Obama signs Ledbetter Act: What it means to HR
January 30, 2009 by Jim GiulianoPosted in: Employment law, Money, Pay and benefits, Special Report, policies
President Barack Obama signed the Lilly Ledbetter Fair Pay Act into law. Here’s what it means to HR.
The law is retroactive to May 28, 2007, the date of the Ledbetter decision, which means that it will apply to all claims of pay discrimination pending on or after that date.
Summary of the law
The Fair Pay Act, S. 181, alters statute of limitations for pay discrimination claims. It also overrules the U. S. Supreme Court’s decision in Ledbetter v. Goodyear Tire & Rubber Company, Inc. Congress believed the High Court, in Ledbetter, unduly restricted the time period for bringing pay discrimination claims. The new law will will extend the shelf life of claims employees make against their employers.
Under the new law, an unlawful employment practice occurs when:
- the discriminatory pay decision is made
- an individual becomes subject to the discriminatory pay decision, or
- “an individual” (see below) is affected by the discriminatory compensation decision or other practice” — meaning that the deadline for filing a claim starts anew each time an employee receives wages, benefits, or other compensation tainted by the discriminatory pay decision, and may go back as far as two years from the date a charge was filed with the Equal Employment Opportunity Commission.
Broad application of ‘individual’ and ‘payment’
The language of the law also could be interpreted expansively to permit pay discrimination charges to be filed by individuals other than employees, so long as those individuals claim they have been affected by the discriminatory decision. The House rejected proposed amendments that would have clarified that the law applies only to employees.
Additionally, the new law is not limited to discriminatory wage or salary payments; it also applies to payments made under benefit plans, such as pension plans. That means, for instance, retired employees who receive pension payments may bring claims years after their pension plan went into effect.
What to do
You may want to consider
- the length of time you retain compensation and benefits records, and
- a review of your compensation and benefits practices to ensure there are no glitches that could have the appearance of discrimination.
Tags: goodyear, ledbetter, obama, Supreme Court
February 2nd, 2009 at 9:59 am
A colleague of mine has said that he thinks the Fair Pay Act prohibits a written policy not allowing exempt employees to discuss their pay with each other. Is this accurate?
February 2nd, 2009 at 10:30 am
What happens to the female executive that has greater education and experience than her male predecessors and counterparts, but is paid 30% less for the same job?
February 2nd, 2009 at 10:46 am
Things to consider – destroy compensation & benefits records as soon as legally permissable.
– hire women and minorities to avoid the “appearance of discrimination”.
February 2nd, 2009 at 11:00 am
Tom, Spoken like a true Republican! That’s a great way to cover up the fact that you’re screwing your employees! How about just being honest and fair? If you can not pay ALL of your employees a fair wage and still make a livable profit, maybe you need to reevaluate your business model. Far too many business owners these days are looking to make a killing, rather than a living, and this is part of the reason we are heading into recession. Take from the workers to make sure the CEO gets his obscene bonus while the company fails? Is this what corporate America has become?
February 2nd, 2009 at 11:10 am
So, it’s ok to discriminate as long as it doesn’t look like you’re descriminating? What about the premise that this country was founded on, that ALL MEN ARE CREATED EQUAL. That applies to women and minorities, as well.
February 2nd, 2009 at 11:11 am
Tom, you must be joking to suggest such things. A person was discriminated against for years. That type of pay discrimination was finally addressed by the legislators. It was addressed by men, women, whites, minorities, and probably gays as well. Yet the only reference you make is a disparaging remark about women and minorities? Are they not supposed to enjoy the same protections of those that you deliberately left out? Are you suggesting that the body has little enough sense to say that pay discrimination is wrong?
And you also should know that to destroy records in an attempt to hide compensation errors is against the law. Yes, you did say when legally permissible but that was in association with your apparent distain for a ruling that affected women and minorities. It is indicative of an attempt to continue discriminatory actions because to not do so will be inconvenient. Please tell me you were joking or that I have misunderstood your post. As a minority H/R manager I am very shocked that you would find your sugesstions ok to do.
February 2nd, 2009 at 11:16 am
Worth reading for a different, yet relavent perspective….
http://www.heritage.org/Research/LegalIssues/lm34.cfm
February 2nd, 2009 at 11:20 am
What is the retention schedule for compensation and time records? 7 years?
February 2nd, 2009 at 11:27 am
Cheryl – 3 yrs on payroll records
February 2nd, 2009 at 11:28 am
I don’t know what the big deal is. If we are doing our jobs correctly, this legislation won’t affect us. If you do the right thing, it won’t be a problem. If you don’t discriminate, you won’t be sued. If you do discriminate, you should be sued.
February 2nd, 2009 at 11:35 am
I agree with John. I understand that this law might make things harder for HR, but it just makes good ethical sense. If companies want to avoid being sued for violations of the Ledbetter Act, they should do a better job of insuring “all” employees are compensated equally without regards to age, race, sex, … Don’t cover-up your mistakes, do a better job of not making them in the first place.
February 2nd, 2009 at 11:38 am
We are drowning in paper. What is the retention schedule for payroll, expense reports, and labor worksheets? I’m also looking at old personnel files, OSHAA logs, union pension contributions to a union that we haven’t had since 1989. I keep getting conflicting answers.
February 2nd, 2009 at 11:41 am
Mike Kromer Says:
February 2nd, 2009 at 9:59 am
A colleague of mine has said that he thinks the Fair Pay Act prohibits a written policy not allowing exempt employees to discuss their pay with each other. Is this accurate?
_________________________________________________________________________
I don’t know that is or is not true. However it does not stand to reason since under the guidance of other acts that control union activities you cannot prohibit employees from acting in concert with each other.
February 2nd, 2009 at 11:48 am
I’ve always thought that non-exempt employees could openly discuss their pay with each other; exempt employees could not.
mike
February 2nd, 2009 at 11:53 am
The liberalization (Socialism) of America continues. We are going to tie up our courts with yet more gunk, and burden employers with more hoops to jump through. Companies aren’t built for the purpose of providing people with jobs. They are built to turn a profit for the owners/investors that are taking the risks. Yet, the liberals (Socialists) keep insisting that the employers owe the employees a living. People should be fighting their own battles individually over what they think there job is worth. If they feel they aren’t paid fairly it is their right to leave – it should not be a matter of regulation. Employers must find the happy medium between paying fairly and having costly turnover.
February 2nd, 2009 at 11:54 am
My understanding is that employers cannot tell anyone that they cannot discuss their pay.
February 2nd, 2009 at 11:55 am
How about you all get to WORK(Bryan and John)!! Looks like you too much time to BS.
February 2nd, 2009 at 11:56 am
Mike Kromer – the text of “Ledbetter” certainly doesn’t prohibit such a policy, but would those policies be enforceable? It doesn’t seem likely.
February 2nd, 2009 at 11:56 am
Cheryl: To my knowledge, for most states the record retention requirement for compensation and time records is three (3) years.
February 2nd, 2009 at 12:01 pm
John,
I would never advocate anything illegal, but because of this new law, I will look at both the federal and state retention periods for compensation and benefits documents and ensure that they are destroyed when allowed by law. To do anything less does a disservice to my employer.
My employer (like most) does not now, nor ever has, discriminated against anyone based on anything other than their ability to to the job they were hired to do, but I’m not sure how I avoid the “appearance of discrimination” when an individual’s perception is their reality.
February 2nd, 2009 at 12:06 pm
Retention schedules of various records may depend on which state you live in. You should also research your Federal and State OSHA record retention requirements if your employees have exposure to some hazardous materials, so if your compnay has a medical surveilance program you probably have some requirements that go back decades.
In response to Bryan I undersand his angst, but I know that other party members other than Republicans work at keeping their staffs at lowest pay they can get by with, ship work offshore, hire illegals, and take big bonuses. Gosh, some even don’t pay taxes. There are equal numbers of unethical business practices amongst Democrats as Republicans. Hang in there Bryan – if you get Socialism to replace Capitalism as a means to pull out of our current recession/depression, you will only replace government bureaucrats with business owners you despise.
As to overall record retention it has always been a good HR business practice to only keep records for as long as required by law to limit liabilities – and yes,unfortunately, many companies have done so to cover up issues.
Anne – you may be correct in your assumption, but education and experience does not replace proven accomplishments. I have seen many individuals with advance degrees and 30 years of experience be relatively incompetent at mid management or higher levels of work.
February 2nd, 2009 at 12:25 pm
John,
Does your company need a new HR professional? Are you working for the company or against? Part of your job is to keep the company from being a target for lawsuits but it is not your job to make it easy for employees to sue. Are you working for the company or the employees?
February 2nd, 2009 at 12:34 pm
Worrying about how long to keep records seems petty & trite. Shouldn’t we be more concerned that all employees in each position are being paid equally or that there is legitimate documentation saying why anyone is being paid differently?
Anne, whoever is getting paid 30% less than predecessors who had less experience & education, now has more negotiating power. unless employers can now blame it on the economy.
“Anybody can sue anyone anytime for anything” as long as a lawyer will take the case. This new law allows for the person who believes they were disciminated against to sue irregardless of when he/she discovered the alleged discrimination, instead of limiting the time to make the claim to 180 days from date of discrimination. Will it make for more lawsuits? Maybe, but it gives anyone discriminated against a fairer shake. Keep in mind that a jury found in favor of Ledbetter to begin with, but her employer’s lawyers appealed based on the time loophole…the new law closes that loophole. Will some who perceive discrimination incorrectly abuse this law? Sure same as they will the Fair Pay Act or any other laws. Keep in mind that our Republic was designed with the idea that everyone is equal under the law. That concept is still being experimented with.
February 2nd, 2009 at 1:09 pm
Ben Says:
February 2nd, 2009 at 11:55 am
How about you all get to WORK(Bryan and John)!! Looks like you too much time to BS.
______________________________
Ben You are the best argument For the Ledbetter legilation.
February 2nd, 2009 at 1:10 pm
Ben Says:
February 2nd, 2009 at 11:55 am
How about you all get to WORK(Bryan and John)!! Looks like you too much time to BS.
______________________________
Ben, You are the best argument For the Ledbetter legislation. When people have no valuable comment to add they resort to your type of post, low class.
February 2nd, 2009 at 1:13 pm
An HR Professional should be able to work for both the company and the employees at the same time. These should not be conflicting goals.
Those owners/board members need good employees if they want to succeed and make those dollars. Good employees need employers that recognize the value of their employees and work with them to achieve their goals.
Mutual respect and consideration go a long way toward making a successful company.
February 2nd, 2009 at 1:17 pm
Tom Says:
February 2nd, 2009 at 12:01 pm
John,
I would never advocate anything illegal, but because of this new law, I will look at both the federal and state retention periods for compensation and benefits documents and ensure that they are destroyed when allowed by law. To do anything less does a disservice to my employer.
My employer (like most) does not now, nor ever has, discriminated against anyone based on anything other than their ability to to the job they were hired to do, but I’m not sure how I avoid the “appearance of discrimination” when an individual’s perception is their reality.
_________________________________________
I’m glad to know that. However perception is created by what you post. The perception, by your words, was that the legislation was the fault of not discriminating against women and minorities. To say such a thing on an open forum assuming that you have to know that women and minorities are H/R professionals as well, was thoughtless and rude. I will accept that you do not discriminate.
Destroying records because they have expired is one thing. Destroying records because a company does not want to be exposed to their failure of pay discrimination s quite another.
February 2nd, 2009 at 1:19 pm
My thoughts on “What happens to the female executive that has greater education and experience than her male predecessors and counterparts, but is paid 30% less for the same job?”
If the level of responsibility, job functions, and expecations are the same, then education and experience are irrelevant (for either sex) other than meeting the initial qualifications of the position –the pay should be equitable.
February 2nd, 2009 at 1:21 pm
I tend to save everything for 7 years. I understand that saving records longer then necessary may expose us to problems down the road. Its just one of those things that I put on the back burner until I get a moment to sort through everything.
February 2nd, 2009 at 1:25 pm
Sharon Says:
February 2nd, 2009 at 12:25 pm
John,
Does your company need a new HR professional? Are you working for the company or against? Part of your job is to keep the company from being a target for lawsuits but it is not your job to make it easy for employees to sue. Are you working for the company or the employees?
__________________________________________
Does yours?
I do not consider obeying the law working against the company. Do you? I do consider paying the employees according to the law as protecting my company from lawsuit. I did not create this legislation crooks did. Will you support your employer stealing from the employees? I work for the company in this manner. I advocate and support employment law, period. If the law supports the company then by default the company gets my support. If employment law supports the employee then I support the employee. To suggest otherwise is unethical and may rise to being illegal. Maybe that is not what you meant but when you question my professionalism you need to examine your own standing by your own questions.
February 2nd, 2009 at 1:35 pm
The job of the HR Professional should be to balance the best interests of the company while not violating the rights of the employee. If you want to keep your company out of lawsuits then trains them to not break the law.
February 2nd, 2009 at 1:42 pm
John,
“By default the company gets your support”. I rest my case.
February 2nd, 2009 at 1:45 pm
Sharon Says:
February 2nd, 2009 at 1:42 pm
John,
“By default the company gets your support”. I rest my case.
____________________________________________
Ok then I can assume that you would support your company doing unethical things.
Uhhh. . . I rest my case.
February 2nd, 2009 at 1:45 pm
Howard, Just for the record, I don’t belong to any political party. I vote for the PERSON whos morals and values are closest to my own, be they Republican, Democrat, or Independant. I’m not wanting to replace capitalism with socialism either, that’s not the direction we need to go. I own my business and I pay my employees well enough to keep them happy and productive. Sure, I could find people willing to work for less, but I prefer to have long-term career oriented and focused people in my employment. And I perfer to receive less annual compensation myself to sustain that. What I was lashing out at was the fact that Financial District CEOs received billions of dollars in bonus compensation in 2008 (The 6th highest year ever) even as the corporations they work for were failing and requesting assistance from our government. THAT is what I find troublesome. It is possible to pay fairly AND live nicely. Sure my gross revenue is relatively small, compared to major corporations, at only $25M annually, and Mid-sized buisness practices don’t apply to the big fish, but all things considered, there are certainly better options than grossly overpaying your top 2% and underpaying your main workforce.
February 2nd, 2009 at 2:07 pm
Perversely, the Ledbetter Act may actually harm those it is intended to protect. In making employment decisions, businesses would consider the potential legal risks of hiring women, minorities, and others who might later bring lawsuits against them and, as a result, hire fewer of these individuals. Even though this discrimination would violate the law, it would be difficult for rejected applicants to prove. Other employers might simply fire employees protected by Title VII–and especially those who are vocal about their rights under the law–to put a cap on their legal liabilities. Again, this would be illegal, but difficult to prove.
These kind of unintended consequences have been a chief effect of the Americans with Disabilities Act, which prohibits discrimination against individuals with disabilities and enforces that prohibition through civil lawsuits. Today, the disabled earn less and work far less than they did prior to enactment of the ADA, and a number of economists, including MIT’s Daron Acemoglu, blame the ADA for reducing the number of employment opportunities available to the disabled. In this way, by dramatically increasing employers’ exposure to potential liability when they hire members of protected classes, the Ledbetter Act will put members of those classes at a disadvantage in the labor marketplace.
February 2nd, 2009 at 2:13 pm
Mike, bear in mind that a written policy about keeping confidential the personal salary information is not enforceable by law. People have the right to discuss their personal information with whomever they deem appropriate, i.e. a personal friend who happens to be a co-worker. I don’t think that Lilly Ledbetter Fair Pay Act changes anything.
February 2nd, 2009 at 2:20 pm
If one used these postings as a barometer, it is no wonder some companies get into so much trouble. Either not everyone who posts is in HR, or there are far too many incompetent incumbents in HR.
February 2nd, 2009 at 2:34 pm
We all started as a tiny little baby…… when were small we couldn’t talk for ourselves. But now that we are adults and if we feel that someone is not doing right by us. God gave us a voice use it, why should it have to go before the courts before something is done. How many times must one be burnt before saying ouch. Hello, listen up you get what you settle for that is the bottom line. Good luck to all and yes I am a woman.
February 2nd, 2009 at 2:35 pm
Jim,
Sadly you may be right. However this case was less about women and more about the Equal Pay Act violation that just happened to have been commited against a woman. As you have pointed out, which I find telling, minorities and those with disabilities all suffer from the same illegal activity. The telling part is that you do not say that this happens to whites as a class as you did non-white classes. Doesn’t that say something?
Employees that find other illegal ways to saddle women, minorities and those with disabilitiess with illegal actions are out there, it’s true. Proving that is what they did may be difficult, also true. But when they are exposed as the scum they are, I can only hope that the full force of the law will come down on them and those that protected them while doing it. They are the reason we have Title VII, Equal Pay Act, ADA-AA, Unions. If employers and their companies and in some cases their H/R professionals acted legally and and in good faith none of these acts or laws would have been enacted.
What you say is true and as long as it remains true we will be facing more and more regulation to complain about. The blame is not on the victims of illegal discrimination it is on those that either engage in it or accept it.
February 2nd, 2009 at 3:53 pm
Gin, I appreciate what you are saying. If a person has a contract and knowingly, that is informed either by research or other means, settles for less then contractually yes they have no argument. However many businesses do not have individual contracts with their employees. They have a pay scale. Some then set pay even outside of the parameter of their own pay scale. Under the Equal Pay Act basically employees that are similarly situated cannot be paid differently. Let’s say two people have the same education, background experience, job knowledge, same time on the job and in grade and perform the same duties. You can’t pay one much larger sums than you can the other, simplistically, if they are working side by side. Now given the same circumstances and one works mid-night shifts, a differential pay can be paid for the mid-night shift worker because now “similarly situated” has changed. Apparently that is what the Ledbetter legislation is still saying. The significant change is only to the degree that a person finds and can legally substantiate a violation of their rights under the 1963 (been around a long time) Equal Pay Act, that the artificial limiting statue of 180 days be extended to the time the violation is discovered. That is done by each ILLEGAL pay period beginning a new time frame limited to two years retroactively.
The Equal Pay Act in 1963 was primarily enacted because of the gross discriminatory pay as it affected women and minorities however the Equal Pay Act is a protective statute for all. It just so happens that race and gender in our society is still considered fair game to discriminate against.
February 2nd, 2009 at 4:02 pm
For those of you looking for record retention information I found these websites that might be helpful.
http://www.taxpros-plus.com/BusinessRecordRetentionlList.html and http://www.articlealley.com/article_117316_15.html
Hope these help
February 2nd, 2009 at 4:33 pm
I think John, the major impact of Ledbetter is the change in the statute of limitations…
“While different treatment, such as pay disparities, may be easy to prove even after much time has lapsed, because the kinds of facts at issue are often documented and, indeed, are rarely in dispute. More contentious, however, is the defendant’s discriminatory intent, which Title VII requires in addition to proof of disparate treatment. The evidence proving intent can be subtle–for example, “whether a long-past performance evaluation … was so far off the mark that a sufficient inference of discriminatory intent can be drawn.” With the passage of time, witnesses’ memories may fade, stripping their accounts of the details necessary to resolve the claim. Evidence may be lost or discarded. Indeed, witnesses may disappear or perish–the supervisor whom Ledbetter accused of misconduct had died by the time of trial. Sorting out the subtleties of human relationships a decade or more in the past may be an impossible task for parties and the courts, one at which the defendant, who did not instigate the suit, will be at a particular disadvantage. This seems to have been the case in Ledbetter.
The Supreme Court’s decision did not speak to the merits of Ledbetter’s case–that is, whether she had suffered unlawful discrimination years before–but only to the application of the statute’s limitations period. Statutes of limitations, as the Court observed, do serve several essential functions in the operation of law that justify their cost in terms of barred meritorious claims. In general, limitations periods serve five broad purposes.
Statutes of limitations require a plaintiff to bring his or her claim earlier, when evidence is still fresh and the defendant has a fair chance of mustering it to mount a defense. In this way, statutes of limitations serve to prevent fraudulent claims whose veracity cannot be checked due to passage of time.” She, Ledbetter, said she was aware as early as 1992 but did not bring suit until 1998 when she retired.
“Second, statutes of limitations help to effectuate the purposes of law. They encourage plaintiffs to diligently prosecute their claims, thereby achieving the law’s remedial purpose. This is particularly the case for statutes such as those forbidding discrimination in employment practices, where Congress has created causes of action to supplement government enforcement actions. Litigation under such statutes is, in part, a public good, because the plaintiff in a meritorious suit secures justice not just for himself but for similarly situated victims, as well as the public at large, which has expressed its values through the law. Anti-discrimination law is the archetypical example of an area where private suits can promote far broader good. Other victims and the public are best served when workers who believe they have been subject to discrimination have the incentive to investigate the possible unlawful conduct, document it, and then challenge it in a timely fashion. This was an explicit goal of the Civil Rights Act of 1964, whose drafters reasoned that the short limitations period and mandatory EEOC administrative process would lead most discrimination complaints to be resolved quickly, through cooperation and voluntary compliance.
Third, time limits on filing lawsuits prevent strategic behavior by plaintiffs. In some cases, plaintiffs may wait for evidence favorable to the defense to disappear or be discarded, for memories to fade and witnesses to move on, before bringing claims. Particularly under laws that allow damages continuing violations or punitive damages, plaintiffs may face the incentive to keep quiet about violations as the potential pool of damages grows. Concerns that plaintiffs will game the system in this way are so prevalent that an entire doctrine of judge-created law, known as “laches,” exists to combat certain of these abuses. Laches, however, is applied inconsistently, and courts often decline its exercise in enforcing statutory rights. A limitations period puts a limit on the extent to which plaintiffs can game the law by delaying suit.
Fourth, time-limiting the right to sue furthers efficiency. Valuable claims are likely to be investigated and prosecuted promptly, while most of dubious merit or value are “allowed to remain neglected.” Thus, “the lapse of years without any attempt to enforce a demand, creates, therefore, a presumption against its original validity, or that it has ceased to subsist.” Statutes of limitations, then, are one way that our justice system focuses its limited resources on the most valuable cases, maximizing its contribution to the public good.
Fifth, there is an intrinsic value to repose. It promotes certainty and stability. Putting a deadline on claims protects a business’s or individual’s settled expectations, such as accounting statements or income. At some point, surprises from the past, in the form of lawsuits, cease to be possible. As with adverse possession of land, the law recognizes that, though a wrong may have been done, over time certainty of rights gains value.
For these important reasons, statutes of limitation are ubiquitous in the law and have been since ancient Roman times. Limitations periods necessarily close the courthouse doors to some potentially worthwhile claims–an outcome so harsh that it would be “pure evil,” observed Oliver Wendell Holmes, if it were not so essential to the operation of law. That a single good claim has been barred, then, proves not that the deadline for suit is unfair or unwise but only that justice cannot provide a remedy in every case.”
Alas, Congress and the President effectively wipe away a whole way of law in Ledbetter when many other less grevious methods were available within the Congress to effect this and other cases like it. One wonders who this law serves – certainly not justice – perhaps trial attorneys and unions. As previously posted, the impact could well be as it has been with the ADA – far less opportunity for those it was designed to help.
February 2nd, 2009 at 5:29 pm
Jim, that was enlightening. I appreciate your indebt response. Where-as I did know the merits of the Ledbetter case was not considered the postings here have lead a discussion about the merits or lack there-of concerning discrimination. I’ll also defer to your expert coverage of the merits of time limitations.
With that said and fully, after your explanation of time limitations, understand the importance of such can’t agree that this legislation has wiped out a whole way of law. The Ledbetter case also had a limiting provision retroactively of two years. That mirrors most statutes of limitations of civil complaints. So to me that is not new. I’ll admit that there may have been other remedies but what where they? Why didn’t the business community or other factions step forward with those solutions? Could it be that business saw a way to continue an unfair practice at the expense of possibly millions of employees?
Is there a suggestion that the president and a whole body of legislators had no idea of what they were doing and that it would have been better to allow this to be resolved by a system that created and then sanctioned this injustice? Where-as it is clear that individuals could and have used “time” to feather their bonnet is it any more acceptable for business to use a lack of time to feather theirs?
True, all situations cannot be legislated away. But there are those that impact our human capitol to such a degree and are so egregious that it must be addresses. I come from a time well before the Civil Rights Act. It was fought tooth and nail by those that practiced such evil by such terminology as it was not needed, let it solve itself, let us work it out, meddlers having legislation create burdensome laws. Were we to look that in the eye and defer to the injustice for the reason that we can’t legislate everything? Obviously not. This, to me is not different. If the wrong was discrimination it needed to be corrected. If the wrong was a burden of an arbitrary statute of limitations placed upon every other person beyond Ledbetter, then that needed correcting as well.
I thank you for your knowledge however I don’t agree with your conclusion. As with all statutes and manmade solutions only the future will tell how wise it was. We as employers and H/R people expect, by holding employees accountable, for their performance and behavior at our job sites. We have the power to do that. We as employers also are held accountable when we wrong an employee. We are not or at least should not be held to a different standard of honesty than we expect from our employees. I guess that is why I feel so passionate about this.
Thanks for your well written post.
February 2nd, 2009 at 5:51 pm
John,
You said let’s say two people have the same education, background, experience, job knowledge, same time on the job and in grade and perform the same duties, you can’t pay one much larger sums than you can the other, simplistically, if they are working side by side.
Now let’s say one of those two people sitting side by side spends a very large part of his day writing posts to just about everybody who responded to a post on an HR website. Let’s further say that the content of these posts was consistently anti-business, calling employers “scum, criminals, and evil”. Let’s also assume that these many volumnous posts were composed on company time. Should he be paid the same as his counterpart who is working hard for the company? Should the company continue to pay him at all? If he is fired is that discrimination because he is a protected class or is it because he wasn’t doing his job?
February 2nd, 2009 at 6:05 pm
My, my, my. I am done…..
February 3rd, 2009 at 8:05 am
John,
That was a beautifully written post. Well said. Thank you. You’ve renewed my faith in the human spirit.
February 3rd, 2009 at 8:09 am
John – thanks. Yes there were many other simpler solutions to Ledbetter without impact to very long standing legal norms.
Recall that initially, Ledbetter sued under the Equal Pay Act of 1963 (EPA) and Title VII of the Civil Rights Act of 1964, a more general anti-discrimination statute. The EPA, unlike Title VII, has been interpreted not to require proof that pay discrimination was intentional but just that an employer paid an employee less for equal work without a good reason for doing so. For such claims, the EPA imposes a two-year statute of limitations, meaning that an employee can collect deficient pay from any discriminatory pay decisions made during that period, whether or not the employer intended to discriminate in any of those decisions. Title VII, while imposing a shorter filing deadline of 180 days and requiring proof of intent to discriminate, allows for punitive damages, which the EPA does not. Perhaps for this reason, Ledbetter abandoned her EPA claim after the trial court granted summary judgment on it in favor of her former employer.
Under the Ledbetter Act, employees could sue at any time after alleged discrimination occurred, so long as they have received any compensation affected by it in the preceding 180 days. While this would certainly reverse Ledbetter, it goes much further by removing any time limitation on suing in pay-related cases, even limitations relating to the employee’s learning of the discrimination–an approach that is known in other contexts, such as fraud, as a “discovery rule.” This new rule is also broader in that it would apply to any (alleged) discrimination that has had an (alleged) effect on pay, such as an adverse promotion decision. In addition, retirees could bring suits alleging pay-related discrimination that occurred decades ago if they are presently receiving benefits, such as pensions or health care, arguably effected by the long-ago discrimination.
In these ways, the Ledbetter Act will allow cases asserting extremely tenuous links between alleged discrimination and differences in pay, which may result from any number of non-discriminatory factors, such as experience. Employers would be forced to defend cases where plaintiffs present evidence of a present wage gap, allegations of long-ago discrimination, and a story connecting the two. As wage differences between employees performing similar functions are rampant–consider how many factors may be relevant to making a wage determination–a flood of cases alleging past discrimination resulting in present disparity would likely follow passage. In addition to investigatory and legal expenses, employers will face the risk of punitive damages and the difficulty of rebutting assertions of discriminatory acts from years or decades ago.
From my previous post you’ll recall that I believe most large companies will assess the legal risks, accrue monies to pay for legal defense and damages and subtract that from labor dollars otherwise paid to hire new employees and provide benefits and/or precipitate layoffs to accumulate said pool for defense. All will suffer. Small companies will do nothing until hit with lawsuits that a profound effect on their bottom and then make cuts to staff to pay for these suits. All companies will reassess their hiring practices and I believe this act will have the same impact has ADA has. Companies will train management on the impact and danger of Ledbetter and this will have a subtle, yet distinct impact on hiring practices. Fear of suit is a powerful motivator regardless of company policy against discrimination.
It is difficult to explain the cry from parts of the bar that accompanied Ledbetter, given that the plaintiff clearly could have proceeded under the Equal Pay Act without running into a limitations period problem. One explanation is that Title VII, unlike the EPA, allows for punitive damages in addition to several years’ worth of deficient pay. Had she proceeded under the EPA and prevailed, Ledbetter would have received deficient pay going back two or three years prior to filing a charge with the EEOC–about $60,000 according to the trial court. But under Title VII, the case was worth six times that amount, due to a large punitive award.
That result becomes all the more alluring to the plaintiff’s bar when one considers the possibility of follow-on lawsuits and, in limited instances, class actions. A single legal victory against an employer could provide the fodder for scores of lawsuits by similarly situated employees and former employees receiving benefits, each alleging a pattern of discrimination affecting pay, as evidenced by the previous lawsuits. In this way, each lawsuit becomes easier and cheaper to bring than the last. Employers, then, would face the choice of fighting every suit with all their might–because any loss could lead to scores more–or agreeing to generous settlements, even in marginal cases, to avoid the risk of high-stakes litigation.
This may account for the trial bar’s keen interest in the Ledbetter Act–it is among the top priorities of the American Association for Justice (formerly the American Trial Lawyer’s Association)–despite the existence of other, less attractive statutory remedies for those who are the victims of recent or continuing discrimination or unjustified pay disparities.
It is true, as proponents of the Ledbetter Act have noted, that the statute of limitations for Title VII is shorter than most others. There are good reasons for this, though, considering the context in which it was drafted. Chief among them, many Members of Congress, when they considered the Civil Rights Act of 1964, feared that businesses would be overwhelmed with litigation. Others favored voluntary conciliation over litigation. Some might have been concerned that evidence of discriminatory intent would fade away if the limitations period were too long. A relatively brief limitations period certainly satisfies these concerns.
But if Congress believed that it was too short, it had far less drastic and disruptive options at its disposal than effectively eliminating the limitations period altogether. It could have, quite simply, extended the period to two or three years to match the EPA. This would have given employees more time to uncover possible discrimination and seek remedies, without allowing a flood of lawsuits premised on aged grievances. There was more logic to matching the more specific statute’s limitations periods than leapfrogging it so dramatically.
Another option was proposed in the last Congress as the “Title VII Fairness Act” (S. 3209, 110th Cong.). This legislation would have maintained the current limitations period but augment it with a “discovery rule” so that the period begins running only when the employee reasonably suspects, or should reasonably suspect, that he or she has been discriminated against. This approach has the benefit of encouraging employees to investigate and take action on worthwhile claims, while keeping many stale claims out of court. Some courts, however, might twist this looser rule to allow stale claims brought by sympathetic plaintiffs, such as Lilly Ledbetter, who learned about the possible discrimination fully six years before filing a charge. It would have also undermined, somewhat, the clear bright-line rule that a hard statute of limitations provides. Nonetheless, that approach would provide far more certainty, and prove far less disruptive, than eliminating the limitations period.
In any event, an apparent knee-jerk reaction to something that could have been resolved with existing law and tweaks to existing law. The lure of punitive damages is strong for plaintiff.
My advise (and other counsels advise) to all is to retain compensation records indefinitely. The burden has shifted to the employer to defend practices perhaps decades ago. You will also need to tighten up your performance management system and justification for all raises granted and maintain those records if you are providing/ will provide any pension or other wage related benefits that may continue on after an employee leaves your employ.
February 3rd, 2009 at 8:25 am
Sharon
Once more your self serving post reflects a lack of honesty. You are word-smithing me which shows me that you would twist the words and actions of your employee to seek an unfair advantage. You have already made it plain that you do not care about the law or the rights of your people.
Second if my responding is so time consuming then your spending time reading it all must be equally so. Try on your own advice. Whoops! Wait! I forgot; you live beyond what is the same for everyone else. My mistake.
Third I did and will refer to dishonest, deliberately discriminatory employers as scum and other sundry expression. If the shoe fits wear it. As I have explained to this entire board I come from a time before civil rights existed and I fought that battle against scum then and I will now. If fighting and speaking against discrimination offends you that would be one more reason why you are more of a liability to your employer than a help. With the attitudes you have displayed here sooner or later you will be the cause of a lawsuit in your organization.
February 3rd, 2009 at 8:51 am
Someone asked if it was illegal for an employer to have a policy against employees discussing compensation. The answer is yes. However, if the employee comes into possession of compensation information they otherwise would not have as a course of their job and shares that information with others, the employer may take appropriate action subject to a policy statement against said practice.
February 3rd, 2009 at 8:56 am
Jim, again very enlightening.
Allow me to ask a question. You referenced the 1964 Civil Rights Act. This act had a provision that a discriminatory action was actionable rather there was an intent or not. Didn’t the 1994(?) amendment to the Civil Rights Act change that to having to show that discrimination was not only deliberate but additionally was aimed, directed at the plaintiff? If so would that be a mitigating circumstance to the 1963 EPA having to show deliberate intent on the part of the employer?
I’m not a lawyer and you have certainly presented some compelling possibilities. But aren’t similar fears expressed when each new legislation was passed? If so has a reality of those fears been measurable as applied to other civil rights legislation come to fruition? Yes things can happen. But don’t we as H/R people and lawyers always conduct an exercise of ‘what if’ with all new legislation?
February 3rd, 2009 at 9:09 am
Good morning everyone…
I am somewhat confused with the way the economy is at this time with the lay offs. If someone been working on a job for several years and your company hires a person if they are over qualified for the job they are applying for do they start at the pay rate you work yourself up to.
February 3rd, 2009 at 9:19 am
Would have to research for you John. But be aware that Ledbetter amends all applicable acts to provide that an unlawful practice occurs with respect to discrimination in compensation when either
(1) a discriminatory compensation decision or other practice is adopted;
(2) a person becomes subject to the decision or practice; or
(3) an individual is affected by application of the decision or practice, including each time wages, benefits, or other compensation is paid, resulting in whole or in part from the decision or practice.
As previously posted, there have been definitive studies done on impact of legislation like this and my experience on how large employers plan for legal liabilities like this is reflected in my post.
One such study that comes to mind is Daron Acemoglu & Joshua D. Angrist, Consequences of Employment Protection? The Case of the Americans with Disabilities Act.
February 3rd, 2009 at 9:30 am
Thanks Jim. I have learned from you and welcome the exposure of your level of knowledge.
February 3rd, 2009 at 9:42 am
John – just an old HR guy that’s been around a long time….
February 3rd, 2009 at 10:40 am
# Mike Kromer Says:
February 2nd, 2009 at 9:59 am
A colleague of mine has said that he thinks the Fair Pay Act prohibits a written policy not allowing exempt employees to discuss their pay with each other. Is this accurate?
It would be a violation if employers took adverse action against an employee for discussion their “personal” salary with another employee. The right for employees to discuss with other employees is protected in the U.S. by the Department of Labor under the National Labor Relations Act. This act doesn’t change that. Its already been the law. Policies that prohibit discussion of salaries are uninforceable without violating the law. You need to scratch that one from your policies and gently let the executives know it is a dead duck.
February 3rd, 2009 at 10:57 am
Gin
We are a public service organization. People move from one department to another frequently. We will accept certifications from other states and organizations that meet reciprocity requirements. Some coming in were officers in the previous organization and certainly ‘over qualify’ at the entry level requirements. None-the-less they are not similarly situated employees with a person that has been with the organization for a number of years having progressed through the pay scale and now earn what their tenure dictates. With that said and over qualified individual that is a new employee will start at the beginning pay grade for that assignment.
February 3rd, 2009 at 12:44 pm
People, people, people. We may all be created equal, but once created for most of us it’s down hill from there. Good employees should be rewarded and bad ones not. Our gov. seems to keep trying to make us all equal all the time. It kind of reeks of Socialism. If you don’t like your pay, go to work somewhere else. This law like most of them being passed anymore just makes lawyers rich with junk law-suits. The owner of a business should be able to run his business as he sees fit, big profits to him or not. If a business treats it employees bad they will go else where to work, and the business will fail. Government needs to butt-out before all companies move to Mexico.
February 3rd, 2009 at 12:56 pm
Interesting….
The average pay for the 33 men on Obama’s Senate staff was $59,207. The average pay for the 31 women on Obama’s staff was $48,729.91. (The average pay for all 36 male employees on Obama’s staff was $55,962, including interns; and the average pay for all 31 female employees was $48,729.) This according to the public record from the Secretary of the Senate, which covered a six-month period ending Sept. 30, 2007. So while campaigning for women’s rights and equal pay and dissing his opponent on same, his staff had a discriminatory wage structure.
The women working for Obama in his Senate office made, on average, $6,000 less than the men that work for his Senate office. Meanwhile over at Hilary’s office she was paying the at 100% parity and McCain was paying at above 100% while Obama was running at 80%.
One would hope that the women in his Senate office would use the Ledbetter Act to take the now President to task for not practicing what he preached…. the irony would be fascinating.
It is quite possible that the women on Obama’s campaign staff are not as qualified as the men he has on staff and that could very well be the explanation for the difference in pay, yet in that same speech that Obama gave in New Mexico, he addressed a bill he was supporting, called the Lilly Ledbetter Fair Pay Restoration Act which would extend the time women have available to file a complaint.
Ledbetter sued her employer for pay discrimination, but because she had waited too long to bring the complaint, the Supreme Court threw her case out.
McCain agreed with the Supreme Court’s decision and opposed the Fair Pay Restoration Act, saying it would open the door for too much litigation.
Obama criticized that McCain decision, saying, “Senator McCain thinks the Supreme Court got it right. He opposed the Fair Pay Restoration Act. He suggested that the reason women don’t have equal pay isn’t discrimination on the job – it’s because they need more education and training. That’s just totally wrong.”
This leads us to the question of whether the female staffers on Obama’s campaign are less qualified or less trained than the male staffers, to which confirms McCain’s initial assertion, or if Barack Obama is discriminating against his female staffers?
February 3rd, 2009 at 1:46 pm
“One would hope that the women in his Senate office would use the Ledbetter Act to take the now President to task for not practicing what he preached…. the irony would be fascinating.”
Yep, this should prove to be interesting.
February 5th, 2009 at 10:51 am
Oh please, all this wouldn’t have happened if HR paid employees equally in the first place.
I’m fairly new working in HR and am very dismayed at how some HR executives, managers, and generalists treat employees like dirt. It’s appalling how some HR professionals listen to employees with a straight face then as soon as they walk out the office, they laugh, call them names, then curse them out behind their backs.
Well HR professionals I got some news for you, employees are not as stupid as you think they are and how you may want them to be. Remember, YOU are employees of companies too and you’re not exempt from the law. So get off your high horses.
I’m glad President Obama is signing these laws. It’s about time someone got the HR industry straightened out because employees have been treated like dirt long enough. I came into the HR industry for what the HR industry is supposed to be not what it has become.
February 5th, 2009 at 11:43 am
Not sure where you work but in my 40 years I haven’t seen the kinds of HR departments you speak of – I’m sure there are people like that but wouldn’t condemn an entire profession based on your limited experience. The law is not needed – was a pay-off for trial attorneys and unions and addresses a problem that does not exist. Many studies on this….do your homework. The disparity that continues to appear in publication after publication was based on a flawed apples to oranges census bureau report. But if you don’t do your homework, you won’t know this. And of course your President (see my post above) may actually practiced discrimination in his own Senate office while preaching just the opposite. Hypocrite?
February 5th, 2009 at 1:41 pm
Jim, I don’t care if I’ve been in HR one day, wrong is wrong and this has nothing to do with limited experience, it has everything to do with treating people right and fairly. You can dig through your books, studies, articles, journals, history, and criticize President Obama (who by the way is also YOUR President whether you like it or not) all you want, but the Lilly Ledbetter Act would not be in existence if businesses and I repeat SOME HR executives, managers, and generalists paid women equally as men.
You keep calling President Obama a hypocrite, do you fit the notion that it takes one to know one?
February 5th, 2009 at 2:17 pm
To DLorraineH, Welcome to HR.
I’ve been in the HR business for over 20 years and don’t consider myself an expert in this area of discussion but I couldn’t help but notice the frustration in your post. Like every profession and every business there are good people/companies that want to do whats right and fair and there are those that want to get away with what they can and don’t give a hoot about anything else but the bottom line. It sounds like your experience is with that latter. If I were you and that is truly how you feel about your current employer or the HR profession I would find another job or another career. One of HR’s many responsibilties is to represent the employer in matters of policy, guidance, vision and values and if your not aligned with the employer then you can’t possibly do your job. If you truly have a passion for HR, find a different employer, not all companies are like what you are describing.
Good luck
February 5th, 2009 at 2:29 pm
A little frustrated are we?
If our now President discriminated against his own staff but preaches equally to everyone else, he is a hypocrite. Period. Would you disagree? I’m hoping a woman in his Senate office that was underpaid relative to her male staffers takes him to task, unless you think he above the law that he so swiftly signed?
We don’t pass laws in this country just because one person who said she “knew” she was being discriminated against 6 years before she filed suit, failed to file in time to meet the statute of limitations. What was she doing for 6 years? It is interesting that she chose to file her case after her supervisor who allegedly discriminated against her died, so Goodyear did not have the opportunity to bring him as a witness. This is the whole purpose of statute of limitations and the whole crux about this particular law in my view. Equal justice under the law for all. Each side must have the opportunity to present timely information in order that a fair decision can be made.
This president was elected as I recall to fix the economy – yet his very first legislative act was to pass a law that is a windfall to trial attorneys and unions and other special interests. His first act was social engineering on a large scale – playing with centuries worth of law on the statutes of limitations.
If there is real data that suggests this law was actually needed, lets see it. As a trained mathematician, I haven’t seen it. Just because Wolf Blitzer says so on CNN does not make it so or real, yet most people get their “facts” and do their research on television.
From the editor of Forbes in the most recent issue:
If the market doesn’t give workers a fair shake, then decree one. Such is the thinking behind a mountain of statutes enacted over the past century. Sometimes they have the intended effect. Sometimes they backfire.
Federal law forbids discrimination against disabled workers. Who would vote against such a law? And yet, as MIT economists Daron Acemoglu and Joshua Angrist have noted, enactment of the law has been accompanied by a decline in employment for the disabled. Either employers don’t want to make necessary accommodations, or they are afraid of what happens if a new hire doesn’t work out. Overlawyered.com has the 2004 tale of a grocer who was broad-minded enough to take on a clerk with Down syndrome, fired the worker, then was punished with an expensive lawsuit.
Age discrimination is illegal, too. It nonetheless happens on a grand scale–in the hiring office. Joanna Lahey, an economist at Texas A&M University, showed as much by sending out test résumés for entry-level openings for dental assistants, truck drivers and the like. The open question is whether antidiscrimination laws help or hurt the older worker. They may help those who already have work; they may damage prospects for those looking for it, says David Neumark of UC, Irvine, in a recent paper. A 50-year-old’s right to sue is useless to a sales clerk who just got laid off by Circuit City. The same right may make a new employer think twice before taking a chance on him.
Maybe some older job hunters would like to be able to prospectively waive the right to sue for wrongful termination. They can’t. It is presumed that employers would abuse that bargaining chip.
Shocked by tales of workers who lost pensions just as they were about to collect, Congress enacted Erisa in 1974. That didn’t work out too well. The safe monthly pension is fast vanishing in favor of the sketchy 401(k). Other factors, like the drift of manufacturing jobs abroad, contributed to the demise of traditional pensions. But the legal and actuarial thicket created by Erisa didn’t help matters.
Mandatory overtime pay sounds like a win for workers. Maybe it was, in an era of grueling factory jobs. Now it provides a windfall for lawyers, who filed 7,310 cases demanding back pay in 2007, triple the number in 2000. One recent case involves Apple’s network engineers. Throw out your BlackBerry, start punching in. Does this make workers better off?
Confronted with workplace mandates that don’t make economic sense, the market adapts. Hence the rise of the “independent contractor,” the end run around all workplace protections.
——————
As Ronald Reagan said, the 10 most feared words in the English language are: “Hello, I’m from the government and I’m here to help.”
February 5th, 2009 at 2:37 pm
DLorraineH, I guess you have me confused a little. Lets say Employee#1 makes 30 widgets an hour, doesn’t need any assistance, never calls out, and never complains, should get the same pay as employee#2 that can only make 19 widgets in the same amount of time, needs help making them, calls out frequently, and is always complaining about their job. It’s not a male/female thing, it’s a good worker vs not so good worker thing. There are or atleast should be rewards for doing things right. If a person wants the better pay them let them do the better work. Employers hire people to do a job which in turn makes money for the company. You make more, you get more!
February 6th, 2009 at 5:44 pm
Glenn, you are confused at lot. The Lilly Ledbetter Act was signed into law because of pay discrimination and inequality between males and females, not job descriptions and performance.
Using your example, you have a male and a female worker both excellent employees with the exact same job desciption; which one are you going to pay more, the male or female? Why? Keep in mind
February 6th, 2009 at 5:48 pm
Oops didn’t finish. Keep in mind that both employees are high performers on the same level.
February 6th, 2009 at 5:50 pm
Sorry DLorraineH, there is no credible evidence that there is pay discrimination between males and females. Do your homework. The argument was based on a fundamentally flawed Census Bureau report of 2002.
February 6th, 2009 at 6:01 pm
Jim, do your homework are your famous words. So pompous and school teacher of you.
February 6th, 2009 at 6:07 pm
Yes – because people say such stupid things – mostly repeat what they hear on the television. They never take the time to research an issue before taking a position.
February 6th, 2009 at 6:09 pm
Yes – because people say such stupid things – mostly repeat what they hear on the television. They never take the time to research an issue before taking a position.
John Adams: Facts are stubborn things; and whatever may be our wishes, our inclinations, the dictates of our passions, they cannot alter the state of facts and evidence.
Aldous Huxley: Facts do not cease to exist because they are ignored.
February 6th, 2009 at 8:07 pm
Jim, where exactly do you get your facts? Are all media not to be trusted? How about this one?
“Pay Disparity Among the Genders
January 28, 2008
On average, women earn a mere 75% of what men employed in the same occupation earn, according to the editors at JIST, authors of the recently released reference Salary Facts Handbook. The authors of the book shed light on the pay disparities between men and women and offer advice on how women can maximize their opportunity to earn equal pay for their employment. Indeed, in the Salary Facts Handbook, the editors at JIST reveal the 20 best-paying jobs for each gender and many of the occupations in the lists reveal significant gaps between men and women who are employed in the same occupation. For example, male economists earn an average of $103,254 per year, while women economists earn an average of $88,406 per year. Often, professionals are quick to blame gender discrimination for why women seem to struggle to earn equal pay for equal work. The editors at JIST acknowledge that such discrimination has played a role in the wage gap between men and women, but that many other factors also widen the gap. “For most occupations female workers earn less, but this is not always the result of discrimination in the way wages are determined. In some cases the disparity results from choices female employees make about their work arrangements,” says Laurence Shatkin, Ph.D., senior product developer at JIST. The book shares several strategies that women can use to maximize their chances of receiving a fair wage.
Do some research to learn about occupations that have a better ratio of female-to-male wages;
Seek jobs within organizations that have programs in place to recruit women for positions where they have been underrepresented; ”
Be on the lookout for a manager who is a determined and inspiring mentor. Such a manager can accomplish as much for a woman’s career as a formal program might;
Speak with other women who currently work for a particular employer with whom they may be interested;
Remember to consider the availability of female-friendly benefits, such as paid maternity leave.
February 7th, 2009 at 9:08 am
LadyMcB, I totally agree with you. There are numerous reports describing unequal pay between the genders, but I’ve found women don’t get paid the same because we’re so quick to accept the first offer, which is often the lowest. We should research the market value of a position so that we can negotiate a fair pay. I’ve read books revealing how men are far more assertive during salary negotiations than women which result in a higher salary. On the flip side, some women are just as assertive negotiating their salary and still fail to receive equal compensation as men.
I’ve heard people justify the pay disparity saying that a man is considered the leader, major breadwinner, and head of household therefore it’s only logical to pay him more. Women are the submissive and docile ones and should be at home taking care of children anyway; women are paid less because they are the weaker gender. There are more women considered head of household these days and should be compensated fairly and equally.
February 7th, 2009 at 1:06 pm
Thanks Lady….
Would think that the state of journalism in the US is poor and I wouldn’t trust them to research what they report, do the math and substantiate the material they present. They also have an agenda, in large part liberally slanted by their own admission. There are numerous of “unequal pay” because there are numerous reporters and “researchers” reporting the same flawed data.
The data from the Salary Facts Handbook comes from the same flawed DOL study.
There are many people who have pointed out the flwas yet doing so does not sell articles, books or air time. So you’ll never see a story that says Woman Earned 95% of what men earn because that will not sell newsprint and will not sit well with special interest groups who solicit money from you to push this flawed agenda. Here is a brief slightly dated (2008) synopsis of the issues – I can provide much more detailed references for you if you care to jump into this and really understand the numbers:
The Truth About the Pay Gap
By Steve Chapman
New Year’s Day is called that because it begins a new year, and Thanksgiving has that name because it’s an occasion for expressing gratitude. But Equal Pay Day, observed this year on April 24, is named for something that, we are told, doesn’t exist — equal pay for men and women.
The National Committee on Pay Equity used the occasion to announce that among full-time workers, women make only 77 cents for every dollar paid to men. The three leading Democratic presidential candidates have all endorsed legislation to fix the problem.
And the effort got new fuel from a report by the American Association of University Women (AAUW) Educational Foundation, which says women are paid less starting with their first jobs out of college, and that the deficit only grows with time. Pay discrimination, says AAUW, is still “a serious problem for women in the work force.”
In reality, that’s not clear at all. What we know from an array of evidence, including this report, is that most if not all of the discrepancy can be traced to factors other than sexism. When it comes to pay equity, we really have come a long way.
On its face, the evidence in the AAUW study looks damning. “One year out of college,” it says, “women working full-time earn only 80 percent as much as their male colleagues earn. Ten years after graduation, women fall farther behind, earning only 69 percent as much as men earn.”
But read more, and you learn things that don’t get much notice on Equal Pay Day. As the report acknowledges, women with college degrees tend to go into fields like education, psychology and the humanities, which typically pay less than the sectors preferred by men, such as engineering, math and business. They are also more likely than men to work for nonprofit groups and local governments, which do not offer salaries that Alex Rodriguez would envy.
As they get older, many women elect to work less so they can spend time with their children. A decade after graduation, 39 percent of women are out of the work force or working part time — compared with only 3 percent of fathers. When these mothers return to full-time jobs, they naturally earn less than they would have if they had never left.
Even before they have kids, men and women often do different things that may affect earnings. A year out of college, notes AAUW, women in full-time jobs work an average of 42 hours a week, compared to 45 for men. Men are also far more likely to work more than 50 hours a week.
Buried in the report is a startling admission: “After accounting for all factors known to affect wages, about one-quarter of the gap remains unexplained and may be attributed to discrimination”. Another way to put it is that three-quarters of the gap clearly has innocent causes — and that we actually don’t know whether discrimination accounts for the rest.
I asked Harvard economist Claudia Goldin if there is sufficient evidence to conclude that women experience systematic pay discrimination. “No,” she replied. There are certainly instances of discrimination, she says, but most of the gap is the result of different choices. Other hard-to-measure factors, Goldin thinks, largely account for the remaining gap — “probably not all, but most of it.”
The divergent career paths of men and women may reflect a basic unfairness in what’s expected of them. It could be that a lot of mothers, if they had their way, would rather pursue careers but have to stay home with the kids because their husbands insist. Or it may be that for one reason or another, many mothers prefer to take on the lion’s share of child-rearing. In any case, the pay disparity caused by these choices can’t be blamed on piggish employers.
June O’Neill, an economist at Baruch College and former director of the Congressional Budget Office, has uncovered something that debunks the discrimination thesis. Take out the effects of marriage and child-rearing, and the difference between the genders suddenly vanishes. “For men and women who never marry and never have children, there is no earnings gap,” she said in an interview.
That’s a fact you won’t hear from AAUW or the Democratic presidential candidates. The prevailing impulse on Equal Pay Day was to lament how far we are from the goal. The true revelation, though, is how close.
Let me know.
February 9th, 2009 at 8:39 am
Wow. I stayed out of the conversation for a bit to see where it would go and if I really missed something with the passage of the Ledbetter Act. Here is what I have subsequently discovered.
After very wordy post from very inventive people, I have concluded that the conversation has not been about right or wrong or about discrimination. Were that so then those that have pointed to the most obvious reason for the Ledbetter Act would easily win the day. This is about scuing agenized ‘facts’ on a political level. All through some of the post are admissions that discrimination exist yet it is scued to mean something else, ‘choice’ I think was one person’s description as if women choose to be discriminated against. I have seen fancy foot work and tap dancing while realities of people’s lives are ignored so that a point can be made that to have anti-discrimination laws in fact create discrimination. If that is so there is a lot more evil in business that I originally thought.
Yes it is true that any legislation carries with it the fringe of disaster for those clever enough to sit back and figure out how to use it. On the other hand I have seen very clever H/R people here figuring out how to skate this law, sorry to say, because of it being a law from a Democratic President. No, that is not a direct quote but some intent has been very clear. I for one, and thankfully I have seen others, feel we owe our employees fair and equal pay. I for one am not a person that operates out of fear to be sure employees are treated fairly and to obey employment laws nor from political one-sidedness. Others that seem to have a sense that employees are less than employers will continue to be the basis for passage of other employment laws.
Guys you have quoted and mathed many real good sounding things that are the exact opposite of what others have posted that were just as good. I take it with a grain of salt and conclude that this not only was good legislation but well timed. I await the disaster predicted like it was with Title VII. I am saddened that we as a society are still at the point that fairness has to be legislated and still responsible people for that fairness to be administered still fight it with antiquated speech such as, if they don’t like it leave, and such other talk that has been used for decades to further entrench discrimination.
See you guys on another thread. It has been enlightening.
February 9th, 2009 at 10:18 am
It is very interesting to read so many different points of view. I too am somewhat afraid of the possible class action suits that could come of this legislation, but more importantly I am hopeful that HR professionals will utilize this as an opportunity to influence change, if needed. It provides us with a tool to promote equity within our organization(s).
I do often wonder which came first – the chicken or the egg? Do “careers for women with college degrees such as education, psychology and the humanities, pay less than the sectors preferred by men, such as engineering, math and business” because have been predominantly female? What if it was reversed? We will never know the answer to this question, but it’s an interesting thought.
February 9th, 2009 at 12:08 pm
Businesses exist to make profit and generate cash. Those two goals ensure the long-term stability of the business. A stable company that makes a good profit, creates long-term, higher paying jobs to qualified workers. If an individual proves a value to the company, the company should reward that value as it sees fit. If an employee is unhappy with their job, they should leave and find another job. If they are that valuable, they won’t have much trouble finding a better position somewhere else and the company they left will suffer for their leaving and will learn their lesson one way or another. We need to be rewarding performance, not gender, but laws like this set us up to fail to reward performance. If I hire a man and a woman for the same job on the same day but the man performs better over a year’s time I would be afraid to increase his wages because the woman would likely sue me and all the burden is on me to prove I did the right thing. If the woman is the top performer and I pay her less, I will lose her. Why would a company be willing to lose their top performer? That would be stupid and any good business owner will know that. Natural consequences can solve these problems on their own and if less is legislated, less government spending will occur. Less government spending means lower taxes and now we are talking about a real stimulus plan that will actually work. Politicians very rarely have any experience in economics or business leadership and they make things worse by writing labor laws that hurt businesses and by extension, hurt our economy. Non-domestic companies are not burdened like we are and therefore have much lower costs. Lower costs mean lower prices and this is why we have higher unemployment in the US. We are costing ourselves out of business in almost every industry. These laws will put make things worse, not better and we need to get serious about supporting businesses in this country or none of us will get paid (equal or not).
February 9th, 2009 at 12:32 pm
I see this in much the same light as global warming. Assertions based on bad data and manipulated data with demanded political solutions. Supporters claim all the evidence they need to enact legislation has been presented – after all, 2500 scientists told the UN – there is no more discussion for them. The UN report was a political report, not a scientific one. The media does not tell you that 30,000 scientists (9000 PhDs) have questioned the UN report, its data, its manipulation – many of the 2500 scientist have deserted their position. The word is starting to spread that the issue is dead, non-factual, yet our President and his energy secretary are still believers and will undoubtedly burden our employers with additional legislation. So it is with discrimination in pay. The data that floats around to support the assertions and therefore the need for this type of legislation is fundamentally flawed, yet no one does their research any more.
Someone please provide the data that supports the need for such legislation – why was this bill needed at this time? Facts are always helpful in making rationale decisions that affect so many.
February 9th, 2009 at 1:21 pm
Gosh I just can’t help this one.
Jim:
You are guilty of your own assertions. You claim you are a researcher but you only accept those “facts” that you believe are true the same as you say others are doing. You are simply a polar end to a controversial topic cleverly creating your set of acceptable “facts” as you go along. You are very good at researching those ‘facts’ that support your point of view while denying that anyone else is intelligent enough to have ‘facts’ outside of your agenda after all anything that proves otherwise is flawed data because you said it was. I agree with you. Facts are helpful in making rationale decisions. I will also add that those ‘facts’ don’t turn on a “I don’t like this legislation” whim. Data has been provided. It is available to you I’m sure, since you are the self-proclaimed fact finder here. You just don’t like the data.
Bottom line the legislation is here, that is a fact. The legislation was researched by the administration regardless of who likes it or not, that is a fact. The legislation has teeth as much as one might want to fight it, that is a fact. The legislation was created because of an inequity as has all civil rights legislation, that also is a fact. People, businesses, politicians have fought legislative processes at each and every turn especially when they are forced to change a way of doing things that gives them a discriminatory advantage. Discrimination does not have to be deliberate to be harmful. They use your method to do so. That is deny, deny, deny. Dismiss, dismiss, dismiss. ‘The data is flawed.’ ‘There is no other way to look at this’ and then call it fact finding. History proves that to be a fact. Any study of the Civil Rights Act of 1963 and the 1994 Amendment will repeat your language. It was the same argument when discrimination was addressed by Title I and Title II of the Civil Rights Act. The Ledbetter amendment has to be administered or the penalty has to be paid, that is a fact. But of course we do not want facts to get in the way of logic, do we. It is not logical, legal, ethical or moral to discriminate no matter how it is tried to be cleaned up. That is a fact.
I observed your examples of equal pay. They were flawed. You did not present a case of similarly situated employees rather your injected a performance issue that would make the two not similarly situated. Then you attempted to apply equal pay theory to a poor performance issue. Talk about flawed data.
I am open to the possibility of fraud from someone using this legislation. It is equally clear that some businesses are not unfamiliar with perpetrating a form of fraud toward the employee when it comes to equal pay. I don’t see that discussion as forth-coming. Apparently an administration sensitive to the assault on civil rights for equal pay did see it, gender not withstanding. This is anti-discrimination action applied to an amendment that has been in force since 1963. Now all of a sudden the sky is going to fall?
February 9th, 2009 at 1:38 pm
I’m only guilty of being a skeptic John. There is only one source of data on this subject and as I and many others have stated, the study that was done was a flawed data and the headlines that followed were based on an apples and oranges comparison. Why this legislation was needed now and was the president’s first act is mystifying when he was elected to fix the economy. The legislation was purely an act of political payback, nothing more. I am a mathematician by training and I have yet to see the data that supports the argument and the legislation. You should read the Power of Logical Thinking by Marilyn Vos Savant – she cites many examples of politicians using “facts” to make assertions and win votes – she cites an analyzes many made by Bill Clinton in 1992 when he was running. The bottom line is politicians know you won’t look at the numbers – they count it.
BTW -I didn’t site an examples in my posts…
February 9th, 2009 at 1:51 pm
Jim, Per the journalist you’ve decided to trust….”we know from an array of evidence, including this report[by the American Association of University Women (AAUW) Educational Foundation] is that most if not all of the discrepancy can be traced to factors other than sexism.” Yet he quotes that very report as saying “about one-quarter of the gap remains unexplained and may be attributed to discrimination”. He tosses that off as if it is insignificant, But 1 in 4 is NOT insignificant. If your daughter/sister/wife/female friend were in that 25%, was being paid less than a male counterpart, should she not have the right to sue when she found out about it?
And those who say, “if you don’t feel you are being treated fairly just quit” are no different than those who say when someone gets raped, “well she must’ve been asking for it, she must have been in the wrong place and sending the wrong message.” When people feel they are being treated unfairly and illegally they have the right to seek justice. Why just quit so that the company can take advantage of someone else who doesn’t have the knowledge and strength to stand up and fight for equality?
I am not saying people (lawyers & unproductive workers) will not take advantage of this. They will, but get a grip folks, we are a nation of laws in which everyone is supposedly equal under the law. We are not a religous society which accepts that it is okay to treate one gender or race differently. AT least that is not iits ntent, even though many obviously still operate under age old cultural/religious biases.
One thing I have noted is that people avoid confrontation like a plague…they don’t write up in-productive or screw up employees because they don’t want to cope with a face to face confrontation. Anything that is uncomfortable is to be steered clear of. As an HR mngr I have helped people progress and improve in their positions by putting the cards on the table in writing and telling them that unless their work habits improve, their jobs are in jeoprady. Some improved others didn’t. Those who didn’t eventually lost their employement, but there was documentation. Yet I have watched my counterparts, supervisors over other employees, and interestingly, mostly male, just complain but rarely confront or document, and just hope the problem would go away. It usually doesn’t. Instead it blows up in ones face, or drags the company down as a whole, because other workers see the defective worker getting away with whatever. One employee who did sue us, said he got regular raises and was never given a warning notice about any work related issue — actually I did insist on one because I was involved in the problem as it directly related to a client, and because of that one report and other mititaging circumstances, we were able to settle with him for 4% of what he orginally asked. Had there been other reports as I had urged his supervisors to make, he would have gotten nothing. Instead, now his supervisors have warning notices on their records that I wrote for them not correctly supervising their employees, such superivison including honest & fair evaluaitons, and warning notices.
I would really appreciate it if this forum were focused on Human Resource Management instead of policits and talking points. It is our jobs to comply with the law. When we think it is unfair we can appeal to our legislators like any other citizen, or have our companies fund PACs that support our viewpoints.
February 9th, 2009 at 2:16 pm
John, don’t necessarily trust or distrust this particular journalist – he simply points out that any real difference can not be explained which certainly doesn’t mean its discriminatory. If an economist (female) looks at the same data and says if you look at women and men on an equal basis – unencumbered by the demands of family – there is no difference in wages between male and female.
“June O’Neill, an economist at Baruch College and former director of the Congressional Budget Office, has uncovered something that debunks the discrimination thesis. Take out the effects of marriage and child-rearing, and the difference between the genders suddenly vanishes. “For men and women who never marry and never have children, there is no earnings gap,” she said in an interview.” That’s not Jim talking, that is June and I assume she has studied the data carefully as a former CBO official.
So, my point is, that this is far from a certainty (like global warming) yet we’ve rushed through a bill, as our president’s first act, that impacts the statute of limitations in such a negative way – against all legal logic of hundreds, if not thousands of years. As I posted, there were much less dramatic, yet equally effective means of recourse, but this particular bill was chosen.
As I said before, we are employees and we are also leaders in our profession (hopefully). And when we see something done without firm data for action, we should speak out – our president should hear from us and he should be seeking our counsel, not that of trial lawyers and unions in setting workplace policy. Its one of our responsibilities.
I think I am answering the question at the top – what does this mean to me…. It means potentially a lot more needless work, more divisiveness between management and employees, less opportunity for all protected classes in the long run,and more expense for my employer.
February 12th, 2009 at 9:29 am
Are White Males entitled to anti-discrimination? I hear of laws and complaints all the time about minorities and females. If minorities and females truly believe in anti-discrimination; they should also agree that anit-discrimination applies to everyone. I know for a fact that in many cases; minorities and females are given preferential consideration in hiring practices of companies and also in the U. S. government. Government requirements for companies to hire certain percentages of minorities or females leads to discrimination (i.e. a company may not be able to hire a better qualified white male because doing so would be considered discrimination). That is also discrimination (not being able to hire a white male).
February 12th, 2009 at 1:00 pm
Thomas Says:
February 12th, 2009 at 9:29 am
Are White Males entitled to anti-discrimination?
John Says:
Anti-discrimination laws apply to everyone. Title VII enumerates protected classes because of the specific discrimination directed at such groups because of the class they are.
Thomas Says:
I hear of laws and complaints all the time about minorities and females.
John Says:
Could it be that you hear of complaints all of the time because there are discriminatory actions that occur all of the time? Has it escaped your attention that the anti-discrimination laws were not passed, studied, or enforced by a majority of minorities or women but by an overwhelming legislative and judicial body that was and is white male?
Thomas Says:
If minorities and females truly believe in anti-discrimination; they should also agree that anti-discrimination applies to everyone.
John Says:
If white males truly believe in anti-discrimination minorities, women, the disabled, military veterans, those that have different religious values, national origin and sexual orientation to name a few, who are all included in anti-discrimination legislation, there would have been no need for the legislation to begin with. It is especially interesting that you selectively ignore the centuries of discrimination against minorities and women and others so named, while you portray relatively small numbers of reverse discrimination as if centuries of other discrimination are less important.
Thomas Says:
I know for a fact that in many cases; minorities and females are given preferential consideration in hiring practices of companies and also in the U. S. government. Government requirements for companies to hire certain percentages of minorities or females leads to discrimination (i.e. a company may not be able to hire a better qualified white male because doing so would be considered discrimination).
Johns Says:
Then you must not be familiar with the multiples of courts decisions made by the Supreme Court beginning with 1994 amendment to Title VII of the Civil Rights Act. You don’t keep up with judicial trends or you would know there is no legal preferential treatment even in college and university selection for minorities but there still is for whites. Only it is called net-working, closed clubs, alumni children, friends in high places, inner circles or just out right tweaking the system so that you may still have a color advantage.
Thomas as a minority I take umbrage at your uneducated assumptions to place discrimination as legitimate on female and non white victims by your deliberate twist and omissions while placing reverse discrimination as more important. Sorry but it is ignorant thinking such as this that continues the gender and racial divide and will continue further anti-discrimination legislation.
February 12th, 2009 at 3:35 pm
Lady Mcb said:
“I would really appreciate it if this forum were focused on Human Resource Management instead of policits and talking points. It is our jobs to comply with the law.”
This discussion did trend towards opinions on the policy and away from the enforcement of it. I, for one, would like to hear more feedback on how we can honestly enforce something like this while still being fair to all applicants and employees. The burden is on the company to prove performance discrepancies and in the case of Ledbetter, poor performance was proven but she still received the award. I work in the manufacturing industry where the majority of employees in my area are male. Because the pool of female applicants for a lot of my jobs is much smaller and a lot of them have only recently entered the field, the majority of my highest performing employees are male. Most of the employees who have been here 10 years or more are male. On the surface, it appears we favor males but we actually base everything on performance. Even if we win, a lawsuit would be expensive enough to really hurt my company. I would love to hear thoughts on this…
February 12th, 2009 at 4:02 pm
I feel your pain Lajeli. I am also in manufacturing and have a situation similar to yours. Most of our competition has moved their operations out of the country. (It’s not all about wages… you know?) At this point the law is so new that I’m just hoping I get ideas from reading about some other poor victims case rather than everyone else learning from reading about mine. The problems with most of these laws are the adverse consequences. Unfortunately this blog has been so full of “go ahead, knock that chip of my shoulder!” that there has been very little constructive discussion about how to deal with it. At least it has been that way for me. If I can just hold out about four more years, and the country is still in decent shape, I AIN’T GONNA WORRY ABOUT IT NO MORE!!!!
February 12th, 2009 at 4:05 pm
Documentation. Employment records indicating date of hire, compensation progression, training, performance reviews that are accurate and can’t be turned into a ‘pretext’ by the employee are a few or the things we all have to protect our employer. Lawsuits may be inevitable unfortunately. Cost may be minimized by having proper documentation.
Having more males at a higher pay rate than females is not the real issue. It is having a compensation system that pays similarly situated employees comparably.
February 13th, 2009 at 6:02 am
[...] First, a quick recap of the law (see “Obama signs Ledbetter Act: What it means to HR”): [...]
February 16th, 2009 at 2:24 pm
I have a retention scheduled provided to me by our accounting department. Retention time is as follows:
1. Payroll records and summaries, including payments to pensioners – 7 years
2. Employee Personnel Records (after termination) – 6 years
3. Vouchers for payments to vendors, employees, etc. (includes allowances,
and reimbursement of employeers, officers, etc., or travel and entertainment
expense – 7 years
Anything else, let me know — the rest of you answering 3 years could get in BIG trouble.
February 16th, 2009 at 4:40 pm
I guess Obama didn’t have anything bigger to deal with right now. I think he needs to prioritize his agenda.
February 16th, 2009 at 5:01 pm
Bill, Our government system requires that the President (no matter who he is) sign or veto any bill that passes Congress. Obama didn’t bring the bill to Congress…Congress brought it to him. He’s dealing with all kinds of bigger deals, like the economy, _____, the war, the middle east, etc., etc. How about all the critics take a break, at least for a few months & give the new guy a chance, and maybe prioritize their own job duties.
February 17th, 2009 at 8:17 am
Would agree with Bill. He could of left it on his desk and not signed it – he’s not required to sign anything sent to him by Congress. It would have sent a message to the Congress on what is important. However, since he co-sponsored this bill in the senate and social engineering is one of his big agendas, signing this was political pay-back to the trial lawyers that supported him and the unions and made perfect sense. Not what he was elected to do, but what the lawyers and unions wanted (more to come for them btw). I’d like to give our President a break, but spending $750B on mostly pork and special interests – $750B that our children and theirs will have to repay someday (and more to come) is a mistake. How does building roads and bridges and unneeded labor laws help those 450,000 people laid off from Fortune 500 companies since November? How does a laid off worker from GM, Nike, WalMart, Emerson Electric, Macys, Kodak, etc… benefit from any of this? Labor unions benefit but not the general public that need jobs, not equal pay acts.
February 18th, 2009 at 11:00 am
John, you can site all the facts you want; however, I know for a fact (after 7 years on recruiting duty in the military) that blacks qualify to enlist and can enilist in the military service with a lower AFQT (Armed Forces Qualification Test) score than whites. For true non-discrimination (which I am for) every person (black, white, or any other race) would be required to score the same. You can sit back and call my (so called assumptions) uneducated if you desire; however, the fact is that blacks are given preferential treatment in hiring practices of the United States Military.
February 18th, 2009 at 11:45 am
Thomas
As with all cases you may find some things are practiced or done differently for other legitimate reasons. Where-as you may be correct with a military test, the assumptions are for reasons strictly related to the military. As you should know private industry, municipal governments, state governments, federal policies and military policies operate with different standards under the law and all have different protections. So you are still uneducated and fact less when it comes to state sponsored or presuming Title VII sponsored affirmative action.
To me your attempt to broad brush is typical of single mindedness mentality for something you personally do not like. There was not one thing in my post that you are referencing that well . . . was not a fact. You may attempt to debate that but, sorry, you are wrong. In fact it is starting to sound to me that you have larger issues well beyond the Ledbetter legislation. Can’t help you or sympathize with that.
February 18th, 2009 at 12:50 pm
Ledbetter Act giving HR big headaches already – http://www.hrlegalnews.com/ledbetter-act-giving-hr-big-headaches-already/
And so it begins….