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Big ruling: Supreme Court limits scope of pay-discrimination lawsuits

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in Discrimination and Harassment,Employment Law,Human Resources

The U.S. Supreme Court this week handed employers a major victory by clarifying that workers who claim illegal pay discrimination must file their complaints within 180 days of the alleged offense. But this ruling could, in the short run, lead to a spike in pay-bias claims.

Background: Federal rules says that when employees feel that their pay has been illegally based on their race, gender, religion or national origin, they must first file a discrimination charge with the EEOC within 180 days of the “discriminatory act.”  (This 180-day filing deadline is extended to 300 days if the charge also is covered by a state or local anti-discrimination law.)

The question before the high court: Does the “discriminatory act” occur when your organization sets the person’s salary (employers’ view) or does a separate discriminatory act occur each time the employee receives a paycheck (employees’ view)? The Supreme Court today sided with the employers' view, ruling that employees must file complaints within 180 days of the direct discriminatory act.

That’s good news for employers. An opposite ruling in favor of employees would have allowed anyone to sue years—or even decades—after they suffer an alleged discriminatory pay decision. But the Supreme Court ruled that employees who think they have been discriminated against must act right away, and not wait to file their claims.

The case: Lilly Ledbetter sued Goodyear Tire & Rubber, claiming that after working at the company for 19 years, she earned $6,000 less than the lowest-paid man doing the same work. She claimed each paycheck was lower based on her starting pay and, therefore, the company discriminated every two weeks. A jury agreed and awarded her $3.8 million. But the Supreme Court rejected that argument.

Justice Samuel Alito, writing the majority opinion, said that Ledbetter should have filed her claim years earlier, within the deadlines set by the Civil Rights Act of 1964. He wrote, “This short deadline reflects Congress’s strong preference for the prompt resolution of employment discrimination allegations.” (Click here to read the full case, Ledbetter v. Goodyear Tire.)

Bottom line: This ruling makes clear that employees must file their EEOC complaints promptly. But it also may lead to an increase in such complaints in the coming months, as word spreads that employees cannot delay.

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