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The Lilly Ledbetter Fair Pay Act of 2009: A Preliminary Report, Part Three


Tuesday, October 13, 2009

This is Part Three in a series of three columns by the authors on the Lilly Ledbetter Fair Pay Act. Part One explained the Act and the Supreme Court decision that prompted it, while Part Two considered a recent federal appellate case illustrating confusion about the Act's meaning. – Ed.

At the beginning of his Presidential term, Barack Obama signed into law the Lilly Ledbetter Fair Pay Act, a law that restores certain protection for pay discrimination claimants under Title VII. That protection had been undercut by the Supreme Court in Ledbetter v. Goodyear Tire & Rubber Co. In the previous parts of this series, we considered the Court's ruling in Ledbetter, some questions about the scope of the Ledbetter Act, which was passed in response to the ruling, and a recent appellate case, Mikula v. Allegheny County, applying the Act.

In this Part, the third and last in the series, we consider other cases and questions that have arisen as courts begin applying the Act. Specifically, we focus on three issues: (1) What discriminatory practices are encompassed within the Act's reference to a "compensation decision or other practice"?; (2) Does the Act have any effect on statutes that it did not specifically amend, but that are interpreted with reference to Title VII law?; and (3) Does the Court's Ledbetter decision have continuing vitality with respect to Title VII cases that are not directly covered by the Act, but that involve concerns similar to those prompting Congress to overturn that decision?

The Basic Provisions of the Ruling and the Act

As we discuss in greater detail in Part One of this series, the Supreme Court's 2007 ruling in Ledbetter holds that Title VII's statute of limitations for pay discrimination starts running when a discriminatory pay decision is made. The Court rejected the "paycheck accrual" rule long followed by the EEOC and most federal courts, which provided that an employee could also challenge pay discrimination within 180 or 300 days (depending on the jurisdiction) of any paycheck containing a discriminatory wage.

In the Ledbetter Act, Congress reversed the ruling in Ledbetter, specifically restoring the law to what it had been on the day before the Court issued the Ledbetter opinion. The Act has two provisions. First, it redefines an "unlawful employment practice" to include those times when a "discriminatory compensation decision or other practice" is adopted, applied, or affects compensation, including receipt of paychecks reflecting that discrimination. Second, it provides that an employee who proves that she has been the victim of pay discrimination can recover back pay for up to two years prior to her filing of an EEOC charge for similar or related unlawful practices that occurred during that period.

What Constitutes a "Compensation Decision or Other Practice"?

What did Congress mean by "compensation decision or other practice" when it used that phrase in the Ledbetter Act? In Part Two, we considered the case of Mikula v. Allegheny County, and the court's misapprehension of this phrase. Clearly, the Act applies to decisions to set a discriminatory initial wage or issue a discriminatory raise, as well as to the later implementation of such decisions through paychecks. These are plainly compensation decisions. But what does "or other practice" mean in the context of the Act?

Some commentators have speculated that this catch-all term might encompass discriminatory practices wholly apart from pay discrimination. However, a separate phrase in the Act makes clear that the unlawful employment practice must be made "with respect to discrimination in compensation" in order to trigger the provisions of the Ledbetter Act.

Still, even limiting the Act to practices that bear on employee compensation leaves some important questions unanswered. Clearly the Act's inclusion of the language "or other practice" was intended to have some meaning. At a minimum, it should extend to practices covered in the Act beyond decisions that directly set an employee's salary. The plain meaning of the Act suggests that it encompasses employment practices that cause an employee to receive lower compensation than she would have received but for the discriminatory practice.

A Potential Clash Between the Act's Wording and Congress' Intent

That meaning, however, may well clash with Congress' intent, as expressed in the legislative history of the Ledbetter Act, not to overturn other Supreme Court precedents requiring "discrete" decisions to be challenged within the limitations period, even if they have later discriminatory effects on employee pay.

For example, the Supreme Court ruled in 1980 in Delaware State College v. Ricks that the time for challenging a discriminatory denial of tenure starts when the tenure denial is communicated to the employee, not at a later point in time when the consequences—such as the loss of a salary—are felt.

Likewise, in 1977, in United Airlines, Inc. v. Evans, the Court ruled that a discriminatory policy requiring airline stewardesses to lose their jobs when they married had to be challenged on a timely basis from the date that they were discharged under the policy. Thus, the Court rejected an argument by an employee who was fired under the policy, then rehired, that her discrimination claim was revived by the airline's failure to grant her credit for the seniority she would have enjoyed absent the discriminatory policy.

Some legislative history suggests that Congress did not intend to overturn the results in cases like Evans and Ricks, and intended instead to return the law to its status on the day before the Court decided Ledbetter. In contrast, however, a plain-meaning approach to the Ledbetter Act may well render similar claims timely if the older discriminatory practices have subsequent discriminatory effects on employee compensation.

Courts Must Choose Between Different Interpretations of the Act's "Other Practice" Language

The issues, then, are complex, and the challenge of figuring out the scope of the Act's covered practices is already causing some confusion in the lower courts. However, no clear trend has yet emerged to set the Act's outer boundaries.

Some courts have interpreted the Act broadly, to encompass a variety of employment decisions that do not directly involve pay, but that will negatively affect employee compensation down the road. For instance, a few courts have left open the possibility that in the case of a discriminatory failure to promote, even if a challenge to the promotion decision itself would be untimely, the employee might still bring a timely challenge to the lower pay that results from that decision, as long as the paychecks themselves were received within the charging period.

Likewise, in academic contexts, some courts have read the Act broadly, so that even though an untimely discriminatory denial of tenure is not itself actionable, challenges to the resulting impact on an employee's pay may still be timely for paychecks received within the charge-filing period.

In contrast, other courts have not viewed the Act so broadly. Instead, they have read it as leaving intact cases like Ricks and Evans where "discrete" discriminatory practices occurred outside the time limit, and thus, they have refused to effectively revive such claims, even if the discriminatory practices have continuing effects on employee compensation. This approach would not allow discriminatory promotion decisions as to which charges were not timely filed to be the basis for challenging lower compensation resulting from such decisions.

The divide reflects a clear tension: On one hand, the language of the Ledbetter Act appears to encompass any discriminatory practice with a continuing effect on employee compensation. On the other hand, it was Congress' apparent purpose not to overturn other Supreme Court precedents besides the Ledbetter decision. Lower courts are likely to continue to struggle with this tension into the foreseeable future.

What About Discrimination Statutes NOT Covered by the Act? Whose Ledbetter Reasoning Controls, the Court's or Congress's?

There is also a separate and very important issue on which we have no clarity yet: With respect to certain discrimination statutes, courts often look to Title VII law for guidance on questions of timeliness. But some of these statutes were not amended by the Ledbetter Fair Pay Act. Assuming the courts interpreting these other statutes continue to look to Title VII law for guidance, will they focus on the Supreme Court's reasoning in Ledbetter or Congress' intent in passing the Ledbetter Act when the two seem to conflict?

The Ledbetter Act amends only four statutes: Title VII, the subject of the Ledbetter decision; the Age Discrimination in Employment Act (ADEA) and the Americans with Disabilities Act (ADA), both of which expressly adopt Title VII procedures; and the Rehabilitation Act of 1973, which looks to the procedural law of the ADA. However, many other statutes are shaped by Title VII principles and courts interpreting those statutes often look to Title VII law for guidance. Where questions of timeliness arise under these statutes, should courts rely on the reasoning of the Court in Ledbetter, or the reasoning of Congress in overturning the Court's decision?

One court recently flagged this issue under 42 U.S.C. Section 1981, a statute that covers race discrimination in employment, including pay discrimination based on race. It observed that courts interpreting Section 1981 typically look to Title VII law for guidance, but noted, too, that the Ledbetter Act amended only Title VII and not Section 1981. Ultimately, the court was able to dodge the issue by deciding the case on other grounds, but other courts will surely have to grapple with this dilemma.

On one hand, Congress' decision to amend only four statutes might be read to leave other statutes untouched by the Ledbetter Act, and hence fair game for falling under the sway of the Court's Ledbetter decision. The better view, however, would recognize that the Ledbetter Act reflects Congress' unequivocal disavowal of the Ledbetter decision, as made clear in Congress' findings stating that the decision "significantly impairs statutory protections against discrimination in compensation that Congress established and that have been bedrock principles of American law for decades" and "ignores the reality of wage discrimination and is at odds with the robust application of the civil rights laws that Congress intended." Congress would have been hard-pressed to come up with harsher language condemning the Ledbetter decision as a violation of core principles of civil rights law.

In the Ledbetter decision itself, Justice Ginsburg's dissent took the majority to task for relying on a 1989 decision that was later overturned by Congress in the Civil Rights Act of 1991. The majority took the view that since Congress only overturned the decision with respect to seniority systems, its reasoning and holding were still good law in other settings, such as pay discrimination. When Congress passed the Ledbetter Act, it effectively endorsed Justice Ginsburg's dissent, as well as swiftly overruling the Ledbetter decision.

Accordingly, courts should think carefully before making a mistake similar to the one Justice Ginsburg decried, by assuming the continuing vitality of a Supreme Court decision overturned by Congress (here, the Ledbetter decision) in cases involving statutes not expressly amended by the Act..

Is the Court's Ledbetter Decision Still "Good Law" in Title VII Cases Not Covered by the Act?

The Supreme Court recently agreed to hear a case that will likely shed light on the related issue of how to handle Title VII claims that are not directly covered by the Act, but that raise issues similar to those that arose in the Ledbetter case itself.

In a case the Court will hear this Term, Lewis v. City of Chicago, the plaintiffs challenged the county's use of a written test for hiring firefighters, claiming that the test had a disparate impact against racial minorities in violation of Title VII. They filed an EEOC charge that was timely as measured from the date the county began to hire firefighters based on the test results, but untimely as measured from the date the test results were first announced.

The Seventh Circuit ruled that the "unlawful practice" occurred when the allegedly discriminatory test results were announced, and not when they were relied upon to make hiring decisions, thus rendering the Title VII claim untimely. The court cited the Supreme Court's Ledbetter decision, reasoning that the test itself represented the discriminatory decision, and that the later hiring decisions were merely the effects of that prior decision to discriminate.

The case presents the issue of whether the Court's or Congress' Ledbetter reasoning controls Title VII claims not directly covered by the Act. Although it does not involve pay discrimination, the Lewis case raises issues similar to those in the Ledbetter case. In Lewis, the hiring decisions implemented the discriminatory test results, much as the paychecks to Lilly Ledbetter carried out the prior discriminatory decision to pay her less.

And like the Supreme Court in Ledbetter, the Seventh Circuit in Lewis ignored legitimate reasons why the plaintiff or plaintiffs waited to file a charge until the discriminatory decision was implemented. For instance, knowledge of discriminatory test results does not necessarily mean that the test results will be applied to visit discriminatory harm on the plaintiffs. An employer might disregard test results for a variety of reasons, including that it no longer plans to hire for the positions in question, that it decides to use a better test for hiring, or that it discovers that the test is not a good enough predictor of job performance to warrant its use in hiring decisions.

Thus, the Supreme Court's upcoming decision in the Lewis case could shed light on the Court's view of the continuing viability of the Ledbetter case and the lessons to be drawn from Congress' decision to overrule it.

Joanna Grossman, a FindLaw columnist, is a professor of law at Hofstra University. Her columns on family law, trusts and estates, and discrimination, including sex discrimination and sexual harassment, may be found in the archive of her columns on this site.

Deborah Brake is a professor of law at the University of Pittsburgh. Her research focuses on sex discrimination in employment, education, and athletics. She is the author of a forthcoming book, Getting in the Game: Title IX and the Women's Sports Revolution (NYU 2010).

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