Outten & Golden: Empowering Employees in the Workplace

Groundhog Day Every Payday

November 30th, 2006 | Paula Brantner

Does the passage of time render past pay discrimination untouchable? Or is it like Groundhog Day, where it happens again and again with every paycheck? That was the question the Supreme Court faced on Monday, in the case of Ledbetter v. Goodyear Tire and Rubber Co. Situated right where law and reality collide, you have to wonder, from the tenor of the Supreme Court’s questioning, whether the legal principles at stake will end up reinforcing a harsh reality for female workers — and any workers who get paid less for discriminatory reasons — one that repeats itself over and over.

In 1997, Lilly Ledbetter was an Area Manager at the Goodyear plant in Gadsen, Alabama, working her way up from the Production Supervisor position she started at when she was hired in 1979 with 15 years of supervisory experience. Early on in Ms. Ledbetter’s career, she had been subjected to discrimination and harassment due to her sex, primarily from her direct supervisor, Mike Maudsby, who when she refused to sleep with him, falsified her performance audits and gave her poor evaluations.

Goodyear’s “neutral” raise policy was that each employee received a percentage-based increase over the previous year’s salary, which meant that when Ms. Ledbetter was discriminated against early in her career, resulting in poor evaluations and smaller raises, it had a ripple effect later on in her career. By 1997, when she challenged a transfer, Ms. Ledbetter’s salary was less than the the lowest paid male in the same job and department, substantially less than men with equal or less seniority, and even so low that it sometimes fell below the minimum salary set by Goodyear’s pay scale for her position.

When Lilly Ledbetter sued for discrimination, she had to show that there had been discrimination against her in the 180 days (or 300 in some states) prior to the point at which she filed with the Equal Employment Opportunity Commission (EEOC). (See Filing a Discrimination Claim – Alabama) The question then was whether — assuming for a moment that her current boss had no knowledge that she had been discriminated against early in her career — receiving a paycheck that was lower than everyone else’s was a new act of discrimination. If it isn’t, then she could only challenge the poor evaluations from Mike Maudsby that were the result of discrimination and affected her pay, and since she hadn’t done so at the time, she would be out of luck.

To the EEOC, which gets these claims first and has to decide whether there’s evidence of discrimination, this is an easy call. It’s been the agency’s position for a number of years, based upon a 1986 Supreme Court decision (Bazemore v. Friday), that as long as the employee received a paycheck that represented discriminatory treatment during the previous 180/ 300 days, the employee had not missed the filing deadline for a lawsuit. However, in cases argued before the Supreme Court, the Solicitor General’s office gets to make the final judgment call on the U.S. Government’s position, and so the Solicitor General weighed in NOT in support of the employee or its own agency (the EEOC) in this case, but on behalf of defendant corporations who want a free pass when it comes to addressing their legacy of discrimination.

So will Lilly Ledbetter get to keep the $350,000 + that an Alabama jury ruled she was entitled to after hearing her evidence of sex discrimination? (The original award was over $3 million, but was reduced due to damages caps which limit how much plaintiffs can receive in punitive and compensatory damages.) That’s what the Supreme Court has to decide — and based upon the argument, it looks like she and millions of other workers receiving less than what they should may be reliving their paltry paychecks for some time to come.

Justices Kennedy and Scalia questioned whether decisions regarding pay should be treated differently than other kinds of discriminatory decisions, such as promotions, because if the decision did not involve a lowered paycheck, the amount of time needed to file a claim within 180 days. (Transcript, p. 4-7) Chief Justice Roberts expressed concern about going back 15 years and having to relitigate what happened so far back, while Justice Alito worried about making people now responsible for past discrimination with which they were not involved. (Transcript, p. 10-15) And while Justice Thomas said nothing — as usual — if his decision in National Railroad Passenger Corporation v. Morgan is any indication, he may be inclined to find that the discrimination is a discrete act and does not continue with each paycheck. (See Workplace Profs blog.)

Justice Souter provoked some laughs in the courtroom when asking Irving Gornstein from the Solicitor General’s office what would happen if the government was essentially forced to eat crow and swallow the EEOC’s position — highlighting the divisiveness of having the agency which is supposed to protect the workers’ interests and vindicate the civil rights statutes overruled by the more political Justice Department. (Transcript, p. 51-53) But unfortunately, it won’t be so funny if over two decades of precedent is overruled in this case to undo what’s known as the “paycheck accrual rule.”

What’s ironic is that it might be a decision that employers live to regret, even if the Supreme Court gives them what they’re asking for here. If it’s good policy for workers to wait to file a lawsuit until there’s clear evidence of discrimination, then there must be latitude in the law to allow that to happen. If a worker can only challenge a discriminatory pay decision right away, or forfeit the right to do so forever, then there could be an awful lot of lawsuits about every evaluation that affects a worker’s pay.

Say, for example, that one year, a worker has a bigoted supervisor, which leads to a poor evaluation and no raise for the worker that year. But the next year, the worker has a different supervisor, and no discrimination takes place; in fact, the worker gets a merit raise for a flat amount. In this example, the worker would have an incentive to file a claim right away, rather than to wait and see whether company rectifies the problem. And practically speaking, most workers would prefer to wait and see — that is, unless they’re told they have no choice if they want to challenge discrimination at all.

Not to mention that once that claim is filed right away, if the worker stays with the company, the company is going to have to worry about a retaliation claim too, and managers accused of discrimination frequently ends up shooting themselves in the foot, since the desire for retribution (and vindication) is an all-too-human need. Unlike harassment, which has to build to a severe and pervasive level before an employee can file suit, any decision regarding pay, no matter how severe, could serve as the basis for a lawsuit — just the kind of thing that employers and the Supreme Court would seemingly want to avoid.

Also, workers are going to demand a less opaque pay system. If the only way you can fight pay discrimination is to know what you’re being paid and how it compares to your coworkers’ pay, then workers must have adequate information. Companies that have saved money and manipulated morale by shielding what each worker individually makes are going to have to “give it up.” Why should workers trust that they’re not being treated adversely unless a company shows they have nothing to hide, and their compensation system survives scrutiny? Companies may find it was easier to pit workers against each other by keeping everyone in the dark, than it will be to shed light on their entire compensation structure.

But we’ll just have to see what the Supreme Court rules in the next few months, and whether workers will have to swallow the horror of each deficient paycheck each time a new one comes along — just like Groundhog Day.

More Information:

Ledbetter v. Goodyear: The Supreme Court Considers Procedural Technicalities That Perpetuate the Gender Wage Gap

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