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Supreme Court preview: More pay-Bias lawsuits coming?

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in Employment Law,Firing,Hiring,Human Resources,Leaders & Managers,Performance Reviews

When the U.S. Supreme Court opens its new term on Oct. 2, look for a clear theme to the employment-related cases it has chosen to address: the Civil Rights Act of 1964.

Even after more than 40 years, courts continue to interpret that important federal law, which bars discrimination on the basis of race, religion, sex and national origin in hiring, firing, pay and other aspects of employment.

So far, the court has agreed to hear five cases interpreting aspects of the Civil Rights Act.

Two cases concern whether federal employees' discriminatory actions were outside of their "scope of employment," but that ruling only applies to federal employees.

Two other cases deal with affirmative action in high school admissions. Employers may gain some guidance on how far they can go to create a workplace that resembles the racial mix of the surrounding community or within the industry.

Time limits on pay-bias cases

The most important employment-law case on the docket so far will decide how much time employees have to file charges alleging pay discrimination. A pro-employee ruling could open the floodgates for more discriminatory-pay lawsuits.

Background: Title VII of the Civil Rights Act says employers can't pay employees less simply because of their race, religion, national origin or gender. When employees feel they've been discriminated against, they first must file charges with the Equal Employment Opportunity Commission (EEOC) within 180 days of the discriminatory act (300 days if they live in a state that has a state level agency equivalent to the EEOC).

The question before the court: What counts as a "discriminatory act"?

Does the pay-bias occur when you set the employee's salary or when she received her most recent raise (the company's view)? Or does the company commit a separate discriminatory act each time it hands the employee a paycheck that is less than it should be (the employee's view)?

That answer could have a huge impact on whether an employee's EEOC claim is filed within the 180- or 300-day statute of limitations.

The case: Goodyear Tire tied salary to performance evaluations. Employee Lilly Ledbetter filed an EEOC claim when she earned no increase for four years. She alleged that women and older workers were paid less.

The company argued that Ledbetter can't file a claim on a salary that was set four years before. But she argued that each paycheck was a discriminatory act, and each annual no-increase decision is also a separate violation.

Ledbetter originally won a $300,000 judgment. Goodyear appealed, arguing Ledbetter failed to file in time. The Appeals Court agreed. Now the Supreme Court will have the final call.

Bottom line: Should the Supreme Court side with the employee, employers could see a deluge of pay-discrimination suits. In effect, employees could argue that employers violate the law each time they issue a paycheck, from the day they made the original pay decision. If you tie compensation to evaluations, that means any mistake you ever made while preparing an evaluation can come back to haunt you, years and even decades later.  

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