U.S. Supreme Court Limits Pay Disparity Claims

May 31, 2007

On May 29, 2007, the United States Supreme Court ruled that employees may not bring suit for sex discrimination in an employer’s pay practices under Title VII of the Civil Rights Act of 1964, unless they have filed a charge with the EEOC within 180 days (300 days in the case of Pennsylvania) after their pay was set. The clock begins to run even if the effects of the initial discriminatory act were not immediately apparent to the worker and even if they continue to the present day.

In Ledbetter v. Goodyear Tire & Rubber Co., the majority rejected the view of the EEOC, that each paycheck reflects the initial discrimination is itself a discriminatory act that resets the clock on the 180-day or 300-day period, under a rule known as “paycheck accrual.”

The impact of the decision on women may be somewhat limited by the availability of another federal law against sex discrimination in the workplace, the Equal Pay Act (EPA), which does not contain the 180-day/300-day requirement. The EPA has additional procedural hurdles and a low damage cap that excludes punitive damages. It does not cover discrimination on the basis of race or Title VII’s other protected categories. However, the decision may signal the Court’s willingness to limit the concept of a "continuing violation" which allows employees to circumvent the limitations periods for filing charges with the EEOC by showing that the effects of a discriminatory act continue to the present time.