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U.S. Supreme Court rules: "Tick, tock, watch your clock": Employees must promptly file pay-discrimination suits

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Question: This week’s important U.S. Supreme Court ruling on pay discrimination resulted in a major victory for employers nationwide … and an unusually heated debate between Supreme Court justices. The 5-4 vote means employees no longer can sit on wage discrimination claims for years. They have only 180 days to file their claims with the EEOC or the claim is forever barred. Period.

Sounds like good news, right? But be aware: This ruling likely will, in the short run, lead to a spike in pay-discrimination claims as word spreads that employees cannot delay. And that’s more reason to make sure your organization isn’t vulnerable to a pay-bias complaint.

Case in Point: Lilly Ledbetter worked for Goodyear Tire and Rubber for 19 years as a manager at its Gadsden, Alabama location, earning substantially less money (15% to 40% less) than men doing the same work. Following an unwanted transfer, she retired and then filed suit with the EEOC for pay discrimination based on gender, which is prohibited by Title VII of the Civil Rights Act of 1964.

A jury awarded Ledbetter more than $3 million in back pay and punitive damages. But now the Supreme Court has erased that award … and set a tough new standard for employee pay-bias claims. (Ledbetter v. Goodyear Tire & Rubber Co., U.S. Sup. Ct., No. 05-1074, 5/29/07)

What does this new ruling mean to you?

Goodyear’s appeal was based on the fact that Ledbetter failed to file her claim within 180 days “from the date of the alleged violation,” as required by federal rules.

To the contrary, Ms. Ledbetter argued that the court should follow the “paycheck accrual rule,” meaning that every paycheck she received in which the wrong was not rectified was considered a “new act” of discrimination. Since she was paid every two weeks, she claimed, she was discriminated against that frequently (and, therefore, within 180 days of filing her EEOC claim).

The Supreme Court rejected her argument. Justice Alito, in writing the opinion for the majority, noted that 180 days from the first paycheck was “short by any measure.” However, he declared, “This short deadline reflects Congress’s strong preference for the prompt resolution of employment discrimination allegations through voluntary conciliation and cooperation.”

But the dissenting justices didn’t take the loss quietly. In an unusual event, Justice Ruth Bader Ginsburg read aloud her dissenting opinion, in essence noting that pay discrimination is often subtle and not quickly discoverable by the first paycheck (when the clock now begins ticking).

One important note: The 180-day filing limit can, in some states, be extended to 300 days. The difference: In states in which the federal EEOC is the only agency authorized to accept Title VII charges, the filing limit is 180 days. In states that do have such anti-discrimination agencies that accept such claims (such as Alabama) the filing limit is extended to 300 days.

Lessons Learned … Without Going To Court

  • Employees will be comparing benefits. The U.S. Supreme Court just opened the “taboo door” between employees, forcing them to ask each other, “How much do you make?” Make sure there is no pay difference between employees doing the same jobs, or at least be able to point to bona fide business reasons for those differences.

  • The ruling doesn’t just affect pay-bias between genders. It also affects pay-discrimination among races, colors, national origins and religions. So expect all of your employees to be talking to one another to compare and contrast pay.

  • Increase in EEOC charges. Employees will now have to file claims very quickly to preserve their rights … and their lawyers know this, too. So, expect a spike in charges.

  • HR needs to keep its eyes and ears open. The smartest move is to head off any pay-bias complaints before they happen. But also have a heightened sense of awareness and be ready to work with the legal department if you are aware of any grumblings.

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