter’s annual performance evaluations from 1992 to 1996 placed her at or near the bottom of her group. By the end of 1997, Ledbetter earned less than all 15 of the other area managers in her department. She did not receive a salary increase in 1998, the year she took early retirement, because her manager at the time concluded that her performance did not warrant an increase.

Jury Verdict:
A jury in the U.S. District Court for the Northern District of Alabama found that Ledbetter was paid less than her male counterparts because of her sex. In making its verdict, the jury was allowed to consider discrete pay review decisions made at different times by different people over Ledbetter’s nineteen-year career at Goodyear. The jury awarded her over $3.5 million in back pay, mental anguish and punitive damages, an amount that was later reduced to the statutory maximum.

Eleventh Circuit Court of Appeals:
The Eleventh Circuit refused to consider Ledbetter’s pay reviews going back decades. It reversed the jury verdict and ordered Ledbetter’s lawsuit dismissed. The court held that at least in cases in which the employer has a system for periodically reviewing and re-establishing employee pay, “an employee seeking to establish that his or her salary was unlawfully depressed may look no further into the past then the last affirmative decision affecting their pay immediately preceding the start of the limitations period.” The court distinguished this case, where Ledbetter’s pay “had been reviewed and re-established over a dozen times,” from cases in which employees do not have such “regular opportunities to complain of improperly deflated pay and to seek a raise.”

Implications:
It would be very difficult for employers to defend against allegedly discriminatory pay decisions made years earlier — long after decision-makers had retired or died, documents had been lost or discarded, and witnesses’ memories had faded. The potentially good news for employers, however, is that some legal experts predict the Supreme Court will decide this case favorably to them. The Court will hear the Ledbetter case this fall.

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