The Harm is Ongoing, The Remedy Should be as Well

October 19, 2007 -

 

By Julie F. Kay & Gillian L. Thomas
Senior Staff Attorneys for Legal Momentum - Advancing Women's Rights

As you read this, can you answer the question: How much does the person in the next cubicle earn? If you don't know, you're not alone. Who among us could even say what our best friend earns? Yet according to a recent Supreme Court ruling, what you don't know can hurt you when it comes to pay discrimination. Unless Congress responds, the clock will run out for countless workers who are paid less due to their gender, race, national origin, disability, age or religion.

In last term's Ledbetter v. Goodyear Tire & Rubber, the Court's new conservative majority decided that you are responsible not only for knowing whether you make less than your co-workers, but for knowing it within six months of your employer's decision to shortchange you. (The deadline is 300 days in some jurisdictions.) And if you don't file a claim with the Equal Employment Opportunity Commission within that time frame, you forever lose the right to challenge your employer's pay decision in federal court - even if it was discriminatory.

Sound unrealistic? It is. Paychecks are personal. In fact, many employers have policies that forbid workers from disclosing their pay. Others simply count on employees' own squeamishness about discussing salaries.

Consequently, an employee who receives lower pay is unlikely to know that his or her peers are paid more. The discriminatory decision often occurs at the time of hire, when an employer sets an employee's starting salary - and when an employee is least inclined to pry into her new co-workers' wages. An employee may even receive decent percentage raises in subsequent years, never knowing that his or her colleagues' raises are greater, or are inflated by higher base salaries. If she's the lone woman (or African American, or Latina, or Asian American, or Muslim) in her workplace, discovering such closely-held information is even harder, let alone a winning strategy for fitting in. The lack of transparency around wages means that pay discrimination can go undetected for years.

Lilly Ledbetter faced just such a situation as the only female area manager at Goodyear's Gadsen, Alabama plant. After working for Goodyear for nearly 20 years, she learned that she was paid up to 40 percent less than the male area managers only after a detailed anonymous note was left in her mailbox. A jury found that the pay disparity stemmed from discriminatory decisions by Goodyear over several years, including poor performance evaluations issued by a supervisor after Ledbetter rejected his sexual advances.

Pre-Ledbetter, the Court recognized that each new paycheck that is unfairly depressed because of an employee's gender, race, religion or national origin, is a new act of discrimination, and a new filing period begins. In Ledbetter, the Court backed away from such precedent and found that it was only the original decision to pay less that matters now. In essence, the Court told employees, speak now or forever hold your peace, and forget about your Title VII claim. It also sent the wrong signal to employers: as long as you keep the lid on your discriminatory actions for the first 6 months, you're home free and cannot be held liable for them.

But as Justice Ginsburg described in her dissent to the Ledbetter decision, the Court's rigid time cut-off insulates salary decisions "infected" by bias that reduce an employee's pay long after the initial discriminatory decision. And as Ledbetter herself described it to Congress: "It turned out that I ended up getting paid what I did because of the accumulated effect of pay raise decisions over the years. In any given year, the difference wasn't that big, nothing to make a huge fuss about all by itself."

The persistent wage gap between the sexes means the aggregate effect of pay discrimination on women is especially severe. One recent study from Carnegie Mellon University showed, for example, that if a woman with a Master's degree started out her career earning $5,000 less per year than her male counterpart, yet both received identical 3% annual increases, the female employee would have a pay disparity totaling over half a million dollars by the time she reached age 60, when annual interest and differences in her retirement benefits, pension plan and Social Security payments also are considered.

The good news is that when Senators return from their summer recess, they will have the chance to right the Ledbetter wrong. The bi-partisan and aptly named "Lilly Ledbetter Fair Pay Act," passed this summer by the House of Representatives, restores the protections against unfair pay decisions that Title VII (and because they use the Title VII standard, the Age Discrimination in Employment Act, and the Americans with Disabilities Act) had provided before the new Court majority took a sledge-hammer to it. It again allows pay discrimination claims to be filed within six months of the latest discriminatory paycheck.

Employer advocates who fret that the proposed law will open the floodgates to lawsuits have got it backwards. The potential for flimsy discrimination claims is much higher if the corrective legislation isn't passed. Ledbetter gives employees the perverse incentive to file a discrimination claim now and ask questions later.

Time may have run out for Lilly Ledbetter, but Congress now has the chance to make sure other employees have a fair chance to seek fair pay.