Lilly Ledbetter Fair Pay Act Does Not Save ADA Discrimination Claim: Second Circuit | Practical Law

Lilly Ledbetter Fair Pay Act Does Not Save ADA Discrimination Claim: Second Circuit | Practical Law

In Davis v. Bombardier Transportation Holdings (USA) Inc., the US Court of Appeals for the Second Circuit held that the Lilly Ledbetter Fair Pay Act of 2009 applies to traditional pay-discrimination claims involving discriminatory compensation practices but not to discrimination claims in which demotions and other adverse employment actions result in a pay reduction. The Second Circuit found that an employee's time-barred disability discrimination claim was not resurrected by the Ledbetter Act.

Lilly Ledbetter Fair Pay Act Does Not Save ADA Discrimination Claim: Second Circuit

Practical Law Legal Update 6-617-6844 (Approx. 5 pages)

Lilly Ledbetter Fair Pay Act Does Not Save ADA Discrimination Claim: Second Circuit

by Practical Law Labor & Employment
Published on 27 Jul 2015 • USA (National/Federal)
In Davis v. Bombardier Transportation Holdings (USA) Inc., the US Court of Appeals for the Second Circuit held that the Lilly Ledbetter Fair Pay Act of 2009 applies to traditional pay-discrimination claims involving discriminatory compensation practices but not to discrimination claims in which demotions and other adverse employment actions result in a pay reduction. The Second Circuit found that an employee's time-barred disability discrimination claim was not resurrected by the Ledbetter Act.
On July 22, 2015, in Davis v. Bombardier Transportation Holdings (USA) Inc., the US Court of Appeals for the Second Circuit held that the Lilly Ledbetter Fair Pay Act of 2009 (Ledbetter Act) applies to traditional pay-discrimination claims involving discriminatory compensation practices, but not to discrimination claims in which demotions and other adverse employment actions result in a pay reduction. The Second Circuit affirmed a district court's grant of summary judgment to the employer, finding that an employee's time-barred disability discrimination claim was not resurrected by the Ledbetter Act. (No. 14-289, (2d Cir. July 22, 2015).)

Background

Natasha Davis worked as an Air Train Agent (ATA) for Bombardier Transportation Holdings (USA) Inc., a company that operates the Air Train airport shuttle in New York City. Her position, ATA II, included responsibility for manually operating the Air Train during emergencies. In January 2007 Davis went out on disability leave for multiple eye surgeries. When she returned to work in August 2007, Bombardier determined that Davis could no longer operate the Air Train in an emergency and demoted her to the ATA I position which paid less than the ATA II position. In September 2008, Davis filed a discrimination charge with the Equal Employment Opportunity Commission (EEOC) and in 2011 she filed a lawsuit in a US district court alleging Bombardier violated the Americans With Disabilities Act (ADA). The district court granted summary judgment to Bombardier, dismissing Davis's demotion-based ADA claim as untimely because the demotion occurred more than 300 days before her filing the EEOC charge. Davis appealed, arguing that the Ledbetter Act's accrual provision in which a new statute of limitations is triggered each time an employee receives a discriminatory paycheck, applied to her otherwise untimely demotion claim.

Outcome

The Second Circuit affirmed the district court's grant of summary judgment to Bombardier, including its dismissal of Davis's discriminatory demotion claim. The Second Circuit held that the Ledbetter Act:
  • Does not apply to an employer's discriminatory demotion decision that results in an employee receiving lower wages.
  • Prohibits discriminatory compensation decisions and practices in which an employer determines compensation in a discriminatory manner.
  • Requires a plaintiff to establish the elements of a pay discrimination claim in order to gain the benefit of the favorable statute of limitations.
The Second Circuit also noted that:
  • The ADA incorporates the Ledbetter Act and applies when an employer adopts a "discriminatory compensation decision" or practice (42 U.S.C. § 2000e-5(e)(3)(A)).
  • Congress enacted the Ledbetter Act to overturn the Supreme Court's decision in Ledbetter v. Goodyear Tire & Rubber Co. dismissing as untimely a pay discrimination claim and rejecting the argument that each paycheck issued to the plaintiff represented an individual discriminatory act (Ledbetter v. Goodyear Tire & Rubber Co., 550 U.S. 618 (2007)).
  • A new statute of limitations for Ledbetter Act claims is triggered "each time wages, benefits or other compensation is paid . . ." (42 U.S.C. § 2000e-5(e)(3)(A)).
  • The Ledbetter Act's repeated references to compensation indicate that the statute covers compensation decisions, not other types of employment decisions (Noel v. Boeing Co., 622 F. 3d 266, 274 (3d Cir. 2010)).
  • The underlying rationales for the Ledbetter Act's statute of limitations were based on Justice Ginsburg's dissent in Ledbetter, pointing out that:
    • employees do not have obvious, immediate notice of pay discrimination because employers are typically not forthcoming about their compensation structures;
    • employees usually have immediate notice of adverse employment actions like demotions, promotions, hirings and firings; and
    • with demotions that result in a reduction in pay, demoted employees can immediately request an explanation from their employer and evaluate whether the explanation is a pretext for discrimination.
    (Ledbetter, 550 U.S. at 649-650.)
The Second Circuit found that:
  • Although Bombardier's decision demoting Davis resulted in her losing pay, it was not a compensation decision under the Ledbetter Act.
  • Davis's claim is not that she was paid less than other employees who did the same work because of her disability (a claim covered by the Ledbetter Act), but instead that she was demoted and paid less when she was still capable of working in the higher-paid position (a claim not covered by the Ledbetter Act).
  • The Ledbetter Act's accrual statute of limitations provision does not apply to Davis's demotion claim and the claim was untimely.

Practical Implications

The Second Circuit's decision in Davis appears to limit the Lilly Ledbetter Act's reach to claims involving an employer's discriminatory compensation decisions and practices, as distinguished from discriminatory adverse employment actions like demotions that result in pay reductions. Employers that face this type of claim should consider filing a motion to dismiss if the plaintiff has failed to meet the statute of limitation for filing a timely claim. Plaintiffs' counsel should notify their clients of the distinction between a discriminatory pay claim that is covered by the Ledbetter Act versus a claim with a distinct adverse action which may not covered by the Act.