Ledbetter v. Goodyear: The Supreme Court Considers Procedural Technicalities That Perpetuate the Gender Wage Gap:
Part Two of a Two-Part Series

Today, the Supreme Court will hear oral argument in Ledbetter v. Goodyear, a case that will determine how to apply Title VII's statute of limitations to claims of gender discrimination in pay. As we wrote in the first column in this series, the Court is reviewing a ruling of the U.S. Court of Appeals of Appeals for the Eleventh Circuit that is extremely hostile to victims of pay discrimination. Under the ruling, a claimant cannot challenge a discriminatory paycheck unless the decision to pay her less because of sex occurred within the last 180 days, or was the most recent pay decision prior to that time. Thus, discriminatory paychecks attributable to earlier decisions are, under this ruling, immune from challenge.

The Equal Employment Opportunity Commission, the federal agency charged with the interpretation and application of Title VII, disagrees with the Eleventh Circuit. But, disappointingly, the United States Solicitor General has disagreed with the EEOC - taking a position that, if accepted, would cripple the agency's ability to enforce Title VII in the pay-discrimination context. The Solicitor General's position, even more disappointingly, is even more draconian that the harsh position the Eleventh Circuit adopted.

If the Supreme Court upholds the Eleventh Circuit's ruling or, worse still, adopts the Solicitor General's view, its decision will predictably harm many victims of blatant pay discrimination, and, more broadly, will exacerbate the gender-based wage gap that currently exists in America.

The Gender Wage Gap: A Persistent Barrier to Women's Equality

While estimates vary, women on average still earn approximately seventy to eighty cents for every dollar earned by a man. The reasons for this disparity are not fully understood, but discrimination against women unquestionably explains at least some significant portion of it.

Discriminatory pay decisions are not an isolated event. Rather, they continue to reverberate throughout a woman's employment life. Even small pay disparities are typically magnified by percentage-based pay adjustments and morph over time into a devastating disadvantage. Indeed, in "Women Don't Ask: Negotiation and the Gender Divide," Linda Babcock and Sara Laschever found that a $4,000 (7.6%) starting pay disparity between a male and a female employee, followed by 3% annual raises, would evolve into a $15,000 annual disparity by age 60. That means the female employee may lose a total of $361,171 over her employment life, while the male employee gains a staggering $568,834 assuming he earns even a modest three percent in interest on the difference.

Discriminatory pay disparities must be susceptible to correction not just when they are first made, but as long as they are being implemented. Otherwise, unless an intervening decision corrects the disparity, a decision to discriminate against a woman early in her career can legally continue to affect every paycheck for the rest of her life, once a brief period of time following the initial decision has passed.

In sum, by immunizing discriminatory pay decisions, the Eleventh Circuit's decision hurts not only individual women, but exacerbates the society-wide gender wage gap that contributes to the financial insecurity of women and children.

Workplace Realities: How Employees Perceive and Respond to Discrimination

In barring Title VII challenges to pay decisions after 180 days, the Eleventh Circuit's ruling places the burden on employees to quickly discern and challenge discrimination in each pay decision very soon after it is made. Such a rule is blind to the difficulties employees face in perceiving and challenging pay discrimination.

Employees typically lack the information they need to be able to discern whether gender bias has suppressed their pay. Many employers encourage confidentiality when it comes to their workers' salaries, and many workers simply do not feel comfortable discussing how much they make. And without access to full information about all of their colleagues' salaries and the underlying reasons (whether legitimate or discriminatory) for the pay differences among them, it is next to impossible for an employee to accurately perceive individual instances of pay discrimination.

Moreover, perceiving bias in pay before the statute of limitations expires is only half the problem. Even if an employee fortuitously learns that a recent pay decision was tainted by gender bias before the 180 days elapse, the pressures not to challenge discrimination are intense. The risks of retaliation are great (as we discussed in a prior two-part series of columns appearing on July 7 and July 11) and many employees are understandably reluctant to rush to file a discrimination claim. Such reluctance is especially likely if the pay disparity is relatively minor, yet, as we noted above, even minor pay disparities create a very significant discrimination-based deficit over time.

The burden that the Eleventh Circuit's rule places on new employees is particularly acute. The code of silence with respect to employee compensation is likely to be especially impenetrable for new employees. The kind of informal connections through which employees learn the salaries of their peers do not exist for new employees. In most reported cases, new employees do not learn about pay discrimination until much later, after the offending pay decisions have long been in place.

Moreover, the deterrents to filing complaints are even more acute for new employees. Retaliation against them is easier to get away with than retaliation against veteran employees: Unlike longstanding employees, new employees will not have the benefit of an established work record (likely complete with periodic positive evaluations) that is necessary to prove an adverse action was not based on job performance, but rather on gender discrimination.

The consequences of retaliation also are likely to be higher for the new employee. Leaving a new job soon after being hired can be a red flag to prospective employers, one that can have long-term career consequences. Employers may infer from a quick departure that an employee may have committed some egregious mistake or demonstrated true incompetence. No wonder, then, that many employees try to stay at their jobs for at least a year or more, even if they dislike them, to make sure to maintain an impressive resume. Filing a complaint, even a meritorious one, against one's employer within the first six months makes that next to impossible.

The Government's Brief: Ignoring the EEOC and the Needs of Workers

Despite the intractable hardships such a rule places on employees, the United States Solicitor General has, as noted above, filed an amicus curiae (friend-of-the-court) brief weighing in on the side of Goodyear, urging an even more draconian position than the Eleventh Circuit adopted. In the government's view, an employee cannot challenge pay discrimination that results from any pay decision outside the 180 day period before the complaint was filed (the lower court at least left open the possibility that an employee could challenge the most recent pay decision prior to that time period). So if there has been no pay decision over the past 180 days, according to the United States, even the victim of blatantly discriminatory paychecks is officially out of luck.

This position directly contravenes the government's own policy guidance, issued by the EEOC in a compliance manual dated July 2005, in which it treats each discriminatory paycheck as separately actionable, regardless of when the initial discriminatory decision was made. Undercutting its own agency, the government now insists that the EEOC's position on this issue "lacks persuasive force and is not entitled to deference."

This attack on the EEOC's competence is highly ironic given the Solicitor General's description of the government's interest in this case: His brief states that the "United States has a significant interest" in this case, in part because a federal agency, the EEOC, enforces Title VII against private employers. But it seems the United States' true interest here is not in vindicating, but rather in ignoring, the views of the agency with by far the greatest stake in this dispute. Unfortunately, the brief tends to reflect the anti-civil rights ideology of the current Administration, rather than the expertise of its enforcing agency, the EEOC, or any interest in robust enforcement of the civil rights laws.

Equally alarming, the government's brief fails to seriously grapple with the information gap confronting employees who would lose their rights unless they challenged discriminatory pay decisions within 180 days. The typical workplace does not have transparent pay scales, nor openly available salary structures. Indeed, many employers even bar employees from discussing their pay with each other - even though such policies are illegal under the National Labor Relations Act - and many others informally enforce workplace norms of confidentiality with respect to salaries. As a result, the vast majority of the time, a worker simply has no way of knowing whether any particular pay decision reflects gender bias.

Why Pay Discrimination Decisions Are Not the Same as Other Types of Discriminatory Decisions

The government's response to these concerns is hardly reassuring. It contends that this predicament - the predicament facing an employee who must challenge each discriminatory pay decision within 180 days of that decision in light of limited salary information -- is no worse than that confronting an employee who, under settled law, has only 180 days to challenge other kinds of discriminatory employment decisions, such as hiring, firing or promotion decisions.

But that is comparing apples and oranges, for these other types of employment decisions are much more likely to tip off an employee about possible discrimination than a discriminatory pay decision is. When a person fails to receive a promotion, for example, at least she knows that she was subjected to an unfavorable employment decision. She probably also knows, or at least can likely find out, who got the promotion. She can search out an explanation from the employer, and evaluate it for signs of discrimination. Granted, there may be more to the story that she cannot find out in the short timeframe allowed for filing a discrimination charge, but at least she is on notice to try to discern what the true reason for the denial of her promotion was: Her gender, or a legitimate business-related reason.

By contrast, when an employee learns of a pay decision, she rarely is told how it affects her salary in relation to her colleagues' pay. Short of a pay-cut, pay decisions are not usually perceived as adverse at all. And even if a pay-cut is imposed, a victim may assume that it was imposed across the board.

Other changes in pay are even trickier. Many employees are simply happy to get a raise - and may have no reason to suspect that others' raises were higher. Thus, the recipient of a 5% raise may be happy to have the extra money, not realizing that her male colleague received a 10% raise, despite a comparable or even lesser performance.

Indeed, a woman who suffers pay discrimination may not even hear of the discriminatory decision at all - for it may not change her pay, but instead may be a decision to increase the pay of a male colleague, while leaving her pay the same.

Yet, under the government's proposed rule, the pay discrimination resulting from any one of these decisions is forever immune from Title VII challenge once 180 days have elapsed from the time of decision. The obvious effect of such a rule is to grandfather in the vast majority of pay discrimination.

Why a Discovery Rule is Not the Answer

One response to these concerns might be to bar challenges to discriminatory pay decisions more than 180 days old, but temper the harshness of such a rule by adopting a "discovery rule" that starts the 180 day clock running only after the complainant knew or had reason to know of a possible violation. The Eleventh Circuit alluded to the possibility of such a result in a footnote anticipating objections to the harshness of its rule, but did not consider whether to actually adopt a discovery rule, on the ground that neither party put forth "equitable considerations" requiring a deviation from the 180-day rule. (The government did not even mention the possibility of equitable tolling - that is, effectively pausing the statute of limitations for a time, due to considerations of justice and fairness -- or of a discovery rule in its brief.)

Still, the possible applicability of a discovery rule is not an adequate answer to the difficulties described above - for a number of reasons. It is not clear, first of all, that a discovery rule applies at all to Title VII pay discrimination cases under existing law, or if it does, how broadly it protects claimants who do not learn until much later that they are receiving discriminatory pay.

Under current law, equitable tolling in such cases may be limited to more restrictive doctrines requiring proof that the defendant actively covered up its wrongdoing, a difficult standard to meet. (Also, in a workplace where the company culture is not to discuss salary, an active cover-up is unnecessary.) Moreover, the Supreme Court has cautioned that equitable tolling should be applied sparingly in Title VII cases--hardly a reassuring warning, given the likelihood that delays in learning of pay discrimination will be, for the reasons we gave above, the norm rather than the exception.

More importantly, even if the Court used this case as an opportunity to explicitly adopt a broad discovery rule for pay claims, such a rule would not solve the problems described above. A discovery rule would probably start the 180 day clock running once the plaintiff learned that a comparable male colleague earned a higher salary. But even this information is unlikely to trigger knowledge of discrimination -- since it is not likely to be accompanied by an explanation from the employer, broader wage data on the workplace, overt signs of prejudice, or any of the other information that enables employees to attribute disparate pay to discrimination.

Lacking such information, research shows that most employees are likely to assume a benign explanation for the pay disparity. While employers may fear employees are champing at the bit to bring any possible discrimination claim, that fear simply does not accord with reality: Overwhelmingly, employees want to believe their employers are acting in good faith, want to stay at their job, and do not want to complain or sue.

Consequently, the application of a discovery rule to Title VII pay claims will not, in the vast majority of cases, enable employees to challenge pay decisions in time to comply with the Eleventh Circuit's rule.

Reliance on a discovery rule to salvage the Eleventh Circuit's ruling creates other problems, as well. It would turn the vast majority of Title VII pay cases into mini-trials over what the plaintiff knew, and when. Because a paycheck is not inherently adverse, does not come with a list of comparators, and is unlikely to be accompanied by an explanation or signs of bias from the employer, it is tricky to pin down the exact point in time when the employee should have known enough to bring a claim. The typical events triggering notice of other types of discrimination are usually absent in pay claims.

In sum, pay discrimination can be silent discrimination - unlike, say, sexual harassment of a "hostile environment" or quid-pro-quo variety, or open mistreatment by a supervisor of employees of a particular gender. Thus, it is especially unfair to start the clock early on employees who seek to bring such claims.

We hope that the Court rejects the approach taken by the Eleventh Circuit in this case, and the even stricter approach advocated by the United States, in favor of a more balanced view -- one sensitive to the country's real interest in closing the gender wage gap and eradicating sex discrimination in pay.