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Caroline Fredrickson Headshot

In Praise of the Paycheck Fix

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On June 22, 2007, Representative George Miller (D-CA) and 23 other House co-sponsors introduced H.R. 2831, the "Lilly Ledbetter Fair Pay Act of 2007," in order to fix a recent Supreme Court decision that undermines protections against discrimination in compensation, which have been bedrock principles of civil rights laws for decades.

On May 29, the Supreme Court ruled in Ledbetter v. Goodyear that workers cannot sue for the later effects of past wage discrimination. Simply put, according to the 5-4 decision, the majority held that the Ms. Ledbetter didn't have a valid claim of wage discrimination because she had not filed her complaint within 180 days of Goodyear's initial discriminatory pay decision. This holding is true regardless of when an employee first discovers the discrimination, and despite the fact that each subsequent paycheck carries forward and is tainted with intentionally discriminatory pay decisions made years before by an employer. The problem was that in Ms. Ledbetter's case, pay disparities occurred in small increments building up slowly, but steadily. Cause to suspect that discrimination is at work may happen over time.

As Supreme Court Justice Ruth Bader Ginsburg noted in her dissent, the majority's decision to sharply limit workers' opportunities to address wage discrimination does not address the realities of the workplace and is at odds with the robust application of our civil rights laws. Most workers may never know the salaries of their coworkers. It is far more likely that workers would not know they are being paid less than their colleagues for many months, if not years, after such discrimination has begun. Indeed, many employers instruct employees not to share financial information at all, and such a discovery may only happen by accident. According to a recent study, only one in 10 private sector employers have adopted a pay openness policy. Critically, this legislation will ensure employers do not profit from years of discrimination simply because their employees were unaware of it.

H.R. 2831, which addresses wage disparity based on race, color, religion, sex, national origin, age, and disability clarifies that such discrimination is not a one-time occurrence that starts and ends with an annual pay decision, but that each paycheck represents ongoing discrimination by the employer. The bill also recognizes that often pay discrimination does not occur as a single event, but can compound overtime with salary adjustments and percentage based raises that magnify a pay gap in a gradual, but insidious way. This bill reaffirms the fundamental principle that our civil rights protections are intended to have a broad remedial purpose -- to make persons whole for the injuries they've suffered because of the discrimination.

Opponents of this legislation make several arguments that not only don't make sense, but also, in some cases, would create absurd results never intended by Congress. First, obviously, an employee can't sue before he or she knows of the discrimination. But this decision would require such an outcome. Even if an employee sues the day after she learns of the discrimination, it's too late if the employer's decision came 181 days before she discovered the illegal behavior. Why should companies unjustly profit from years and years of paying women and minorities less because the employer has been able to keep the discrimination secret?

Second, opponents of this bill say it will open the "floodgates" of litigation. However, this new rule set out by the Supreme Court doesn't stop litigation -- it may encourage it. Now employees will feel they have to file suits upon their first suspicion of discrimination or right after a pay decision, rather than wait for additional evidence, just to make sure they don't run out of time. This is a ridiculous outcome from a public policy perspective, and even more so when one considers the fact that all this legislation is trying to do is put back into place a protection in employment cases that has been the law for years. There would be no huge flood of litigation with this fix in place -- just a return to a rule that has been applied by courts for decades.

Third and finally, some opponents of this legislation argue that by using the paycheck to show ongoing discrimination, employees could wait 20, maybe 40, years of employment before suing, leaving companies in an uncertain position. Even assuming any court would entertain such a situation, on its face this argument makes no sense when one really considers the reality of the workplace for most Americans. What reasonable employee would wait in such a manner when every discriminatory paycheck amounts to lost wages, lost retirement or 401K benefits, and lost Social Security benefits? What reasonable employee would sit on a claim when that translates into less money for their families in every paycheck and more money in the pockets of an unjust employer?

American workers should know that they are protected from wage discrimination and are able to challenge such discrimination no matter how long it takes them to discover it. The ACLU strongly urges Congress to pass this legislation.