Joanna L. Grossman & Deborah L. Brake

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

By JOANNA L. GROSSMAN & DEBORAH L. BRAKE


Tuesday, September 29, 2009

This is Part Two in a series of three columns by the authors on the Lilly Ledbetter Fair Pay Act. Part One appeared earlier on this site, and among other things, explained the Act and the Supreme Court decision that prompted it– Ed.

With the Lilly Ledbetter Fair Pay Act several months shy of its first birthday, it is too soon to say how successful the Act will be in curing the problems at the root of the Court's Ledbetter decision, which we discussed in Part One of this series. However, some open questions—and cause for concern—are already emerging from the first round of lower court cases decided under the Act.

To date, the biggest issue is this one: How broadly should courts construe the Act's coverage of employment decisions that discriminate in compensation? What constitutes a "discriminatory compensation decision or other practice" as defined in the Act? One very recent case from the Third Circuit is a good vehicle for exploring these questions.

Mikula v. Allegheny County: The Facts of the Case

A recent ruling from the U.S. Court of Appeals for the Third Circuit, Mikula v. Allegheny County, illustrates some of the difficulties courts have confronted in applying the Ledbetter Act. In that case, the same panel of appellate judges twice considered the scope of the Ledbetter Act's coverage of pay discrimination claims, with different results each time.

The plaintiff, Mary Lou Mikula, was hired as a county grants manager in 2001. In September 2004, she petitioned the county to change her title to "grants and project manager" and to increase her salary to equal or exceed that of the male "fiscal manager," who earned $7000 more annually than she did. The county did not respond.

In October 2005, Mikula again lobbied for a pay increase and change in her job title. But the county again failed to respond.

In March 2006, Mikula filed an internal complaint with the county's human resources department, in which she compared her job responsibilities to those of the higher-paid fiscal manager and claimed that the pay discrimination began when she was first hired.

In an August 2006 letter, the county responded to her complaint, finding her allegations unfounded and stating that her title and salary were "fair when compared with similar jobs."

In April 2007, Mikula filed a Title VII charge for pay discrimination with the EEOC.

The district court dismissed Mikula's claim as untimely under Ledbetter, holding that the unlawful practice occurred in 2001, when Mikula was first hired at a lower salary than her male counterpart. A "discovery" rule would not have helped Mikula, the court held, since she had discovered the pay disparity at least three years before filing her EEOC charge in 2007. (For employees in Pennsylvania, Title VII charges must be filed within 300 days of their occurrence to be timely; Mikula thus had less than one to year to file from whatever date it was on which the statute of limitations had begun to run.)

The Post-Ledbetter Act Rulings in the Mikula Case

While Mikula's case was on appeal, however, Congress passed the Ledbetter Act. Moreover, it made the Act retroactive with respect to cases, such as Mikula's, that were pending on or after May 28, 2007, the date the Court decided Ledbetter.

Surprisingly, a panel of Third Circuit judges at first affirmed the district court's dismissal of the Title VII claim notwithstanding the intervening Act. The court concluded that the county's August 2006 letter—which was sent within 300 days of when Mikula filed the charge—was not a "compensation decision or other practice" under the Act, because it merely reported the results of the county's investigation into Mikula's complaint. Further, the panel treated that letter as merely a failure to answer a request for a raise, which it also did not view as a compensation "decision" under the Act.

In her initial appeal, Mikula had represented herself, but fortunately, she obtained counsel and plentiful amici curiae support in time to file a petition with the court to reconsider her case. On rehearing, the same Third Circuit panel issued a revised opinion, this time reversing the lower court's dismissal of Mikula's Title VII claim as untimely. Yet, still, the appellate court took an unduly cramped and narrow view of the scope of the Ledbetter Act.

On rehearing, the court viewed its initial error as the refusal to treat an employer's failure to answer a request for a raise as a compensation decision under the Act. This time around, the court recognized that an employer's refusal to answer a request for a raise has the same result as an outright denial (which, the court admitted, would clearly be a "compensation decision"). Thus, the court concluded that employers should not be given the incentive to ignore raise requests as a "safe harbor" way of denying such requests for discriminatory reasons.

Therefore, the court reasoned, Mikula should have been able to sue for any discriminatory paychecks she subsequently received, within the 300-day period before she filed her EEOC charge in April 2007.

The errors in the court's initial decision, however, go much deeper, and not all of them were corrected in the September, 2009 decision. Oddly, the court continued to treat the county's August 2006 letter defending Mikula's salary as outside of the "compensation decisions" covered by the Ledbetter Act, reasoning that employers should not be penalized for responding to internal discrimination complaints.

The Way in Which the Third Circuit Misunderstood the Ledbetter Act

The court's view that treating the August report as a compensation decision would somehow penalize the County for responding to a discrimination complaint reflects its lack of understanding of the scope of the Ledbetter Act. With or without the August report, the Ledbetter Act would treat any paycheck that paid Mikula less because of her sex as a timely basis for her claim if she received it within 300 days before filing the charge.

Indeed, even if Mikula had never filed an internal discrimination claim, or had never even explicitly asked for a raise at all, her claim should still be timely based simply on her allegations that the paychecks she received after June 20, 2006 (300 days before she filed the charge) paid her less than the county would pay a similarly-situated male. This would be the correct result under the Act even if the pay discrimination began when she was first hired in 2001 and no additional pay decisions followed, nor any requests for raises.

At the core of the Third Circuit's cryptic opinion seems to be a misunderstanding—and perhaps outright rejection—of the paycheck accrual that the Ledbetter Act adopted. (This rule, and the Supreme Court opinion overturned by the Ledbetter Act are discussed in greater detail in Part One of this series.) By tying the timeliness of Mikula's claim to the county's refusal to respond to her requests for a raise, the court seems to require some additional employer practice or compensation decision aside from the initial decision—however old—to pay an employee less on the basis of sex. But the Ledbetter Act legislates expressly to the contrary.

Even if Mikula had never requested a raise or filed an internal complaint, her claim should have been timely because she alleged that she continued to receive lower pay because of her sex into the charge-filing period. Thus, while it reached the correct result in this particular case, the court's opinion suggests a troubling misunderstanding of exactly what the Ledbetter Act accomplished.

The Mikula court also seems to misapprehend the remedies available in pay discrimination cases after the Ledbetter Act. Although the opinion is ambiguous, the court appears to limit Mikula's recovery to only those discriminatory paychecks received within 300 days prior to her EEOC charge.

The court is correct that the actionable paychecks are limited to this time period. However, in terms of the available relief under the Ledbetter Act, the Act explicitly allows up to two years' backpay for pay discrimination that is "similar or related to" the unlawful pay discrimination that occurred within the charging period.

As a result, if Mikula proves that the paychecks she received after June 20, 2006, were tainted with sex discrimination, then she should be able to recover backpay for similar or related pay discrimination in her paychecks going back as far as April 17, 2005. Yet the court's discussion of pre-Ledbetter case law, which it viewed the Ledbetter Act as restoring, wrongly seems to preclude any relief beyond the 300 day limit -- a result that conflicts directly with the terms of the Ledbetter Act.

Conclusion

Unfortunately, the issues raised in Mikula are only the tip of the iceberg in early post-Ledbetter Act litigation. The more difficult questions relate to the meaning of "other practice" in the Act's description of the employment actions it covers. This issue, and questions raised by the spillover of the Ledbetter decision into statutes not explicitly amended by the Act, will be explored in a later column.


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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