The Ticking Clock on Pay Discrimination
By Barbara Arnwine

Look around your office. Do you know what your co-workers are really being paid? Probably not. A recent survey found that only 10 percent of companies have pay openness policies. And if you were paid less by your employer simply because you are female how long do you think it would take to find out? Probably not until you’ve been working there a long time, maybe years.

That is exactly what happened to Lilly Ledbetter. Her employer, Goodyear, kept compensation information confidential and it wasn’t until decades after the fact she found out that she was being paid less. By the time of her retirement, she was paid $3,727 monthly, while the lowest paid male doing the same job was paid $4,286. Taking her employer to court, a jury found that she received raises less frequently than her male colleagues because of her gender.

The jury awarded her damages for this intentional discrimination, but on appeal to the Supreme Court earlier this year, a majority tossed out the award because Ms. Ledbetter failed to file her claim within 180 days of her employer’s discriminatory decisions – decisions she didn’t have reason to suspect until long after they were made.

Pay discrimination based on gender is a violation of federal law and victims of such discrimination should be able to recover lost wages and perhaps other damages as well. But the Supreme Court has now made it practically impossible for victims to recoup damages when they have been discriminated against.

In order to encourage victims of discrimination to file their claims promptly, the law requires that they file within 180 days of the discriminatory practice. So far, so good. But the Supreme Court’s decision in Ledbetter v. Goodyear Tire, interpreted the law to mean that the 180-day clock starts when the employer makes the discriminatory decision, not each time the employee receives a smaller paycheck. So, if the employee didn’t learn about her employer’s decision to pay her less when the decision was made, her claim of discrimination will probably be too late, even though the employer continues to pay her less money.

The pattern in the Ledbetter case is not unusual. In a 2002 case, another employee didn’t find out about her employer’s compensation policies until a printout of salaries appeared on her desk seven years after her starting salary was set lower than co-workers. In a 1998 case, the employee found out about salary disparities when she read about them in the newspaper. Unlike discriminatory decisions to hire and fire, compensation decisions are typically confidential. Consequently, it makes more sense to start the clock each time the employer makes a discriminatory payment rather than when the decision to discriminate is made.

Ledbetter was a 5-4 decision in which the conservative majority rejected the consistent position held by most of the lower courts for years. Over 20 years ago, in a race discrimination case, the Court observed that “each week’s paycheck that delivers less to a black than to a similarly situated white is a wrong actionable under Title VII.” This common sense idea means that if the employee files within 180 days of receiving the discriminatory pay, he or she can have their day in court.

Some argue that the clock should start when a reasonable person would have discovered the wrong, but this vague standard is very difficult to apply in a compensation setting. In particular, employees may learn about pay differences but might not have enough information to suspect discrimination until much later. It’s a cruel joke on the victim if their clock runs out before they even know it started.

Rather than opening the door to such time-consuming disputes, a better approach would be to change the law back to the definition that worked for decades and that has proven to be workable for both employers and employees. As it stands right now the Supreme Court has practically given employers a loophole to discriminate, as long as they aren’t found out in 180 days.

Congress has a lot of difficult issues to deal with when it returns in September – Iraq, immigration, the deficit, on and on. But some problems are easy to solve if the political will to stand up to the White House and the business community is there. This is one of them.

Arnwine is the executive director for the Lawyers’ Committee for Civil Rights Under Law

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