Senate Blocks Compensation Discrimination Amendment (Fair Pay Act, Part 1 of 2)
Last week, Republicans blocked legislation (Fair Pay Act) intended to reverse last year’s Supreme Court ruling in Ledbetter v. Goodyear Tire & Rubber Co., which has been widely criticized for making it easier for employers to get away with discrimination in compensation.
Criticism of Ledbetter Decision
One writer describes Ledbetter as having the effect that as long as employers “can hide their discriminatory behavior for six months, they’ve got the green light to treat female employees badly forever.”
This statement echoes Justice Ginsburg’s dissent in Ledbetter, in which she interpreted the majority opinion as “immuniz[ing] forever discriminatory pay differentials unchallenged within 180 days of their adoption.”
Now this Senate vote has brought the issue back into the news. This is Part 1 of a two-part series on the Ledbetter case and why legislation to overturn it is not urgent — and perhaps even unwise.
For straightforward background on the Ledbetter case with quotes from the majority and minority opinions, see our prior post, “Supreme Court Upholds Time Limits on Title VII Pay Discrimination Cases in 5-4 Decision.”
The American Bar Association’s Section of Labor and Employment Law issued an edition of its “Hot Topic” publication about the Ledbetter case. The analysis is calm, rational, and insightful, discussing the case from both employer and employee viewpoints. It notes the unfairness of Ms. Ledbetter’s fate, but justifies the Court’s decision. The following block quotes are from this ABA article, unless otherwise noted.
Goodyear’s Compensation System
Goodyear raised managers’ compensation primarily through annual merit-based raises. The company issued guidelines limiting the size and frequency of merit-based raises. … In most years, Ms. Ledbetter was not the lowest-performing person with her job title, but it appears that she was always the lowest paid.
The Court held that while there may have been discriminatory intent behind the original decision that established her salary level, the employer had no discriminatory intent in setting Ledbetter’s raises or issuing her paychecks within the statute of limitations period [180 days before the EEOC charge was filed].
The key quote from the majority opinion is this: “A new charging period does not commence upon the occurrence of subsequent non-discriminatory acts that entail adverse effects resulting from past discrimination.”
The paychecks Ledbetter received were characterized as such subsequent non-discriminatory acts– notwithstanding a sound bite from another Supreme Court case (Bazemore v. Friday (1986)) stating that “Each week’s paycheck that delivers less to a black than to a similarly situated white is a wrong actionable under Title VII . . . .”
Ledbetter Hurts Employees By Allowing Unremedied Workplace Discrimination
Take a woman whose employer set her pay level substantially lower than those of her male peers because of her gender in 1995. Every year thereafter, the company gave her merit increases untainted by any discriminatory motive, but under company policy merit increases could not exceed 5% of an employee’s salary.
In 2007, she is still earning substantially less than her male peers because of discrimination (in fact, the disparity has grown), even though the company has not made a discriminatory “affirmative decision” affecting her compensation in 12 years.
The employee continues to suffer monetary harm from the employer’s discriminatory decision, but she cannot recover for the disparity between her compensation and that of her male comparators, and her employer is not obligated to remedy it.
The Supreme Court’s ruling allows employers to save money by continuing to underpay victims of discrimination, as long as the employer’s current motivation is greed, laziness, indifference, or anything else but discrimination.
But Ledbetter Is Consistent With Application of Time Limitations to Other Workplace Discrimination Situations
The ABA article explains that Ledbetter was not an anomaly, but a logical outgrowth of the statutory scheme and prior Supreme Court decisions.
[We] should have expected the Supreme Court to rule in Goodyear’s favor because its holding protects the framework Congress put in place to ensure that both employees and their employers promptly deal with discrimination claims. …
The framework gives both parties the opportunity to promptly deal with the alleged discrimination while the facts are fresh in the minds of the parties and witnesses. …
In ruling against [Ledbetter], the majority opinion relies on prior cases establishing that past alleged (and actual, for that matter) discriminatory acts, which are not timely filed with the EEOC are time-barred and considered to be past events in history with no legal consequences.
Where the complaint is merely of “present effects of past discrimination” this is true. But the Court in Ledbetter interpreted Bazemore as holding that “[a]n employer that adopts and intentionally retains . . . a [discriminatory] pay structure can surely be regarded as intending to discriminate . . . as long as the structure is used.”
It will be interesting to watch how this “exception” is applied. I expect creative plaintiff’s employment lawyers will try to drive a truck through this hole in Ledbetter, pleading that the employer knew all along about a discriminatory pay “structure” and continually discriminated intentionally by not changing it.
Note that in Ledbetter the “present effects of past discrimination” description was particularly apt. The pay disparity of which she complained was a direct result of performance evaluations she had received years ago — and not challenged at the time.
Importance of Time Limits in EEOC Cases
The ABA article addresses the legitimate reasons for the 180-day time limit (300 days in many states), which many others have huffily dismissed. The time limit for filing EEOC charges in workplace discrimination cases is short, but for good reasons:
Discrimination charges brought years after the alleged discriminatory act, may leave employers in a difficult situation defending a case where witnesses may have left the company or, as in Ledbetter, a crucial witness may have died, leaving the company with no witness to counter the employee’s allegations.
This is no less true in cases of discrimination affecting compensation than in other forms of workplace discrimination.
It is a function served in all areas of the law by statutes of limitation.
Reform efforts, if any, should be addressed across-the-board to the relative shortness of the 180/300 day limitations period for filing EEOC charges — and even then, with great caution, as this period has served well for many years.
In Part 2: Why the Ledbetter decision is not as harsh, and compensation discrimination not as different from other types of job discrimination, as critics claim.
Photo credit: Patty 74_99 via flickr
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