Third Circuit Rules That Failure To Promote Claim Not Compensable Under Lilly Ledbetter Fair Pay Act

October 20, 2010

By: Jennifer R. Russell

On Friday, October 1, 2010, in Noel v. The Boeing Co., No. 08-3877, 2010 WL 381, 2010 U.S. App. LEXIS 20217 (3d Cir. Oct. 1, 2010), a case of first impression before the United States Court of Appeals for the Third Circuit, the appeals court held that the Lilly Ledbetter Fair Pay Act (“Fair Pay Act” or “Act”), 42 U.S.C. § 2000e-5(e)(3)(A), enacted in January 2009, does not apply to discrimination claims for failure to promote. Emmanuel Noel, a black Haitian national who had worked for Boeing for over 10 years as an airline mechanic, sued Boeing under Title VII of the Civil Rights Act (“Title VII”), as amended by the Fair Pay Act, alleging that Boeing failed to promote him in 2003, but promoted his white co-workers. More specifically, Noel alleged that white co-workers were promoted from temporary to permanent off-site assignments that resulted in a higher pay grade, but he was not.

Although he complained to Boeing and his union in 2003 about not being promoted, Noel did not file a charge of discrimination alleging race and national origin discrimination with the EEOC until March 2005, well beyond the 300-day statutory time period within which to file a charge under Title VII. In his federal court complaint filed in the United States District Court for the Middle District of Pennsylvania, Noel alleged race and national origin discrimination under Title VII and the Pennsylvania Human Relations Act and also a claim of retaliation. Noel focused his allegations upon the failure to promote in 2003 and only included allegations regarding disparate pay rates in 2005. He did not make any allegations regarding unequal pay for performance of the same job.

Before trial, Boeing filed a Motion for Summary Judgment as to Noel’s failure to promote claim with the district court. The court granted Boeing’s motion, finding that the claim was untimely.1 Noel appealed the lower court’s entry of summary judgment and the Third Circuit affirmed.

On appeal, Noel argued that, although his EEOC charge was filed beyond the 300-day limitations period, the Fair Pay Act revived his otherwise-untimely administrative filing on the failure to promote/lower pay claim, because each paycheck he received started the administrative clock running again. The Act provides:

an unlawful employment practice occurs, with respect to discrimination in compensation in violation of this title, when a discriminatory compensation decision or other practice is adopted, when an individual becomes subject to a discriminatory compensation decision or other practice, or when an individual is affected by application of a discriminatory compensation decision or other practice, including each time wages, benefits, or other compensation is paid, resulting in whole or in part from such a decision or other practice.

42 U.S.C. § 2000e-5(e)(3)(A). The court summarized that the Act guarantees that “each paycheck that stems from a discriminatory compensation decision or pay structure is a tainted, independent employment action that commences the administrative statute of limitations.”

The appeals court, however, found that, since Noel did not plead that he was denied equal pay for equal work, he pled a failure to promote claim and not a pay discrimination claim. The court specifically held that “discrimination-in-compensation” is defined as “paying different wages or providing different benefits to similarly situated employees, not promoting one employee but not another to a more remunerative position.” Noel did not plead or claim any nexus between his promotion claim and the resultant lower salary, nor did he make any allegation of disparate compensation. It was only on appeal that Noel tried to make a connection between Boeing’s failure to promote him with a lower salary. The Third Circuit noted that the Fair Pay Act’s intent was to overrule the Supreme Court’s Ledbetter pay discrimination decision, that the findings of the Act focused on compensation decisions and that compensation-related claims and failure to promote claims were distinct claims.

This decision by the Third Circuit is in line with another recent decision by the D.C. Circuit in Schuler v. PricewaterhouseCoopers, LLP, 595 F.3d 370, 375 (D.C. Cir. 2010), in which the court also held that failure to promote claims are not compensation discrimination claims under the Fair Pay Act. The Third Circuit agreed with the D.C. Circuit and pointed out that the purpose of the Act is to provide employees with greater protection against compensation discrimination, not to provide more protection as to other types of discrimination. These decisions help employers by better defining the scope of the Fair Pay Act and assuring employers that they will not face liability under the Act for every decision to promote employees. They will also likely provide courts with guidance with respect to discrimination claims related to similar discrete acts, such as alleged unlawful hiring or firing.

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