By BLR Founder and CEO Bob Brady
Bob Brady gives his take on the new Lilly Ledbetter Fair Pay Act, and he asks for your thoughts about how the law might affect your organization—and American workplaces in general.
Not so fast
Even before the Obama Administration took office, Congress was hard at work passing new employment laws. The Senate passed one of these (the Lilly Ledbetter Fair Pay Act) last week, and the House followed suit on Tuesday. Obama signed the bill into law on Thursday, January, 29, 2009.
The law overturns a U.S. Supreme Court decision that said a woman (Lilly Ledbetter) could not sue for pay discrimination she had endured for 20 years for one simple reason. She hadn’t sued within 180 days of the original discrimination. Ms. Ledbetter had argued that the discrimination occurred—and the clock restarted—every time she received a paycheck less than her male peers, but the justices disagreed.
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In response to widespread criticism of the ruling, the House passed the Lilly Ledbetter Fair Pay Act, which says that discrimination would be deemed to occur every time a new paycheck is delivered—even if it is years after the decision that gave rise to it. If the new law had been in effect, Ledbetter would have been able to bring her case. She said she had been discriminated against for years, but never knew about it until just before she retired. She brought suit, but the Supremes ruled that the suit was barred by the statute of limitations.
Harder to defend
This law will make it much harder to defend pay discrimination suits. If an event occurred years in the past, it’s unlikely the people who made the decision will be presently employed. It will be very messy, but when you look at the facts of the Ledbetter case, it’s hard not to sympathize with her.
A second bill passed by the House, the Paycheck Fairness Act, is another attempt to overturn a judicial decision. Some courts have held that male and female pay disparities are not illegal if they can be accounted for by such things as the better negotiation skills of the male employee or his higher compensation at his previous job.
The bill, awaiting action by the Senate as of late January, 2009, would limit the use of these “affirmative defenses” to situations in which the employer can show that the differential is truly caused by something other than sex, is related to job performance, and is required for legitimate business purposes.
Hard decisions equal bad law?
There is an ancient saying that “hard facts make bad law.” It means that when you have very sympathetic plaintiffs (like Lilly Ledbetter), the temptation on the part of judges and juries is to rule in their favor, even if it requires a “creative” application of the law. Like many “expediencies,” this can lead to problems later on when the decision is used as precedent. It ends up being “bad law.”
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These cases may be the obverse of that saying. Hard decisions may make bad law. Employers are going to find it very difficult to comply with these laws. It will be hard to defend against something that occurred 20 years ago. Any inconsistency other than absolute parity is going to be inferred as discrimination. Since it will be very difficult, if not impossible, to defend against it, and since it is illegal to reduce pay to comply, employers could find compliance very difficult and expensive.
Employees’ side of it
The preceding is the employers’ side of it. Employees who feel they were discriminated against have a right to feel otherwise. Balancing the two is important if employers are to be able to compete successfully in the international workplace. Let’s hope that Congress and the courts do not take this occasion to declare open season on employers. In this economic climate, we’ve got enough problems!
You may be tempted to move quickly, start investigations, etc., but my advice is to move slowly and cautiously. The Ledbetter Act is complex—it is retroactive to May 28, 2007, (the day before the U.S. Supreme Court ruled against Ledbetter in her lawsuit) and that means it applies to all such pay discrimination charges that were pending on or after that date. Consult with counsel and make sure you don’t create unnecessary trouble for yourself. Caution should be the order of the day!
That’s my e-pinion. I’d love to hear yours. E-mail me at Rbrady@blr.com.
P.S. How does this law affect your organization and what are you doing to prepare? Complete our quick (5-minute) survey. We’ll report on the results in the coming weeks.
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