In 2009, Congress passed the Lilly Ledbetter Fair Pay Act (FPA), which allows employees to file unequal-pay claims outside of the otherwise applicable 300 day statute of limitations period for filing claims of discrimination. Under the FPA, the statute of limitations re-starts each time compensation is paid pursuant to a “discriminatory compensation decision or other practice,” typically when a periodic paycheck is issued. In an issue of first impression, the 3d U.S. Circuit Court of Appeals recently upheld summary judgment for an employer, and specifically held that a black Haitian mechanic could not use the FPA to support his failure-to-promote claim under Title VII. Noel v. Boeing Co., 3d Cir., No.08-3877, October 1, 2010. In that case, an employee unsuccessfully argued that the 300-day statute of limitations began each time he received a lower paycheck than he would have received had he been promoted three years prior to his claim of discrimination.

Emmanuel Noel, a black Haitian national, began working for Boeing in 1990 as an hourly sheet metal assembler. Boeing periodically offered the opportunities to work at offsite locations. Those opportunities included greater pay, per diems, and additional training, and often resulted in promotion to a higher labor grade, if warranted by the skill and ability of the worker. In 2002, Noel and two white employees participated in an offsite assignment that resulted in their labor grades rising from 7 to 8. After seven months, the labor grade of the two white employees rose from 8 to 11, while Noel’s remained the same.

In September 2003, Noel complained about that situation to a union representative and a company labor representative, but no action was taken. On March 25, 2005, Noel filed a charge of discrimination with the EEOC, followed by a Title VII complaint in federal court on June 30, 2006. The complaint included an allegation that Noel was not promoted in 2003, when his white co-workers were.

The district court found that Noel’s claims were time barred because he did not file his EEOC charge within the required 300-day period that began when Boeing failed to promote him in 2003. Noel appealed the dismissal of his claims, arguing that under the FPA, his 2005 charge was timely, because the 300-day statute of limitation period restarted every time he got a paycheck that reflected the company’s failure to promote him to a higher paying job.

The Third Circuit upheld the lower court’s decision, stating that the FPA applies only to cases that involve “discrimination in compensation.” Discrimination in compensation means “paying different wages or providing different benefits to similarly situated employees, not promoting one employee but not another to a more remunerative position.” According to the Court, the FPA only comes into play if the employee’s complaint is based on a pay disparity – and a pay disparity claim is made only when an individual demonstrates that he or she was paid differently for equal work done under substantially similar conditions. Courts have universally treated pay disparity claims and failure-to-promote claims as separate causes of action. Therefore, Noel could not use the FPA to excuse his non-compliance with the applicable 300-day statute of limitations.

It could be argued that many employment-related decisions ultimately have some effect on compensation. However, because individuals typically have some recourse under other anti-discrimination statutes for those acts, allowing the FPA to extend statutes of limitations in those cases would “weaken” the existing administrative exhaustion requirement included in those laws, and could essentially subject all employment decisions to a time period in excess of the required 300-day limit. Employers should be aware of this decision, however, and should carefully analyze employment discrimination claims to determine whether a genuine disparate pay action is involved. If so, the claim may not be subject to the general 300-day statute of limitation.