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FEATURE | summer 2007

Court Gives OK To Unequal Pay
The Ledbetter decision guts anti-discrimination law; can Congress strike back for women and people of color?

Just two weeks after she lost her case 5-4 in the U.S. Supreme Court, Lilly Ledbetter stood before a committee of Congress.

“I hope…that Congress won’t let this happen to anyone else,” said the retired Goodyear Tire supervisor. “I would feel that this long fight was worthwhile if, at least at the end of it, I knew that I played a part in getting the law fixed so that it can provide real protection to real people in the real world.”

In her lawsuit, Ledbetter v. Goodyear Tire and Rubber Co. Inc., Ledbetter accused her longtime employer of pay discrimination under Title VII of the 1964 Civil Rights Act. Although Ledbetter started work at Goodyear’s Gadsden, Ala., manufacturing plant in 1979 at the same salary as her co-workers, over the years she lost ground. By the time she retired in 1998, Ledbetter, the only woman in her position, was the lowest-paid of all the managers, earning 20 percent less than the next-highest paid—a man with significantly less experience. Compared to those managers with similar experience, she was earning up to 40 percent less.

Like many employees, Ledbetter was at first unaware that she was being paid less than her male peers. As time passed, she began to suspect it, but had no real evidence. Finally, after receiving an anonymous tip on the eve of her retirement, she learned for sure that she was a victim of pay discrimination and took action, filing charges with the Equal Employment Opportunity Commission (EEOC).

In a stunning decision that disregarded 40 years of legal precedent, the Supreme Court radically narrowed Title VII protections against pay discrimination (Title VII covers workplace discrimination on the basis of sex, race, national origin and religion). The decision—written by Bush’s new appointee, Justice Samuel Alito, and joined by fellow Bush appointee Chief Justice John Roberts as well as Justices Anthony Kennedy, Clarence Thomas and Antonin Scalia— may signal a reversal of decades of progress on legal rights for women and minorities in the workplace.

The crucial point of Alito’s ruling is that it created a new interpretation of the time limit for pursuing pay discrimination claims. The decision requires employees to file their Title VII claims with the EEOC within 180 days of when the discriminatory salary is set. Traditionally, courts have treated each new paycheck that is “polluted” by discrimination as a separate discriminatory practice, and thus have allowed employees to file lawsuits and recover for the significant losses that quietly accrue over long periods of time. This approach, known as the “continuing violation” theory of recovery, allows employees to file pay-discrimination charges within 180 days of each paycheck on the grounds that each check continued the discrimination. In Ledbetter, the Court rejected this approach, finding that paychecks infected by a discriminatory pay decision are simply the “later effects of past discrimination,” and do not constitute individual acts for which an employee can charge discrimination.

Justice Ruth Bader Ginsburg, who as a lawyer in the 1970s led the ACLU Women’s Rights Project’s strategy to establish legal protections from sex discrimination for women, wrote a powerful dissent in the Ledbetter case, joined by Justices John Paul Stevens, Stephen Breyer and David Souter. Ginsburg, now the sole woman on the Supreme Court, took the dramatic step of reading a summary of her dissent from the bench, declaring, “This court does not comprehend, or is indifferent to, the insidious way in which women can be victims of pay discrimination…Any annual pay decision not contested immediately (within 180 days), the Court affirms, becomes grandfathered, a fait accompli beyond the province of Title VII ever to repair.”

Kim Gandy, president of NOW, firmly places blame for the negative decision on the new makeup of the court. “The critics who argued against a filibuster of the appointment of Samuel Alito on the grounds that his appointment would not significantly shift the balance of the Court have now unequivocally been proven wrong,” she says. But she has only praise for Ginsburg’s dissent: “Some day some rational court will pull up Ginsburg’s dissent in this case and rely on it to restore some of our rights.”

At the close of her dissent, Ginsburg remarkably called upon Congress to step in and correct the Court’s illconsidered decision. She noted that Title VII had previously been amended in 1991 by Congress in response to a series of other Supreme Court decisions that weakened its reach.

Within a day of the ruling, Sen. Hillary Rodham Clinton (D-N.Y.) and other members of Congress condemned the decision. Clinton, along with Sens. Edward M. Kennedy (D-Mass.), Barbara Mikulski (D-Md.) and Tom Harkin (DIowa), and U.S. Reps. George Miller (D-Calif.), Rosa L. DeLauro (D-Conn.) and Eleanor Holmes Norton (DD. C.), quickly introduced legislation to reverse the Supreme Court’s interpretation, and hearings in the House Committee on Education and Labor were scheduled. DeLauro expressed the reaction of many in Congress and echoed Ginsburg’s dissent: “When the Supreme Court issued their narrow-minded…ruling, they ignored reality. They ignored the challenges associated with documenting a discriminatory difference in pay within a mere six months, despite the typical office secrecy over income.”

Explaining the urgency of congressional action, Eleanor Smeal, president of the Feminist Majority, said, “We cannot stand by and watch a Bush-stacked court destroy in less than a year Title VII—the bedrock of women’s rights and civil rights protection in wage discrimination cases.”

In response to the decision, the civil rights and women’s-rights community swung into action. Women’srights groups are imploring Congress not only to reverse the Court’s ruling limiting the time for filing wagediscrimination cases under Title VII, but also urging Congress to eliminate the current cap on punitive damages for Title VII discrimination cases. Lifting the cap on damages would allow juries to set plaintiffs’ monetary awards at levels that might motivate employers to stop discriminating. “The only way to eradicate pay discrimination once and for all,” says Smeal, “is to give employers an incentive not to discriminate, rather than an incentive to discriminate.”

Unless Congress passes legislation to reverse the Ledbetter decision, this Court-ordered change in Title VII law will allow employers to get away with pay discrimination as long as they keep it quiet—because after six months employees will no longer have grounds to sue. But employees are also in a bind if they complain too quickly about discrimination, since they may not have sufficient evidence to win a case. As University of Pittsburgh law professor Deborah Brake explained in testimony before the House committee, “In a cruel catch-22, an employee who complains to her employer too soon, without an adequate factual and legal foundation for doing so, could find herself in an even worse position…out of a job and with no legal recourse.”

Under the Court’s ruling, the outcome in Ledbetter’s case is likely to become typical. She lost her case even though she acted as soon as she had hard evidence of pay discrimination, first filing charges with the EEOC and then the Title VII lawsuit in Federal District Court. She proved at her jury trial that Goodyear engaged in intentional pay discrimination, and the jury awarded her $3.5 million, most of that in punitive damages designed to deter Goodyear from engaging in discrimination in the future. However, because of Title VII’s damages cap, Ledbetter’s award was reduced to $360,000. On appeal, even this award was rejected, leaving Ledbetter without any remedy despite years of discrimination.

Justice Ginsburg’s dissent centered on the fact that Title VII was designed to address the realities of workplace discrimination. She emphasized that pay discrimination, unlike discriminatory termination or failure to hire or promote, is not limited to one decision, but is the result of an accumulation of acts that occur over time. Ginsburg also noted that employers typically keep discriminatory pay decisions under wraps, and profit from doing so. As Ginsburg explained, “[W]hen a woman is paid less than a similarly situated man, the employer reduces its costs each time the pay differential is implemented.”

“It’s just common sense that employees are often not going to find out about wage discrimination right away, especially within 180 days,” says Jocelyn Frye, general counsel for the National Partnership for Women and Families. “Alito and the majority either didn’t get this or didn’t want to get this. The Court has sent a message with this decision about how they understand pay discrimination works, and it will likely be much rougher for victims of pay discrimination to pursue claims.”

Other laws, including the Equal Pay Act of 1963 and Section 1981 of the Civil Rights Act of 1866, will still aid some employees in fighting wage discrimination but don’t take the place of Title VII. The Equal Pay Act does not allow punitive damages, and applies only to cases of sex-based discrimination, while Title VII applies to race, sex, national origin and religion. Section 1981 only applies to race-based discrimination in contracting. Furthermore, it is unclear how Ledbetter may affect the application of these laws, and many fear that the decision is a bad sign for the overall direction of the courts with respect to these and other civil rights laws.

Despite her disappointing defeat, Lilly Ledbetter continues to raise her voice against unequal treatment.

“It breaks my heart when I think of how much I have lost—how much less I have in retirement and Social Security income as a result of pay discrimination,” said Ledbetter in an interview with Ms. “But by continuing to speak out about what happened to me, perhaps I can make a difference for my granddaughter, and everyone’s granddaughters, so that they get paid fairly.”