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Pay Discrimination Developments

Find out how a recent Supreme Court decision affects your company now and what to expect in the future.

Opinions expressed by Entrepreneur contributors are their own.

On May 29, 2007, the U.S. Supreme Court decided the case of Ledbetter v. Goodyear Tire & Rubber Co., an employment case important to all businesses in the country. While employers need to understand the decision, its longevity is open to question because bills are currently pending in both houses of Congress to overturn its effect.

Lilly Ledbetter was in a managerial position for nearly all of her 20 years of employment at Goodyear. Most of the other managers were men. In the beginning, her salary was similar to that of men performing substantially the same work. However, over time she claims she received poor evaluations because of her gender, not because of her job performance. Consequently, Ledbetter's pay was not increased as much as it would have been had she received fair evaluations. The disparity in her pay continued over the years until she was receiving significantly less pay than any of her 15 male co-workers doing the same type of work.

As the years passed, the total of the pay differential accumulated. The evidence at trial showed that in 1997, Ledbetter was receiving $3,727 per month, while the lowest paid male manager was making $4,286 per month, and the highest paid was receiving $5,236 per month.

In 1998, a few months before she retired, Ledbetter commenced proceedings with the Equal Employment Opportunity Commission alleging sex discrimination. After retirement, Ledbetter filed suit against Goodyear. At trial, a jury found in favor of Ledbetter and awarded her back pay and damages.

In a 5-4 vote, however, the Supreme Court ruled that Ledbetter's discrimination claims were time-barred. The court held that each and every salary-setting decision of Goodyear was a discriminatory act separate from all prior and subsequent pay decisions. Accordingly, Ledbetter was required to challenge each pay decision by filing a charge with the EEOC within 180 days of the decision or forever lose the right to challenge that decision.

It didn't matter that the discriminatory effects of the pay decisions weren't apparent to the employee or that subsequent paychecks perpetuated the discrimination. The court rejected Ledbetter's argument that the harm resulted from the cumulative effect of the discriminatory paychecks. A strong dissent accompanied the opinion.

The conservative court gave business a significant victory by ruling that employees can't obtain relief in the courts from discriminatory pay unless action is commenced in the EEOC within 180 days of the discriminatory pay decision, even if the employee wasn't aware of the discrimination at the time it occurred. In fact, as noted in the dissent, many company policies make salaries confidential and preclude employees from comparing their pay. Also, in many cases, the aggregate dollar amount of the disparity between pay-setting decisions would be relatively small and may not warrant the time and expense of legal representation for the employees.

As happy as the business community may be with the Ledbetter ruling, liberal and employee advocates are displeased with the obstacle to pay discrimination claims created by the decision. Shortly after the Ledbetter decision came down, HR 2831 was introduced in the House of Representatives, and S1843 was introduced in the Senate with the announced intention of overturning Ledbetter. While liberal legislators on both sides of the aisle will support the bills, if and when such legislation will be passed and signed by the president then in office is uncertain.

Until that time--if it ever comes--and barring a liberal change in the membership of the Supreme Court, Ledbetter will remain the law of the land. The only thing certain is that lawyers on both sides of the issue will be litigating in federal courts throughout the country either both to entrench and broaden Ledbetter's reach or to chip away at and limit its application.

Written By

Jeffrey Steinberger is a veteran trial attorney and the founder and senior partner of The Law Offices of Jeffrey W. Steinberger , a Professional Corporation in Beverly Hills, California. He is also a renowned celebrity attorney, TV legal commentator and analyst, federally appointed SEC arbitrator and professor of law.