Wednesday, May 30, 2007
Sitting here as I am in the Starbucks at the Mandalay hotel in Las Vegas, I am behind the curve in the dissection of the Supreme Court's Ledbetter decision, which strictly construed the 180-day time limit under which employees may bring pay discrimination cases under Title VII of the Civil Rights Act of 1964. At first blush, the decision looks great for employers who need some defense against "springing" claims of discrimination that go back many years. Unfortunately, I think that it is highly likely to result in some miserable unintended consequences, none of which will be an improvement on the status quo, of which more below.
Writing for a 5-4 majority, Princeton's favorite son delivered the opinion of the court (the actual opinions, which I have not yet read, are here(pdf)):
The Supreme Court on Tuesday made it harder for many workers to sue their employers for discrimination in pay, insisting in a 5-to-4 decision on a tight time frame to file such cases. The dissenters said the ruling ignored workplace realities.
The decision came in a case involving a supervisor at a Goodyear Tire plant in Gadsden, Ala., the only woman among 16 men at the same management level, who was paid less than any of her colleagues, including those with less seniority. She learned that fact late in a career of nearly 20 years — too late, according to the Supreme Court’s majority.
The court held on Tuesday that employees may not bring suit under the principal federal anti-discrimination law unless they have filed a formal complaint with a federal agency within 180 days after their pay was set. The timeline applies, according to the decision, even if the effects of the initial discriminatory act were not immediately apparent to the worker and even if they continue to the present day....
Workplace experts said the ruling would have broad ramifications and would narrow the legal options of many employees.
In an opinion by Justice Samuel A. Alito Jr., the majority rejected the view of the federal agency, the Equal Employment Opportunity Commission, that each paycheck that reflects the initial discrimination is itself a discriminatory act that resets the clock on the 180-day period, under a rule known as “paycheck accrual.”
“Current effects alone cannot breathe life into prior, uncharged discrimination,” Justice Alito said in an opinion joined by Chief Justice John G. Roberts Jr. and Justices Antonin Scalia, Anthony M. Kennedy and Clarence Thomas. Justice Thomas once headed the employment commission, the chief enforcer of workers’ rights under the statute at issue in this case, usually referred to simply as Title VII.
Without having read the opinion, I'm nevertheless quite confident that the unintended consequences of Ledbetter will not be good for employers, or at least not the employers who actually deserve some relief from vexatious litigation. There are at least three negative results that immediately suggest themselves.
- At the margin, trial lawyers will drive employment cases to state courts and defendants will not be able to remove them to federal court. The result will be that employees from "blue states" with relatively pro-employee courts and protective laws (think New Jersey and California) will get justice, as it were, manifestly different than employees from states with less protective legislation and relatively pro-employer courts. This will increase, rather than decrease, the already considerable incentives for employers to move from states that are hostile to employers to states that are not (see, e.g., my occasional posts on New Jersey's "war on employers").
- This case will motivate the left like few others, and that significantly increases the risk of legislation that goes far beyond reversing Ledbetter. It is also a political gift to the Democrats, because it creates an ideal opportunity to appeal to every voter who thinks he has a grievance against his boss. Watch for new bills in Congress that purport to reverse Ledbetter but also include all manner of new opportunities for the plaintiff's bar. Watch the Democratic presidential candidates fall over themselves to promise employees a raft of new "rights" that they can hire trial lawyers to assert.
- If Ledbetter is not reversed legislatively, trial lawyers will drive disgruntled employees to altnernative bases for bringing claims. The most obvious alternative would be to allege "harassment" on the basis of protected classification -- sex, race, religion, handicapped status, and so forth. Unfortunately, harassment cases are far uglier than mere pay discrimination cases, for they usually involve a personal attack on the character of an individual. Just as a "fault" requirement for divorce triggers no end of nasty allegations between warring spouses, employers should watch for a surge in harassment allegations. As often as not, they will be on the advice of lawyers who need some basis for the complaint they hope to file.
Yes, the Ledbetter decision does ignores the realities of the work place, but so did the United States Congress when it enacted Title VII. Conservatives are right to say that it is not the Supreme Court's job to fix bad legislation, even if it is more than forty years old. Based on the news reports, Ledbetter seems like a good decision about a badly written written law, and it will appropriately drive Congress toward a legislative solution. Unfortunately, the consequences for employers will not be good regardless of the Congressional reaction. If Congress does nothing, it will drive disgruntled employees toward legal responses that are less attractive for everybody. If Congress does react, it is highly unlikely in this political season to confine itself to a simple reversal of Ledbetter. Either way, the labor market is going to get stickier, which will be bad for both employees and employers.
Of course, I would be delighted to hear that I am wrong. Please comment, especially if you are one of the numerous litigators in the TigerHawk community.
I find the paycheck accrual rule to be a common sense reading of the law. The actual discriminatory act is the lower pay - so each paycheck that's lower is another instance of discrimination. That strikes me as axiomatic.
When one thinks of the incentive structures created by Alito's reading, I find it even harder to believe that the Congress didn't intend the accrual rule. With the rule, it pushes companies to reconsider payrates and fix any gender-motivated disparities. Makes sense to me.
W/o the rule, it pushes people to turn into private detectives to discern everyone else's pay, and also incentivizes discovery fishing expeditions to beat the buzzer.
I reach the diametric opposite conclusion to JP's - that it's axiomatic that the decision as to how much to pay a person can be discriminatory, but the actual act of paying then is not.
My salary is set in a similar manner to Ledbetter's, based on an annual performance review, and it doesn't change thereafter until next reviewed. When I get paid every month, no conscious decision is involved; indeed, no conscious thought at all is involved: our payroll computer talks to the bank's payroll computer. Cutting a cheque is an act wholly separate from the antecedent decision as to the value of that cheque. Title VII requires both discriminatory intent and some kind of action; the standard urged by Ledbetter (and the dissent) would uncouple the former from the latter, and worse yet, would eviscerate the filing period.
I have more on the ruling here.
I'm with my co-blogger Simon on the merits of the case.
On your criticism of Ledbetter as increasing the likelihood of competition between states to promote business growth, well, that's federalism in action, so I don't see it as a negative.
the standard urged by Ledbetter (and the dissent) would uncouple the former from the latter
This presupposes we care about this coupling. The world won't fall apart, other areas of law won't be touched - in short, like other formalist arguments, the objection appears to be purely aesthetic.
That said, while I haven't chaged position, the more I think about it, the less clear cut it appears.
JP - I'm not sure I understand the objection. I'm sorry if this sounds condescending, but I'm not sure how else to answer the point: We are concerned about this coupling because Title VII makes unlawful neither action nor discriminatory intent in isolation. Even if that weren't a fairly obvious implication of §2000e-2(2), §2000e-2(h) says explicitly that "it shall not be an unlawful employment practice for an employer to apply different standards of compensation ... pursuant to a bona fide seniority or merit system, or a system which measures earnings by quantity or quality of production or to employees who work in different locations, provided that such differences are not the result of an intention to discriminate."
Thus, if I intend to discriminate against my employee John Doe but never get around to it, I haven't violated Title VII. If I give John's sister, Jane Doe, a pay raise but deny one to John, without any discriminatory intent, I haven't violated Title VII. Only when intent and action are coupled is there a Title VII claim. As Justice Scalia would say, perhaps that seems formalistic, but the law is about form.