On May 29, the NFIB Legal Foundation scored a key victory when the Supreme Court determined that there is a limit as to how far back a plaintiff can reach when seeking damages in a disparate pay claim under Title VII of the 1964 Civil Rights Act (Ledbetter v. Goodyear Tire & Rubber Co.). NFIB's Legal Foundation filed an amicus brief in this case.
The House recently took action to overturn the Supreme Court's decision in Ledbetter. On July 31, the House passed H.R. 2831, the overly broad "Ledbetter Fair Pay Act of 2007," by a vote of 225-199. NFIB key-voted against passage of the bill. The Senate has not acted on this legislation.
NFIB supports a quick resolution to any workplace discrimination claim. NFIB believes that the goal of ending discrimination in the workplace can be reached only if the employee immediately comes forward with a claim.
Ledbetter v. Goodyear Tire & Rubber Co.
In Ledbetter v. Goodyear Tire & Rubber Co., the Supreme Court ruled in favor of Goodyear because the statute of limitations (the timeframe in which an employee, in this case Ledbetter, must file a discrimination claim) had run out. Statute of limitations exists for several reasons; in this case, the most important of which is to encourage employees to act immediately when they are subjected to discrimination.
The bill's supporters claim that H.R. 2831 simply reverses what they deemed to be an unfair verdict by the Supreme Court in Ledbetter. However, the bill goes far beyond the Ledbetter decision. Instead, it creates a new "paycheck rule," erasing any existing statute of limitations on discrimination claims.
H.R. 2831 is bad for small business
- It discourages employees from reporting discrimination:
- H.R. 2831 considers each paycheck an incidence of discrimination – meaning that attorneys could advise workers to delay their claim and let the incidences of discrimination pile up, resulting in a bigger settlement.
- It would take only one worker to do this to cause a small business to go bankrupt.
- Employers AND employees need the certainty provided by a reasonable statute of limitations:
- Employees should be encouraged to file claims promptly to end any pattern of discrimination.
- Employers must be assured that a claim will not be filed against them decades after the fact, when company ownership may have changed, the former owner may be deceased, etc.
- An endless statute of limitations only encourages employees to sit on a claim.
- Discrimination claims usually rely on circumstantial evidence - "he said, she said" testimony – and the best time to reconstruct what actually occurred is immediately after the event happened, not years later.
- The new "paycheck rule":
- So long as an employee receives a paycheck or benefits – including retirement benefits, such as a pension – they can file a claim against the employer even if the discrimination occurred decades prior.
- Claims will pile up to produce a huge payout for the employee but ruin the small business owner.
- It could increase frivolous lawsuits:
- The bill's vague language allows "anyone affected" by the discrimination to bring forward a lawsuit.
- This means that parents, spouses, children, grandparents, etc. could resurrect cases that could bankrupt small business owners.
- Ledbetter only dealt with gender discrimination (covered by the Civil Rights Act); H.R. 2831 expands the "endless statute of limitations" to other employment policy laws – namely the Americans with Disabilities Act.
NFIB's work on the Hill
NFIB aggressively lobbied against passage of H.R. 2831. Unfortunately, the new leadership in the House rushed this legislation through the committee process and on the floor. They denied their colleagues the time they needed to properly review the legislation and the opportunity to amend it. Should this bill be voted on by the Senate and pass, the president has promised to veto the bill. NFIB will continue to fight this unfair legislation when it is taken up in the Senate.
