Does The Ledbetter Law Benefit Workers, Or Lawyers?

Does The Ledbetter Law Benefit Workers, Or Lawyers? By Stuart Taylor Jr.
Democrats and the media have distorted the facts underlying the new equal-pay law.
National Journal, Saturday, Jan. 31, 2009

This has been a good week, and may be a good year, for lawyers, civil-rights groups and others who think that America needs many more lawsuits to combat what they portray as pervasive job discrimination against women, minorities, the elderly, and the disabled.

Things are not going so well for those of us who fear that the Lilly Ledbetter Fair Pay Act, which President Obama co-sponsored as a senator and signed on Thursday, and other job discrimination bills in the congressional pipeline may be bad for most workers and may benefit mainly lawyers.

These measures seem likely to make it harder than ever for employers to defend themselves against bogus (as well as valid) discrimination claims, effectively adding to the cost of each new hire.

This would be justified if job discrimination were indeed pervasive. But the evidence suggests otherwise. Study after study has, for example, cast grave doubt on what appears to be the myth that sex discrimination in the workplace remains rampant more than 40 years after Congress adopted one law broadly banning job discrimination and another requiring equal pay for women and men doing equal work.

Congressional Democrats, liberal groups, and the media have thoroughly distorted the facts underlying the Ledbetter law to advance their agenda of opening the door wide to all manner of job-discrimination lawsuits.

The new law will virtually wipe out the 300-day time limit (180 days in Alabama and some other states) during which employees can file claims of discrimination under Title VII of the 1964 Civil Rights Act. Disgruntled employees will now be free to wait many years before hauling employers into court for supposedly discriminatory raises, promotions, or any other actions affecting pay.

The longer the wait, the more difficult it will be for the employer to contest an employee's one-sided and perhaps false account of the case, because key witnesses may have retired or died and records such as performance evaluations may have been discarded.

Indeed, some of the Ledbetter law's vague language could be construed as opening the doors for people to sue a company even years after retiring, on the theory that each new pension check is too small because of some claim of discrimination by some long-since-departed (or dead) supervisor.

This law represents an overreaction to a May 2007 Supreme Court decision, Ledbetter v. Goodyear Tire & Rubber Co., that provoked an explosion of ill-informed media outrage and propelled the losing party, retired Goodyear employee Lilly Ledbetter of Alabama, to a speaking role at last year's Democratic National Convention.

The 5-4 decision reasonably (if debatably) held that the 180-day time limit for Ledbetter to file her Title VII claim had started running with the most recent act of intentional discrimination that affected her pay in the ensuing years. Ledbetter had argued -- and the new law now provides -- that the 180-day clock should restart with each new paycheck.

For this, the conservative majority was widely reviled as having denied any remedy to Ledbetter, because employees often don't know what their co-workers are paid and thus might not learn that they are victims until more than 180 (or 300) days after the supposed discrimination occurred.

But some critical facts -- ignored by the media and Congress -- belie their portrayal of the case, as detailed in my June 9, 2007, column.

First, Ledbetter waited more than five years after learning that she was paid substantially less than most male co-workers to file her Title VII claim for back pay, compensatory, and punitive damages. Second, by that time a key supervisor -- whom she belatedly accused of holding down her pay raises after she rejected his sexual advances -- had died. Third, Ledbetter chose not to pursue a claim under the Equal Pay Act of 1963, which has a much longer time limit (three years) than Title VII but does not (yet) provide for big-bucks damage awards.

Fourth, her years of poor performance evaluations, plus repeated layoffs that affected her eligibility for raises, convinced a federal magistrate judge (although not the jury) that her relatively low pay did not prove sex discrimination. Maybe Ledbetter was a victim of discrimination, as the jury found. Maybe not. The evidence is too stale to allow for a confident conclusion -- which is one reason the justices ruled against her.

That said, it would have been reasonable for Congress to amend Title VII by specifying (as some lower courts have held) that the clock does not start running until the employee is or should be aware that she is earning less than co-workers.

Instead, Congress chose to shift the balance dramatically against employers by effectively eliminating time limits for filing all manner of discrimination claims that have some impact on pay.

Another bill that may reach President Obama is the House-passed Paycheck Fairness Act. Its confusingly worded amendments to the Equal Pay Act of 1963 seem designed -- or at least likely -- to force pay raises for women who have never been victims of anything that most people would call discrimination.

The bill would, for example, expose an employer to liability for paying a woman less than a man in a similar job unless the employer can convince a jury that the differential is "job related" and "consistent with business necessity" -- and also that no "alternative employment practice exists that would serve the same business purpose."

What's that parade of nebulosities supposed to mean? I think it would invite judges and juries to go beyond providing remedies for real discrimination and to play Robin Hood by second-guessing justifiable pay disparities. It would force some employers who are entirely innocent of sex discrimination to settle unwarranted lawsuits.

An employer that has long paid higher salaries to employees with more experience or better scores on written tests of their job-related skills might be hit for a big damage award for failing instead to provide special training for inexperienced women or to use a different test.

A very big damage award, perhaps: The Paycheck Fairness Act would allow unlimited awards of both compensatory and (in cases of "reckless indifference") punitive damages. Other proposals likely to emerge during this Congress would eliminate the current caps on damages in Title VII lawsuits as well.

Worse, the Paycheck Fairness Act would allow lawyers to include masses of women who have little or no interest in suing in class-action lawsuits, excepting only those who go to the trouble of "opting out." This is a formula for lawyer-generated lawsuits to extort millions of dollars from companies without proving that they ever intentionally discriminated against anyone.

One of the myths underlying this bill is that, as then-Sen. Hillary Rodham Clinton of New York said on January 8: "It is disgraceful that... women in this country still earn only 78 cents on the dollar" earned by men.

No, it's not disgraceful. Nor is it true that "in many instances, the pay disparities can only be due to continued intentional discrimination or the lingering effects of past discrimination," as stated in the findings attached to the Paycheck Fairness Act.

Labor Department data and academic studies show that much of the male-female pay differential is explained by such factors as disproportionate child-rearing and caregiving responsibilities.These cut into women's working hours and motivate many to sacrifice higher pay for shorter hours and the flexibility to take career breaks.

The data also demonstrate that women who work 40 hours a week make 88 percent as much as men who work 40 hours. Economics professor June O'Neill of Baruch College reported in a 2003 article that the female-to-male wage ratio rises to 95 percent when other data -- on child-related factors, demographics, academic majors, work experience, and occupational characteristics -- are also taken into account. The "gender gap can be explained to a large extent by nondiscriminatory factors," O'Neill concluded.

"Men and women generally have equal pay for equal work now -- if they have the same jobs, responsibilities, and skills," wrote Diana Furchtgott-Roth of the conservative free-market Hudson Institute. She added, in a January 21 commentary published by Reuters, that the 5.9 percent unemployment rate for adult women is lower than the 7.2 percent for adult men.

This is not to suggest that sex discrimination is no longer a serious problem. I worry that my two daughters may run into the barriers that still lurk in some unknown percentage of workplaces. But I worry more that they and their peers will have a harder and harder time finding jobs in the first place if the government burdens employers with lawsuits that make it more and more expensive to bring in new hires.