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New Jersey Supreme Court Holds Pay Discrimination Claim Timely Although Act Occurred Beyond Limitations Period

New Jersey Supreme Court Holds Pay Discrimination Claim Timely Although Act Occurred Beyond Limitations Period
  • December 9, 2010

The New Jersey Supreme Court has held that a wage claim may be timely even though the alleged discrimination occurred outside the New Jersey’s Law Against Discrimination’s two-year statute of limitations.  Alexander v. Seton Hall Univ., No. A-87-09 (Nov. 23, 2010).  According to the Court, this is because each alleged discriminatory paycheck is a separate act, re-starting the limitation period.  The Court, however, limited the plaintiffs’ damages to the two-year period from the date they filed their complaint.  

The plaintiffs, three tenured female Seton Hall University professors, brought suit against the University for wage discrimination based on an internal annual report on professors’ salaries at the University.  The annual report compiled by the University detailed the salaries of its full-time faculty members by college, gender, rank and salary.  The report revealed that younger, male faculty members were paid at a higher rate than older faculty members.  Although the professors found the report in 2005, in their lawsuit under LAD, they sought damages for their entire teaching career of at least 19 years at the University.  

Pursuant to the “continuing violation doctrine,” the plaintiffs’ argued that they were entitled to damages resulting from the initial discriminatory act that occurred nearly 20 years prior to the filing of the action.  The University countered that the plaintiffs’ claims were time-barred pursuant to the U.S. Supreme Court decision in Ledbetter v. Goodyear Tire & Rubber Co., 550 U.S. 618 (2007) (establishing a framework for analyzing timeliness in Title VII wage discrimination claims) because the initial discriminatory act occurred outside the statute of limitations period.   

The trial court granted the University’s motion to dismiss the complaint as time-barred in accordance with Ledbetter.  On appeal, the appellate court affirmed, rejecting the plaintiffs’ argument that the “continuing violation doctrine” applied to a wage discrimination claim under LAD.  It held that “a pay-setting decision is a discreet act sufficient to trigger the limitations period.”  Finding that no pay-setting decision occurred within the limitations period, the court concluded that the plaintiffs’ complaint was untimely.  

The New Jersey Supreme Court reversed, holding that each payment of discriminatory wages constitutes an actionable wrong that can be remedied by the LAD.  On the one hand, the Court declined to apply the “continuing violation doctrine” (typically argued by plaintiffs in hostile work environment claims to suspend the limitation period) that would have allowed the professors to sue for lost wages dating back to their hire dates decades earlier.  Yet, the Court refused to follow Ledbetter, relying upon the 2009 Lilly Ledbetter Fair Pay Act, which overruled Ledbetter and provides that the issuance of a paycheck based on a discriminatory act is a single event.  Therefore, the Court held that despite the fact that no discriminatory acts occurred within the statute of limitations, the plaintiffs could recover for lost wages within the two years before they filed the court complaint.  

This decision is a reminder to all employers that claims of pay disparity can be the subject of legal challenge even when based on compensation practices established many years ago.  Employers may not be able to rely upon the statute of limitations argument to fend off pay discrimination claims entirely under the LAD.  However, this decision helps to limit the potential liability to two years from the filing of a court complaint.

Jackson Lewis attorneys are available to assist employers in handling wage hour and discrimination matters and related litigation.

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