Paying Now to Avoid Paying Later

Compensation discrimination has been a hot topic since the Supreme Court's decision in Ledbetter v. Goodyear Tire & Rubber Co., 127 S. Ct. 2162 (2007). In Ledbetter, the Supreme Court determined that under Title VII of the Civil Rights Act of 1964 ('Title VII'), a plaintiff must establish that a discriminatory decision with respect to pay was made during the statute of limitations period. In other words, a plaintiff cannot proceed with a claim of pay discrimination under Title VII when the pay is the result of prior decisions made outside the statute of limitations period. Although this decision has been touted as a major victory for employers, it did not, as some have seemed to suggest, eviscerate the risk of compensation discrimination claims or insulate from liability employers who have unexplained disparities. Unwary employers, particularly federal contractors or subcontractors, who do not regularly review their own compensation practices, remain at risk for costly litigation.