The Public Policy
Blast from the Past
In their first act, President Obama and the Democratic Congress bring discrimination claims back from the dead.
In the first new law passed by Congress and signed by President Barack Obama, the Lilly Ledbetter Fair Pay Act overturns a U. S. Supreme Court ruling against its namesake.
Lilly Ledbetter, who worked for Goodyear from 1979 through 1998, filed a discrimination claim in May 1998 alleging that she had to rebuff sexual advances of her foreman boss in the early 1980s, and that his unflattering write-ups of her work led to her being underpaid for nearly 20 years. Having stayed on the job, collected money for working and retired receiving additional benefits, she subsequently sought compensatory and punitive damages for actions dating back more than 20 years prior to the time of the trial.
A jury awarded her $228,438 in back pay (including $4,662 for mental anguish), and $3,285,979 in punitive damages. The allegedly harassing supervisor was dead by the time of the trial, so it was Ms. Ledbetter’s word against his coffin. She then conflated her sexual harassment claims along with a claim of equal pay for equal work, inviting a mind-numbing review of her roles over the years. The case ended at the Supreme Court in 2007, which overturned this psychodrama by affirming the Equal Employment Opportunity Commission’s rule that claims of discrimination be made within 180 days of the actual discrimination.
A key risk factor for investors in the current economic crisis has been the rapid loss of the rule of law. The rules keep changing. As the banking contagion spread, some firms — like AIG, Fannie Mae and Freddie Mac— were rescued, while others — like Lehman — were killed. Investors panicked because they no longer knew the rules and the credit markets completely seized up.
As its very first order of business, Congress has created an opportunity for the same kind of panic in the market for employing women. With the passage of this new law, there will be no statute of limitations for any transgression, ever, and every conceivable slight will be valid litigation grounds — forever. Even the death of the discriminator won’t stop the case. (In fact, as we can see from Lilly Ledbetter, it only helps.) It will be a rock festival of nuisance lawsuits and awards. At the margin, Human Resource departments will expand; productive employees will pound salt.
When Congress passed the higher minimum wage law in May 2007, teenage unemployment was about 15%. One year later, it was over 20% — the unintended consequence of making teens more expensive to hire. By this summer it could be even higher.
Lilly’s law may have a similar impact on women. From December 2007 through December 2008, men’s unemployment rate went from 4.4% to 7.2%, while women’s unemployment rate went from 4.3% to 5.9%. Women are employed at higher rates so there must be widespread discrimination, right? One unintended consequence of this act may in fact be greater discrimination against women. Given two equal candidates for a NEW job, the female may now be viewed as carrying greater financial risk from the increased long-term potential for litigation because of Lilly Ledbetter’s Act. And perhaps fewer women will be hired compared to men.
If the unemployment rate for women had been heading towards 8% in the next year or so, I would guess this new law will add at least one or two percent to their top unemployment rate and it will add to the number of hall monitors hired to mitigate liability. The market will have the job of discounting this additional millstone, and I doubt it will like it much.
With this opening act, Congress shows itself to be truly unserious about making it easy for business to take risks and hire people. This law represents a giant step towards copying the mediocrity of European socialism, with its persistent 10% to 12% unemployment rate in good times.
Once upon a time, only murder had no statute of limitations. Now murder one charges and EEOC claims have the same lease on life. Lilly Ledbetter’s law puts the future behind us, and promises an endless rehash of the past. Only ghosts live in the past all the time. Congress is taking us to the dark side.
Letter to the Editor View all comments (37) | Leave a comment
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Appleby| 2.3.09 @ 6:56AM
And when did the lawyers start going hmmmm?
When fifty-year-old abuse charges began to bankrupt the Catholic church, and the public said *hurrah!*
Think about it.
Melvin| 2.3.09 @ 6:59AM
This is Barrack Obama's payback to the trial lawyers for their support. This law will be like a bad case of the Jock Itch, irritating as hell and will never go away.
Companies aren't going to deal with this ill conceived law they'll just go out of business or move off shore.
Tom Hanks once said in the movie Philadelphia, "What do you call ten thousand lawyers at the bottom of the sea?..A good start.
Trial lawyers are the bane of this nation and with this new law will descend upon the nation like a plauge of money grubbing bottom feeding hungry locusts.
JP| 2.3.09 @ 8:47AM
I don't think the trial lawyers and the Dems quite realize that the gig is up. Maybe they do, and this is just one last effort. For 30 years we could afford costly litigation because this nation could generate wealth like never before. Now that we lost some $10 trillion in aggregate wealth it will be interesting to see how tolerant we will be of one the most parasitic industries known to man: the litigation industry. The pickings will indeed be slim.
Appleby| 2.3.09 @ 10:55AM
Melvin, with your attitude toward trial lawyers, the next time you are in trouble, I hope you will have the decency to phone a member of Code Pink or some other hippie of your choice, to get you out of it.
Pingback| 2.3.09 @ 11:20AM
Obama Governing Mistake #1 « The Practical Philosopher’s Blog links to this page.
Bryan St. James | 2.3.09 @ 11:44AM
Just as every Democrat feel-good expansion of the minimum wage reduces the total number of minimum wage jobs, so will this flawed law hurt in practice, the very group (women) it purports to help! Leftists just seem to lack the wisdom to see this theory-practice gap on almost every idea they advance...
Read the rest of this post: http://pracphilosblog.wordpress.com/2009/02/03/obama-governing-mistake-1/
Len| 2.3.09 @ 11:51AM
Data can be rigged to favor an argument, and when even a liberal paper like the Washington Post puts out articles(Summmer of 08, don't recall date) saying that the alleged difference in pay is not what most make it to be, that should get people thinking. ANYHEWW, the real issue is that government, certainly the Federal government has no authority to tell anyone what to pay someone. This kind of law borders on seizing public domains, essentially saying that someone's resources/property are not theirs to with as one pleases. Nowhere in the Constitution is any such power given, so once again we have a law passed IN DEFIANCE of the limits of the Constitution.
Stan Redmond| 2.3.09 @ 12:29PM
This will be easy to fight but not very politically correct. Businesses should simply stop hiring women. Now that the flood gates are opened the ONLY way to protect your business will be to not have women working for your company.
David Govett| 2.3.09 @ 12:54PM
About 95% of blacks voted for Obama. Where can I sue for discrimination against McCain?
Pingback| 2.3.09 @ 3:31PM
Blast from the Past « Depravity links to this page.
jaywhite| 2.3.09 @ 4:19PM
Obama has "accomplished" a lot in his short time in the White House. Bill Clinton was correct. Obama is nothing more than a Chicago Thug politician. Obama is the 21st century's Boss Tweed. Everyone gets their paybacks,except of course, the middle to higher middle class white males who dared not to vote for the Messiah. Notice how "compassionate" Obama is to the several million predominantly white Kentucky residents who have been without electricity for almost one week. It makes Katrina look mild in comparison. But, of course, no Katie Couric, Geraldo, and other news readers are covering this. Obama is too busy having $100 /lb steak and other goodies to spend even one minute on whites in a state which went for McCain. What a surprise !!!!!!!
Robert Rosencrans| 2.3.09 @ 4:56PM
This was simply another ill thought at slap at corporate America. The public loves these laws, believing that corporations are evil. What the public fails to understand is that they pay for everything and every policy the government implements. The public pays through companies moving jobs overseas in response to ridiculous legislation like this, or the public pays when companies are forced to raise the cost of their goods and services in response to higher insurance rates.
Companies are in a no win position in this situation and I predict many lawsuits will come out of the woodwork in response to the passage of this law. I also predict many companies will go out of business as the result of the thousands of lawsuits to come.
Joe| 2.3.09 @ 5:14PM
Appleby, of course all of the smoke from all of these cases and no fire with the priest? Come on. They were guilty and the Church did nothing for years and after the lawsuits still did very little. Don't try to roll this up with the real problems with false lawsuits.
Jim C| 2.3.09 @ 5:29PM
Everything made in America is so expensive because of all the labor and insurance costs. Unions and minimum wages are partially to blame...just like the trial lawyers and frivolous lawsuits. There's no incentive for companies to stay in the US. Congress and B.O. just don't get it.
Sean S.| 2.3.09 @ 6:27PM
"With the passage of this new law, there will be no statute of limitations for any transgression, ever, and every conceivable slight will be valid litigation grounds -- forever."
- Wow, not quite... In fact the law maintains the 180 days of limitation but says that it begins anew after each instance of discrimination instead of only the first instance of discrimination. Originally the law permitted continuuing mistreatment as long as the initial action was kept secret for 180 days. Blatant misrepresentation on your part Mr. Singer.
Interloper| 2.3.09 @ 9:37PM
This entire rant is "blatant misrepresentation." The major effect of the Ledbetter Act is to provide a longer window for women harmed by unequal wages to, first, learn they are being underpaid, second, document the problem, third, exhaust administrative remedies, and finally, file a complaint with the EEOC. The most difficult aspect is often finding out about underpayment since most employees are not privy to others' salaries.
The continuing injury theory is already pretty common in personal injury and other kinds of tort law. It has also been used in regard to child abuse and sexual abuse, other situations in which the victims are weak compared to the perpetrators.
Like many women, and, male employees without much power, Ms. Ledbetter had little choice regarding her work options. It is not that people do not care they are being wronged, it is that there is often little they can do about it. Now, in this context, women have an option to pursue equal pay without jeopardizing their employability.
Len| 2.4.09 @ 10:02AM
The premise of your comment is false. Ms. Ledbetter accepted a job at a certain pay scale, and that's that. No company is obligated to pay anyone beyond what they want, AND there is no power given in the Constitution to take away the rights of a business to give wages according to their policy. Nothing was stolen from her thus no wrong, and don't give me that garbage about "social justice", there is nothing of any kind in the Constitution, nor was it anissue during the debates and ratification process. The EEOC is illegal, take your fallacious arguments and move to Canada.
Marty| 2.4.09 @ 11:41AM
No, Sean S., YOU are misrepresenting---each paycheck represents a new instance of discrimination and resets the clock, which is the same as saying no statute of limitations at all.
Gary | 2.4.09 @ 4:16PM
The Demofiends care only about lining the pockets of themselves and their lapdogs--and on making this a one-party nation of, by and for Demofiends.
Pingback| 2.5.09 @ 4:33AM
The Lilly Ledbetter Scam | Bernard Chapin's The Siege Engine links to this page. Here’s an excerpt:
Sean S.| 2.5.09 @ 6:47PM
Marty- Every night for 5 years I walk up to your front door in a Halloween mask, ring the doorbell, and slap you in the face when you answer. I then run off and escape but repeat this routine every night. After five years the statute of limitations has run its course on my first offense of assault. I again ring the doorbell but this time you manage to knock my mask off and call the police.
Sean S. - "But officer, I've been slapping him consistently for 5 years and the statute of limitations has expired on my first offense".
Officer - "Sorry Sean, the statute of limitations restarts each time you commit an offense."
Marty - "So, does this mean there is no statute of limitations on assault?"
World - "No, that is not what that means."
Mark30339| 2.5.09 @ 11:02PM
EEOC claims are mostly sour grapes suits by underperformers. Some are valid, most are not. All the unemployed really appreciate Congress giving them extra EEOC rights with a law that makes employers even less likely to expand employment.
Pingback| 2.8.09 @ 10:23AM
Obama Stimulates Feminists | Bernard Chapin's The Siege Engine links to this page. Here’s an excerpt:
Pingback| 2.9.09 @ 4:08PM
How Obama Stimulates Feminists | MND: Your Daily Dose of Counter-Theory links to this page. Here’s an excerpt:
gfhfgh| 11.23.09 @ 4:58AM
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