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Senate Committee Holds Hearing on Pay Discrimination Bill

On January 24, the Senate Health, Education, Labor, and Pensions Committee held a hearing, “The Fair Pay Restoration Act: Ensuring Reasonable Rules in Pay Discrimination Cases.” Sponsored by Chair Edward Kennedy (D-MA), the Fair Pay Restoration Act (S. 1843) drafted in response to the Supreme Court’s ruling in Ledbetter v. Goodyear Tire & Rubber Company, which held that employees must sue for pay discrimination within the current 180-day statute of limitations would permit employees to sue employers for wage discrimination even if the discrimination was discovered beyond the 180-day limit. The bill also would permit employees to receive up to two years in back pay upon a finding of discrimination. The House passed similar legislation on July 30 (see The Source, 8/3/07).

Sen. Kennedy said, “The Supreme Court’s 5-4 decision last May in Ledbetter v. Goodyear Tire & Rubber Company undermined the fundamental protections against pay discrimination by imposing serious obstacles in the path of workers seeking to enforce their rights…The bipartisan Fair Pay Restoration Act will restore the clear intent of Congress when we passed these important laws. It provides a reasonable rule that reflects how pay discrimination actually occurs in the workplace. It recognizes that workers may not know immediately that they are being underpaid because of discrimination. It specifies that the time for filing a pay discrimination claim begins on the date the worker receives a discriminatory pay check. It gives workers a realistic opportunity to stop on-going discrimination, and it holds firms accountable for violating the law. We know this legislation is fair and workable it was the law in most of the land and had the support of the EEOC [Equal Employment Opportunity Commission] under both Democratic and Republican administrations, until the Supreme Court upended the rules last year.”

“[P]roponents of the legislation before us claim that the limitations period under Title VII is totally inflexible. That simply isn’t true,” said Ranking Member Mike Enzi (R-WY). “For example, we have been told that this legislation is necessary because the facts that would cause an employee to suspect discrimination, particularly regarding pay issues, may be unknown or even hidden from an employee. Yet, once the 180 days runs, that employee would lose his or her rights. This is a seemingly compelling argument except for one thing. It is not an accurate characterization of the way the law actually works right now. Under current law, the 180-day limitation period is not iron clad. To the contrary, it is completely flexible, and is frequently waived, tolled, or suspended where fairness and circumstances require. It would certainly be suspended in the circumstances the proponents of the legislation so often cite…The supposed inflexibility of Title VII’s [of the Civil Rights Act of 1964 (P.L. 88-352)] limitations period is a myth. You don’t need legislation to address the situations of fairness raised by this bill’s proponents since it is already the law.”

Lily Ledbetter shared her experience of pay discrimination while working as a supervisor at Goodyear. “When I first started at Goodyear, all the managers got the same pay, so I knew I was getting as much as the men. But then Goodyear switched to a new pay system based on performance. After that, people doing the same jobs could get paid differently. Goodyear kept what everyone got paid strictly confidential. No one was supposed to know…I only started to get some hard evidence of what men were making when someone anonymously left a piece of paper in my mailbox at work, showing what I got paid and what three other male managers were getting paid. I thought about just moving on, but in the end, I could not let Goodyear get away with their discrimination. So I filed another complaint with the EEOC in 1998. After I filed my EEOC complaint and then filed a lawsuit, I was finally able to get the whole picture on my pay compared to the men’s. It turned out that I ended up getting paid what I did because of the accumulated effect of pay raise decisions over the years…When we went to court, Goodyear acknowledged that it was paying me a lot less than the men doing the same work…At the end of the trial, the jury found that Goodyear had discriminated against me in violation of Title VII. The jury awarded me back pay, as well as more than $3 million in compensatory and punitive damages…I was very disappointed, however, when the trial judge was forced to reduce that award to the $300,000 statutory cap…But the worst was yet to come. By a single vote, the Supreme Court took it all away, even the back pay. They said I should have complained after the first time I was paid less than the men, seemingly ignoring the fact that I didn’t know what the men were getting paid and had no way to prove that the decision was discriminatory in any event. But the Court said that once 180 days passes after the pay decision is made, the worker is stuck with unequal pay for equal work for the rest of her career and there is nothing illegal about that under the statute.”

Margot Dorfman, chief executive officer of the U.S. Women’s Chamber of Commerce, said, “The Ledbetter decision represents a step backwards on this road to economic equality…With this misguided decision, the Court ignores the realities of the 21st-century workplace. The confidential nature of employee salary information complicates workers’ abilities to recognize and report discriminatory treatment. Employees generally do not know enough about what their coworkers earn, or how pay decisions are made, to file a complaint as quickly as required by the Court’s reasoning…In fact, special efforts are often undertaken to ensure that compensation details are not made public. Such was the case at Goodyear.” Ms. Dorfman added, “Not only does the 180-day time limit have the potential to prevent legitimate discrimination claims from being addressed, but the Women’s Chamber is also concerned it creates incentives for practices that will be detrimental to both business owners and workers. Rather than take the time necessary to evaluate their situation and confirm that they have been subject to discrimination before filing a claim, the new deadline puts pressure on employees to file complaints as quickly as possible, which will prompt workers to act more hastily than they would have in the past. This change creates a potentially greater burden than the previous system, which provided our members with a well-established, reasonable method for resolving discrimination complaints that protected the worker, recognized the demands on business owners, and balanced these factors in the context of the modern workplace.”

Samuel Bagentos, a professor of law and associate dean of Washington University School of Law, said, “The Fair Pay Restoration Act would adopt a simple and commonsense rule to govern the timeliness of pay discrimination claims. Each paycheck that is infected with an employer’s discrimination is a separate violation of the employment discrimination laws lawyers call this the paycheck accrual rule and the victim of pay discrimination may recover back pay for up to two years prior to the last discriminatory paycheck he or she has received.” Mr. Bagentos continued, “Some opponents of legislation adopting the paycheck accrual rule contend that such legislation would make it well nigh impossible for employers to defend themselves against charges of pay discrimination…What is notable about this contention is its entirely theoretical nature. Although ten federal circuit courts of appeals had adopted the paycheck accrual rule before the Ledbetter case, the opponents of that rule have not pointed to any systemic evidence (or even any significant anecdotal evidence) that the rule caused employers to be unable to defend themselves against pay discrimination claims…The Fair Pay Restoration Act, in any event, protects employers against open-ended liability. The bill would affirm the law’s current two-year cap on back pay awards. Under the bill, victims of pay discrimination would have no incentive to sleep on their rights. Because a plaintiff can recover back pay for only two years preceding his filing of the charge with the EEOC, an employee who waits to file for more than two years after the initial discrimination will lose the chance to obtain full compensation.”

Eric Dreiband, an attorney at Akin, Gump, Strauss, Hauer, and Feld, LLP, said, “The Ledbetter decision is entirely consistent with more than three decades of Supreme Court decisions. Furthermore, the bill appears inspired by the mistaken notion that, after Ledbetter, the law currently provides no remedy for concealed discrimination what the bill describes as ‘the reality of wage discrimination.’ Finally, the bill is not limited to compensation and, if enacted in its present form, will create unanticipated and potentially ruinous liability for state and local governments, unions, employers, and others covered by the federal antidiscrimination laws. The bill may also subject pension funds to unanticipated liability that may jeopardize the integrity of those funds and risk the retirement security of pension fund beneficiaries.” Mr. Dreiband added, “The proposed [bill] appears premised on the notion that Ledbetter was wrongly decided and that existing law sanctions hidden discrimination. This notion apparently finds its inspiration in Justice Ruth Bader Ginsburg’s dissent in Ledbetter. According to the dissent, wage discrimination is often ‘concealed,’ and so EEOC charge-filing periods should not apply. But, existing law provides a remedy for any such hidden or concealed discrimination. In fact, for decades, both the Supreme Court of the United States and the EEOC have recognized that EEOC charge-filing periods can be extended or ‘tolled’ in such circumstances…Because Ms. Ledbetter ‘knew definitely’ that her pay was lower than her peers several years before she filed a charge, she could not and did not assert that the charge-filing period should be extended. The Court therefore declined to consider whether to extend the charge-filing period. A timely charge would have enabled the EEOC and Goodyear to investigate the allegations and, as occurred when Ms. Ledbetter filed her 1982 charge, to resolve the matter promptly. The delay had real consequences: Ms. Ledbetter’s case dragged on for nearly ten years, and the supervisor accused of sexual harassment in 1982, who later evaluated Ms. Ledbetter’s work and affected her pay, was dead by the time the case went to trial.”

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