Ending Wage Discrimination

By Lisa Grafstein

In 2007, the U.S. Supreme Court issued a 5-4 decision which changed the rules for determining how long an employee has to raise a claim of wage discrimination. The plaintiff in that case, Lilly Ledbetter, lost a claim for 18 years of discrimination, but has lent her name to a proposal which would correct the interpretation of federal law and allow victims of wage discrimination to recover a portion of what they have lost.

Before the Ledbetter case, courts -- including the Supreme Court -- had used a “paycheck rule,” which recognized that, when an employee is underpaid on a discriminatory basis, each paycheck that employee receives is affected by discrimination, and the statute of limitations for a claim therefore begins to run when a discriminatory paycheck is issued. In most cases, employees do not become aware of wage discrepancies until well into their employment. Moreover, we know that a pay decision continues to impact a worker over her earning years. The National Women’s Law Center has calculated that women 24 and younger start out earning 6 percent less than their male counterparts, but that gap increases over time, resulting in women 45-64 earn 71 percent of what their male counterparts earn.

A study by the Institute for Women’s Policy Research shows the cost in real dollars: a typical college-educated woman who was between 45 and 49 in 2004 had lost over $440,000 (in 2004 dollars) since 1984 due to the wage gap. As Justice Ginsburg noted in the dissent in the Ledbetter decision: “even minor disparities will increase exponentially over time.” The Bureau of Labor Statistics confirms that women earn 76 percent of what men earn -- a gap that cannot be explained away by women’s career choices or other non-discriminatory bases, and is the cumulative effect of long-term wage disparities.

The Ledbetter decision discarded the paycheck rule, and held that a worker could not complain about wage discrimination that started more than 180 days before the initial complaint was made. The practical impact was that there would be no real remedy for wage discrimination, since very few people discover the wage disparity until well after being hired for a position, and still fewer would opt to sue a new employer over what would initially be a very small amount of money. The Lilly Ledbetter Act would reinstate the paycheck rule, allowing an employee to sue for up to two years of the wage difference, even if the initial salary decision was made earlier.

The central argument against the bill appears to be that it would invite litigation over decades-old claims. The law, however, is clear that no claim for damages can reach back more than two years; in other words, regardless of how many years a woman received lesser pay she cannot claim losses that occurred prior to two years before instituting a charge of discrimination.

Both sides in this debate raise the issue of the struggling economy as support for their argument. Those who oppose the proposal, however, are in the position of arguing that discrimination should be left unremedied because of the current economic crisis -- ignoring the very real impact disparate wages have on women as workers and consumers. Without the Lilly Ledbetter Act, employers have no incentive to examine their wage practices -- past and present -- to determine whether some of their employees are not being fairly compensated.

The Lilly Ledbetter Act has already passed the House and will be voted on by the Senate soon. President Obama has pledged to sign it. It is well past time to end wage discrimination, and to send a firm signal condemning the practice.
---------------------------------------------------------------------------
Grafstein is a private practice attorney in Raleigh.
---------------------------------------------------------------------------
Copyright (C) 2009 by the North Carolina Editorial Forum. 1/09