2d Circuit interpets Lilly Ledbetter Act

Remember the Lilly Ledbetter Act which Congress enacted in 2009 to overturn a Supreme Court ruling that made it harder for women to challenge salary inequities in Court? The statute is new enough that the courts are still interpreting its meaning. In this case, the Court of Appeals holds that the Act does not allow a woman to sue for discrimination that led to a reduced salary.

The case is Davis v. Bombardier Transportation Holdings, decided on July 22. After plaintiff returned from disability leave over an eye condition, management demoted her to a position that paid her 75 cents less per hour than her previous position. Her EEOC charge was filed more than 300 days after she was demoted. To save her claim, she invokes the Ledbetter Act, arguing that each paycheck that reflected the reduced salary triggered a new statute of limitations. The Act makes it unlawful to apply a discriminatory compensation decision to an employee and, the law further says that the statute of limitations starts anew with each paycheck that reflects that decision.

The Court of Appeals writes that "Davis argues that Bombardier’s demotion decision was made with disability‐based discriminatory intent and, as a result, reduced her compensation. Thus, she submits that her claim is timely when measured from her last paycheck and not the date of her demotion. Bombardier responds that the Ledbetter Act does not resurrect otherwise time‐barred demotion claims because the statute is applicable only to discriminatory compensation practices."

The Second Circuit sides with the employer and says "the Ledbetter Act does not encompass a claim of a discriminatory demotion decision that results in lower wages where, as here, the plaintiff has not offered any proof that the compensation itself was set in a discriminatory manner. A plaintiff must plead and prove the elements of a pay discrimination claim to benefit from the Ledbetter Act’s accrual provisions." As the Third Circuit has held, "'the plain language of the [Ledbetter Act] covers compensation decisions and not other discrete employment decisions,' such as hirings, firings, promotions, and demotions."

Among other ways, the Second Circuit (Wesley, Livingston and Carney) explains its ruling like this: the Ledbetter Act recognizes that employees do not always know they are receiving a discriminatory paycheck. Co-workers do not always compare salaries. So each discriminatory paycheck is an act in furtherance of an illegal salary scheme. But in a case like this one, where the plaintiff claims she was demoted for discriminatory reasons, there is no reason to extend the statute of limitations as she knows her rights were violated on the day she is demoted.