A January 9 Wall Street Journal editorial opposing legislation to overturn the Supreme Court decision in Ledbetter v. Goodyear Tire & Rubber ignored the effect of the Ledbetter decision on employees who were unaware for long periods of time that they had received lower pay due to discrimination. In fact, the decision penalizes such employees by preventing them from suing after a statutory period, even if they continue to receive lower pay and even if they do not learn they are being discriminated against until long after the initial act of discrimination.

The editorial stated, “The Lilly Ledbetter Fair Pay Act is an effort to overturn a 2007 Supreme Court decision, Ledbetter v. Goodyear Tire & Rubber. Lilly Ledbetter had worked for Goodyear for almost 20 years before retiring. Only in 1998, after she took her pension, did she sue and allege wage discrimination stretching back to the early 1980s. The Supreme Court ruled 5-4 against her, noting the statute [Title VII of the Civil Rights Act of 1964] clearly said claims must be filed within 180 days, or sometimes 300 days, of the discrimination." According to the editorial, the Ledbetter decision “put to rest Ms. Ledbetter's creative theory that decisions made decades ago by a former boss affected her pay all the way to retirement, so that each paycheck was a new discriminatory act and thus fell within the statute of limitations.”

But according to Justice Ruth Bader Ginsburg's dissent in Ledbetter, the case harms employees who are unaware that pay discrimination has occurred for a prolonged period of time. Ginsburg stated that a plaintiff's longtime lack of knowledge that discrimination has occurred is not unusual in pay discrimination cases, pointing out that in the case at hand, the employer, Goodyear, “kept salaries confidential; [and] employees had only limited access to information regarding their colleagues' earnings.”

Ginsburg later added that if the pay discrimination occurs in the form of a woman receiving a smaller pay raise than her male counterparts, it may be impossible for a woman to sue when the discrimination first occurs: “She may have little reason even to suspect discrimination until a pattern develops incrementally and she ultimately becomes aware of the disparity. Even if an employee suspects that the reason for a comparatively low raise is not performance but sex (or another protected ground), the amount involved may seem too small, or the employer's intent too ambiguous, to make the issue immediately actionable -- or winnable.”

From Ginsburg's opinion:

Pay disparities, of the kind Ledbetter experienced, have a closer kinship to hostile work environment claims than to charges of a single episode of discrimination. Ledbetter's claim, resembling Morgan's, rested not on one particular paycheck, but on “the cumulative effect of individual acts.” She charged insidious discrimination building up slowly but steadily. Initially in line with the salaries of men performing substantially the same work, Ledbetter's salary fell 15 to 40 percent behind her male counterparts only after successive evaluations and percentage-based pay adjustments. Over time, she alleged and proved, the repetition of pay decisions undervaluing her work gave rise to the current discrimination of which she complained. Though component acts fell outside the charge-filing period, with each new paycheck, Goodyear contributed incrementally to the accumulating harm.

The realities of the workplace reveal why the discrimination with respect to compensation that Ledbetter suffered does not fit within the category of singular discrete acts “easy to identify.” A worker knows immediately if she is denied a promotion or transfer, if she is fired or refused employment. And promotions, transfers, hirings, and firings are generally public events, known to co-workers. 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. Tellingly, as the record in this case bears out, Goodyear kept salaries confidential; employees had only limited access to information regarding their colleagues' earnings.

The problem of concealed pay discrimination is particularly acute where the disparity arises not because the female employee is flatly denied a raise but because male counterparts are given larger raises. Having received a pay increase, the female employee is unlikely to discern at once that she has experienced an adverse employment decision. She may have little reason even to suspect discrimination until a pattern develops incrementally and she ultimately becomes aware of the disparity. Even if an employee suspects that the reason for a comparatively low raise is not performance but sex (or another protected ground), the amount involved may seem too small, or the employer's intent too ambiguous, to make the issue immediately actionable -- or winnable. [citations and footnote omitted]

In addition, the Journal editorial asserted that Ledbetter had waited until after “she took her pension” to sue for discrimination. This assertion ignores the finding by the Court of Appeals for the 11th Circuit -- which ruled against Ledbetter -- that she filed her formal charge of pay discrimination with the Equal Employment Opportunity Commission (EEOC) in July 1998. This was before Goodyear, as the court noted, made the plant where she worked eligible for the company's early retirement plan in August 1998, and before her retirement became effective on November 1, 1998.

The editorial also described Ledbetter's contention that each paycheck constituted a discriminatory act as a “creative theory,” suggesting that this was a novel way of evading the statute's generally accepted limitations. But as the Supreme Court's majority opinion noted, the court took the case "[i]n light of disagreement among the Courts of Appeals as to the proper application of the limitations period" and compared the 11th Circuit's decision that they were reviewing to 2005 cases from the D.C. Circuit and the 2nd Circuit. Ginsburg elaborated on this point in her dissent:

On questions of time under Title VII, we have identified as the critical inquiries: “What constitutes an 'unlawful employment practice' and when has that practice 'occurred'?” Id., at 110. Our precedent suggests, and lower courts have overwhelmingly held, that the unlawful practice is the current payment of salaries infected by gender-based (or race-based) discrimination -- a practice that occurs whenever a paycheck delivers less to a woman than to a similarly situated man. See Bazemore v. Friday, 478 U. S. 385, 395 (1986) (Brennan, J., joined by all other Members of the Court, concurring in part) [emphasis added].

Ginsburg also noted that the EEOC agreed with what The Wall Street Journal referred to as the “creative theory”:

Similarly in line with the real-world characteristics of pay discrimination, the EEOC -- the federal agency responsible for enforcing Title VII, see, e.g., 42 U. S. C. §§2000e--5(f), 2000e--12(a) -- has interpreted the Act to permit employees to challenge disparate pay each time it is received. The EEOC's Compliance Manual provides that “repeated occurrences of the same discriminatory employment action, such as discriminatory paychecks, can be challenged as long as one discriminatory act occurred within the charge filing period.” 2 EEOC Compliance Manual §2--IV--C(1)(a), p. 605:0024, and n. 183 (2006); cf. id., §10--III, p. 633:0002 (Title VII requires an employer to eliminate pay disparities attributable to a discriminatory system, even if that system has been discontinued).

From the Journal editorial, headlined: “Trial Lawyer Bonanza”:

Well, that didn't take long. Democrats are planning to kick off the legislative portion of the 111th Congress as early as today with two big donations to one of their most loyal retainers: the plaintiffs bar. Higher labor costs will result from a pair of bills designed to create new lawsuit possibilities in cases of alleged wage discrimination.

The Lilly Ledbetter Fair Pay Act is an effort to overturn a 2007 Supreme Court decision, Ledbetter v. Goodyear Tire & Rubber. Lilly Ledbetter had worked for Goodyear for almost 20 years before retiring. Only in 1998, after she took her pension, did she sue and allege wage discrimination stretching back to the early 1980s. The Supreme Court ruled 5-4 against her, noting the statute clearly said claims must be filed within 180 days, or sometimes 300 days, of the discrimination.

That ruling put to rest Ms. Ledbetter's creative theory that decisions made decades ago by a former boss affected her pay all the way to retirement, so that each paycheck was a new discriminatory act and thus fell within the statute of limitations. Yet that is exactly the theory Congress would now revive with the Ledbetter bill. There would no longer be time limits on such discrimination claims. They could be brought long after evidence had disappeared or witnesses had died -- as was the case with Ms. Ledbetter's former boss.

For the tort bar, this is pure gold. It would create a new legal business in digging up ancient workplace grievances. This would also be made easier by the bill's new definition of discrimination. Companies could be sued not merely for outright discrimination but for unintentional acts that result in pay disparities.

Since these supposed wrongs could be compounded over decades, the potential awards would be huge. Most companies would feel compelled to settle such claims rather than endure the expense and difficulty of defending allegations about long-ago behavior. The recipe here is file a suit, get a payday. And the losers would be current and future employees, whose raises would be smaller as companies allocate more earnings to settle claims that might pop up years after litigating employees had departed.