Senate Democrats

H.R. 2831, the Lilly Ledbetter Fair Pay Act of 2007

Summary

On April 21, 2008, Senate Majority Leader Reid filed a cloture petition on the motion to proceed to H.R.2831, the Lilly Ledbetter Fair Pay Act of 2007, a bill to effectively overturn the Supreme Court’s decision in Ledbetter v. Goodyear Tire & Rubber Co., Inc.[1] In Ledbetter, the Court ruled that the 180-day statute of limitations on filing a discrimination claim with the Equal Employment Opportunity Commission (EEOC) under Title VII of the Civil Rights Act of 1964 begins to run when the original discriminatory decision is made and conveyed to the employee, regardless of whether the pay discrimination continues beyond the 180-day period. This ruling reversed a long-standing interpretation, used by nine federal circuits and the EEOC in both Democratic and Republican Administrations, under which the statute of limitations began to run each time an employee received a pay check or other form of compensation reflecting the discrimination.

H.R.2831 would restore this interpretation, the “pay-check accrual” rule, which would ensure that employees who can prove pay discrimination based on race, color, religion, sex, national origin, age or disability will not be forever barred from seeking redress because they did not learn they were victims of pay discrimination within six months after the discriminatory decision was first made.

H.R.2831 passed the House on July 31, 2007, and Senator Kennedy introduced and held hearings in the Senate on a nearly identical, bipartisan bill the Fair Pay Restoration Act (S.1843). Majority Leader Reid has scheduled a cloture vote on the motion to proceed to the House-passed bill, H.R.2831, on April 23, 2008 — the day following Equal Pay Day, the approximate day when women’s earnings catch up to the earnings of men from the previous year.[2]

Background

On May 29, 2007, the Supreme Court handed down its ruling in Ledbetter v. Goodyear Tire & Rubber Co., Inc. The case began in 1998 when Lilly Ledbetter filed a discrimination claim with the EEOC alleging that her employer, Goodyear, had unlawfully discriminated against her on the basis of sex in violation of Title VII. Ledbetter, a supervisor, had been working at Goodyear since 1979. She was one of the few female supervisors and experienced significant sexual harassment during her employment. While she suspected that she may be receiving a lower salary than her male counterparts, a company policy that prohibited employees from discussing compensation hindered her ability to gain proof. Her suspicions were confirmed, however, when she received an anonymous note that disclosed the salaries of three of the male managers. Ledbetter found that by 1997 she was being paid 20 to 40 percent less than her male counterparts.

Ledbetter sued in the District Court for the Northern District of Alabama, where the jury found in her favor and awarded her back pay and damages. Goodyear appealed on statute of limitations grounds to the U.S. Court of Appeals for the Eleventh Circuit, where the lower court’s decision was reversed. The Supreme Court upheld the Eleventh Circuit decision, ruling against Ledbetter and affirming the appellate court’s decision, by holding that workers must show that the original pay-setting decision they challenge occurred within the 180-day charging period. The 5 to 4 majority ruled that “a new violation does not occur, a new charging period does not commence, upon the occurrence of subsequent nondiscriminatory acts that entail adverse effects resulting from the past discrimination,”[3] such as pay-checks or raises that reflect an original discriminatory pay decision made more than approximately six months prior.

The Court’s minority, however, strongly disagreed with the majority’s holding, asserting that attaching the statute of limitations to the payment of a discriminatory wage would better reflect workplace and pay discrimination realties, precedent, and the overall purpose of Title VII. Writing for the minority, Justice Ruth Bader Ginsberg stated:

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. The Court’s insistence on immediate contest overlooks common characteristics of pay discrimination. Pay disparities often occur, as they did in Ledbetter’s case, in small increments; cause to suspect that discrimination is at work develops only over time… A worker knows immediately if she is denied a promotion or transfer, if she is fired or refused employment… When an employer makes a decision of such open and definitive character, an employee can immediately seek out an explanation and evaluate it for pretext. Compensation disparities, in contrast, are often hidden from sight. It is not unusual, decisions in point illustrate, for management to decline to publish employee pay levels, or for employees to keep private their own salaries…

In tune with the realities of wage discrimination, the Courts of Appeals have overwhelmingly judged as a present violation the payment of wages infected by discrimination: Each paycheck less than the amount payable had the employer adhered to a nondiscriminatory compensation regime, courts have held, constitutes a cognizable harm… Similarly in line with the real-world characteristics of pay discrimination, the EEOC — the federal agency responsible for enforcing Title VII…has interpreted the Act to permit employees to challenge disparate pay each time it is received.

To show how far the Court has strayed from interpretation of Title VII with fidelity to the [Civil Rights Act of 1964's] core purpose, I return to the evidence Ledbetter presented at trial. Ledbetter proved to the jury the following: She was a member of a protected class; she performed work substantially equal to work of the dominant class (men); she was compensated less for that work; and the disparity was attributable to gender-based discrimination… Specifically, Ledbetter’s evidence demonstrated that her current pay was discriminatorily low due to a long series of decisions reflecting Goodyear’s pervasive discrimination against women managers in general and Ledbetter in particular… Yet, under the Court’s decision, the discrimination Ledbetter proved is not redressable under Title VII.[4]

Justice Ginsberg further noted that the Court’s interpretation reaches far beyond pay discrimination based on sex: “[I]n truncating…Title VII…the Court does not disarm female workers from achieving redress for unequal pay [because they may still seek relief under the Equal Pay Act], but it does impede racial and other minorities from gaining similar relief,” who do not have an alternative statute.[5] Though not addressed in the dissent, it should also be noted that the Court’s holding in Ledbetter may impact the interpretation of other statutes patterned after the Civil Rights Act of 1964, such as the Age Discrimination in Employment Act (ADEA) and the Americans with Disabilities Act (ADA).[6]

Before concluding, Justice Ginsberg encouraged Congress to overturn the Court’s decision, asserting that, “This is not the first time the Court has ordered a cramped interpretation of Title VII, incompatible with the statute’s broad remedial purpose… Once again, the ball is in Congress’[s] court… [T]he Legislature may act to correct this Court’s parsimonious reading of Title VII.”[7]

H.R.2831 represents Congress’s attempt to respond to the inequalities of the Ledbetter decision.

Major Provisions

H.R.2831 would reflect Congress’s findings that the Supreme Court’s holding in Ledbetter impairs statutory protections against pay discrimination, ignores the realities of wage discrimination, and is inconsistent with Congress’s intent in passing civil rights laws. The legislation would also clarify that nothing in the bill is intended to limit the right to introduce evidence of unlawful employment practices outside the charging period nor is the bill intended to change the current treatment of when pension distributions are considered to be paid.

The legislation would amend the Civil Rights Act of 1964 to clarify that, in the context of pay discrimination on basis of race, color, religion, sex, or national origin, an “unlawful employment practice” occurs when: 1) a discriminatory compensation decision is made; 2) an employee becomes subject to a discriminatory compensation decision; or 3) an employee is affected in whole or in part by the application of a discriminatory compensation decision. Thus, the 180 statute of limitations would begin to accrue each time a wage, benefit, or other compensation was paid.

H.R.2831 would not, however, expand the limits on how much an employer owes in back pay. An employee would still be limited to two years of back pay preceding the filing of the discrimination charge.

The legislationwould also amend the Age Discrimination in Employment Act of 1967, the Americans with Disabilities Act of 1990, and the Rehabilitation Act of 1973 to reflect the same rules for an “unlawful employment practice” in the pay discrimination context.

H.R.2831 would apply retroactively to May 28, 2007 — the day before the Ledbetter decision — for all claims of pay discrimination made under Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act of 1967, Title I and Section 503 of the Americans with Disabilities Act of 1990, and Sections 501 and 504 of the Rehabilitation Act of 1973 that are pending on or after that date.

Legislative History

On April 21, Senate Majority Leader Reid filed cloture on a motion to proceed to H.R.2831, the Lilly Ledbetter Fair Pay Act of 2007. The bill was originally introduced in the House on June 22, 2007 by Representative George Miller. It was referred to the House Committee on Education and Labor in July, where it was amended and reported out favorably. On July 31, the bill, which had 93 co-sponsors, was passed by the House on a 225 to 199 vote (Roll Call Vote 768). The bill was then placed on the Senate Legislative Calendar, where it has remained.

On July 20, 2007 Senator Kennedy introduced a nearly identical bill in the Senate entitled, the Fair Pay Restoration Act (S.1843). This bipartisan bill was referred to the Senate Committee on Health, Education, Labor, and Pensions, where hearings were held. The bill has 43 co-sponsors.

On April 21, 2008, Senate Majority Leader Reid filed cloture on the motion to proceed to H.R.2831. The Senate is expected to vote on this cloture motion on Wednesday, April 23.

Expected Amendments

If the cloture motion is agreed to and the Senate proceeds to consideration of H.R.2831, amendments may be offered. The specifics of those amendments have not been made available, but this Legislative Bulletin will be updated and/or information will be made available through the DPC lists once that information becomes available.

Administration Position

On July 27, 2007, the Bush Administration issued a Statement of Administration Policy (SAP) on H.R.2831, which indicated that, if passed, the President’s senior advisors would recommend that he veto the bill.

CBO Estimate

On July 12, 2007, the Congressional Budget Office (CBO) issued a cost estimate for H.R.2831. The estimate indicated that the bill would not significantly impact the number of discrimination filings with the EEOC or increase the costs incurred by the EEOC or the federal courts.




Endnotes

[1] 127 S. Ct. 2162 (U.S.2007), link.

[2] Equal Pay Day will be observed in 2008 on April 22. National Committee on Pay Equity, link. According to the U.S. Census, as of 2006, women made $.77 for every dollar a man makes. Income, Poverty and Health Insurance Coverage in the United States: 2006, U.S. Census Bureau, link.

[3] Ledbetter, link at 11.

[4] Id. at 28.

[5] Id. at 44.

[6] “Pay Discrimination Claims Under Title VII of the Civil Rights Act: A Legal Analysis of the Supreme Court’s Decision in Ledbetter v. Goodyear Tire & Rubber Co., Inc.,” Congressional Research Service,Order Code RS22686.

[7] Ledbetter, link at 46.

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