Senate Democrats

S. 181, The Lilly Ledbetter Fair Pay Act of 2009

Summary

On January 13, 2009, Senate Majority Leader Reid filed a cloture petition on the motion to proceed to S.181, the Lilly Ledbetter Fair Pay Act of 2009, 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 pay 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, regardless of whether the 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 paycheck or other form of compensation reflecting the discrimination.

S.181 reflects Senate Democrats’ commitment to ending pay discrimination and providing adequate means of relief to those who have been discriminated against. The bill would restore the “pay-check accrual” interpretation to ensure that employees who can prove pay discrimination based on race, color, religion, sex, national origin, age or disability can seek redress as long as the discrimination continues.

At the time of this writing, the Senate is expected to vote on the cloture motion on the motion to proceed to S.181 on January 15.

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. Ms. 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. A company policy that prohibited employees from discussing compensation hindered Ledbetter’s ability to gain proof of Goodyear’s discrimination against her. In 1997, she received an anonymous note that disclosed the salaries of three male managers. Ms. Ledbetter discovered that she was being paid 20 to 40 percent less than her male counterparts.

Ms. 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 Ms. 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,”[2] such as paychecks 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.[3]

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.[4] Though not addressed in the dissent, it should also be noted that the Court’s holding in Ledbetter impacts 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).[5]

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.”[6]

S.181 represents Senate Democrats’ attempt to overturn the Ledbetter decision and make clear Congress’s intent in drafting Title VII of the Civil Rights Act of 1964.

Major Provisions

In S.181, Congress finds 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 amend the Civil Rights Act of 1964 to clarify that, in the context of pay discrimination on the basis of race, color, religion, sex, or national origin, an “unlawful employment practice” occurs when: 1) a discriminatory compensation decision or other practice (such as a discriminatory job evaluation) is adopted; 2) an employee becomes subject to a discriminatory compensation decision or other practice; or 3) an employee is affected in whole or in part by the application of a discriminatory compensation decision or other practice. Thus, the 180-day statute of limitations would begin to accrue each time a wage, benefit, or other compensation was paid.

S.181 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 ensures that the Age Discrimination in Employment Act of 1967, the Americans with Disabilities Act of 1990, and the Rehabilitation Act of 1973 reflect the same rules for an “unlawful employment practice” in the pay discrimination context.

S.181 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 January 13, 2009, Senate Majority Leader Reid filed a cloture petition on the motion to proceed to S.181, the Lilly Ledbetter Fair Pay Act of 2009. The bill is sponsored by Senator Mikulski, Senator Kennedy (Chairman of the Senate Committee on Health, Education, Labor, and Pensions), and 51 other Senators.

This is not the first time the Senate has debated the Lilly Ledbetter Fair Pay Act. In the April 2008 (110th Congress), the Senate debated a cloture motion on the motion to proceed to H.R.2831, the Lilly Ledbetter Fair Pay Act of 2007. The cloture motion failed on a near-party line vote of 56 to 42 (60 votes required).

With the start of the 111th Congress, Democrats have once again made protecting American workers from pay discrimination a priority. On January 9, the House passed an identical version of the bill, H.R.11, [7] on a vote of 247 to 141. That bill includes the Lilly Ledbetter Fair Pay Act of 2009 (Title I) and the Paycheck Fairness Act [8] (Title II), which would strengthen equal pay laws and help close the wage gap. (See footnotes for more details.)

On January 15, the Senate is expected to vote on the cloture motion on the motion to proceed to S.181,which includesLilly Ledbetter Fair Pay Act of 2009 as a stand alone measure. The Senate is not expected to take up the Paycheck Fairness Act at this time.

Expected Amendments

At the time of this writing, amendments are expected to S.181. While no specific information is available, the text of Senator Hutchinson’s Title VII Fairness Act (S.166) may be offered. The bill, introduced on January 7, would fail to restore the “pay-check accrual” rule and would keep the rule established by the Supreme Court in the Ledbetter decision and create a narrow, complicated new exception for workers who can prove that they did not know and did not have reason to suspect discrimination within 180 days of the original discriminatory decision.

Administration Position

At the time of this writing, the Bush Administration has not issued a Statement of Administration Policy (SAP) on S.181. In the 110th Congress, the Administration issued a SAP on H.R.2831, which indicated that, if passed, the President’s senior advisors would recommend that he veto the bill.

When President-elect Obama was a Senator, he co-sponsored the Senate version of H.R.2831, entitled the Fair Pay Restoration Act (S.1843). He has continued to be a supporter of the bill and a champion for ending pay discrimination and promoting pay equity.

CBO Estimate

At the time of this writing, the Congressional Budget Office (CBO) has not issued a cost estimate for S.181.

On July 12, 2007, in the 110th Congress, 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. The CBO found that the bill would not increase the number of charges filed with the EEOC or lawsuits filed in court.

CRS Reports

The Congressional Research Service (CRS) has released two reports on S.181:

Jody Feder, CRS, “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.,” available at RS22686.

Jody Feder, CRS, “Pay Equity Legislation,”available at RL31867.




Endnotes

[1] 127 S. Ct. 2162 (U.S.2007), available at http://www.supremecourtus.gov/opinions/06pdf/05-1074.pdf.

[2] Id at 11.

[3] Id. at 28.

[4] Id. at 44.

[5] “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.

[6] Ledbetter, supra at 46.

[7] Under rule H.Res.5, the original version of H.R.11 (Lilly Ledbetter Fair Pay Act of 2009, sponsored by Representative George Miller) and H.R.12 (Paycheck Fairness Act, sponsored by Representative Rosa DeLauro) were voted on separately and then attached to create the current version of H.R.11.

[8] On January 9, Senator Clinton introduced a companion bill to H.R.12, S.182, the Paycheck Fairness Act. The text of this bill was also introduced in the 110th Congress.

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