Equal Pay Reality Check

Last month, when the Supreme Court issued a majority opinion in Ledbetter v. Goodyear denying employees the right to sue for discrimination after 180 days, Justice Ruth Bader Ginsburg was so incensed she read her scathing dissent aloud from the bench. She defended Lilly Ledbetter's right to sue her employer, Goodyear Tire & Rubber Co.,Inc., for pay discrimination on the basis of sex, giving a not-so-gentle reminder of the realities of the American workplace. She wrote,

A worker knows immediately if she is denied a promotion or transfer, if she is fired or refused employment. And promotions, transfers, hirings, and firings are generally public events, known to co-workers. When an employer makes a decision of such open and definitive character, an employee can immediately seek out an explanation and evaluate it for pretext. Compensation disparities, in contrast, are often hidden from sight.

As the American Association of University Women reported in a study released in April called "Behind the Pay Gap," there is still exists a wage gap between male and female employees that is "unexplained" by factors such as leaving the workforce to have children. Ultimately, what's left is sex discrimination. In Ledbetter's case, the Supreme Court denied her request for years of back pay on the grounds that she didn't file her lawsuit against her employer within the "timely" period of 180 days.

With this one decision, the Supreme Court has reversed "20 years of law and precedent" under Title VII of the Civil Rights Act of 1964, said Wade Henderson, president and CEO of the Leadership Council on Civil Rights said at the hearing. "Once again the ball is in Congress' court."

The House Committee on Education and Labor stepped up to the challenge last week by holding a hearing on pay discrimination, where Ledbetter herself was invited to testify. She's a fiery woman, who was greatly offended by the implication (made by U.S. Chamber of Commerce representative Neal Mellon) that she "sat on a claim" for years before filing a complaint against Goodyear.

"The reason I didn't file my case was I didn't have anything to prove it," Ledbetter said. And she had few allies. There were only three women who worked at the factory, and one of those women -- a single mother -- wouldn't sign on to the discrimination claim because, she said to Ledbetter, "You know Goodyear will know who filed the charge."

The National Labor Relations Act established the precedent that "all complete complaints must be filed within 180 days of the alleged act of discrimination." The period of 180 days is a bit unusual these days; the filing period is extended to 300 days if the employee is also covered by a state or local anti-discrimination provision. Most states have legislation that covers discrimination, so Ledbetter’s case with a 180-day filing period is something of a rarity -- the difference between the 180-day rule and the 300-day rule is a matter of geography. As Deborah Brake, a professor of law at the University of Pittsburgh, testified, limiting the filing period to such a short period of time can be disastrous. "There is a persistent gender wage gap in this country," she said.

One of the reasons the pay issue is so difficult is that many people resist revealing what they make. New employees often lack the clout to discover what their colleagues are earning, especially when employers have put in place policies that prohibit employees from disclosing pay to one another. An employee can't be fired for discussing wages, but that doesn't stop employers from discouraging it. "One-third of private employers by policy prohibit employees from discussing wages," Brake said.

Other kinds of discrimination, such as denial of a promotion or targeted firing, are easily identifiable, and therefore 180 days is more than adequate time to file a claim with the U.S. Equal Employment Opportunity Commission. But often times with pay discrimination, because paychecks are so private, an employee may not know for months or even years that a discriminatory pay decision was made.

The EEOC has a backlog of cases already, and now with the Ledbetter rule that number is likely to increase, Brake said. The Ledbetter ruling places greater importance on the EEOC mediation, so an employee with a complaint must file with the EEOC within the given time period to give legitimacy to any lawsuit that may follow if the EEOC cannot resolve the compliant. The Ledbetter ruling has created a "protection plan for employers," Henderson said, because the burden of proof already lies with the employee filing the charge, and creating a limited time period gives employers an incentive to withhold the information until the filing period has expired.

With a statute of limitations on the pay discrimination application of Title VII, women and minorities may still seek protection under the Equal Pay Act, which was enacted in 1963 to make sex-based wage discrimination illegal, but the EPA hinges on a "willful" violation, and this can be problematic. Take, for example, Lorance v. AT&T Technologies, Inc., in which the court ruled, "there must be a finding of actual intent to discriminate on [statutorily proscribed] grounds on the part of those who negotiated or maintained the [seniority] system" (emphasis added). Ginsburg noted in her dissent that this was not a good case to look to for precedent, saying, "Congress thus agreed with the dissenters in Lorance that 'the harsh reality of [that] decision,' was 'glaringly at odds with the purposes of Title VII.'" As a result, Congress superceded the ruling in the 1991 Civil Rights Act.

This is the same result Brake would like to see with the Ledbetter ruling. Since intent is difficult to prove, employers have an easier time getting off the hook. Brake would also like to see the discrimination filing period extended to the same window that a personal injury case gets: two years.

Brake warns that such a limited filing period will force women and minorities who so much as suspect pay discrimination is happening to file a claim. If that claim isn't proven, the employee risks retaliation that could result in delayed promotion or even termination. Furthermore, pay discrimination is often not determinable until after several years of slightly lower raises; the gap is almost indistinguishable at first, but after several years, can add up to tens -- or even hundreds -- of thousands of dollars. Brake cited a Carnegie Mellon University study in her testimony that found that a starting salary difference of $5,000 -- even assuming the same percentage raise each year of 3 percent -- can add up to more than a $300,000 difference in lifetime earnings.

Additionally, the Paycheck Fairness Act, which was introduced in March and currently sits in committee, holds the possibility of increasing transparency when it comes to wages. It would require the EEOC to gather pay information and separate out how women and minorities rank in pay.

Undoubtedly such legislation will encounter strong opposition from the business lobby. Mellon from the Chamber of Commerce said they didn't want to open themselves up to the liability of employees filing suits "decades later." When asked by the committee how employees are supposed to know if they’re being paid less than co-workers, he cited that the EEOC could resolve such concerns because they can request payroll records. It's more likely that Congress would extend the filing period for employees. While the Paycheck Fairness act charges the EEOC with gathering pay information on the basis of sex and race, it does not address the filing period, likely because the bill was written prior to the Ledbetter decision.

"The payroll records are there," Rep. Phil Hare [D-IL] said, "Either someone was discriminated against or they weren't." In other words, pay discrimination is an injustice, no matter how much time has passed.

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