When the latest unemployment figures came out last Friday showing the joblessness rate rising to 7.2 percent, the U.S. House of Representatives was quick to respond, passing its first major economic legislation of the new Congress.
Sadly, the House-passed bill does nothing to help create jobs or end the recession. Instead the Lilly Ledbetter Fair Pay Act will vastly increase potential legal liability for businesses, making it more expensive to put new employees on the payroll.
For a Congress ostensibly intent on “stimulating” the economy, passage of a bill to discourage hiring seems an odd priority, understandable only as a reward to politically favored groups – trial lawyers and organized labor.
The House passed the bill last week on a nearly party-line vote of 247-171. The Senate is expected to consider its own version soon.
Proponents sell the bill as limited in scope, necessary only to reverse a 2007 ruling by the U.S. Supreme Court in Ledbetter v. Goodyear Tire & Rubber. A majority of justices held that Congress had clearly written civil rights law to require the filing of alleged discrimination complaints within 180 days of the actual act of discrimination.
But the bill does far more that fix an individual case of wage discrimination. It represents a fundamental shift in the principles that have guided employment law, opening up vast new opportunities for cash-seeking litigation.
The bill eliminates the 180-day statute of limitations; in fact, it eliminates ALL statutes of limitations. A wage or other employment-related complaint could be filed even years after the supposed act of discrimination occurred.
Congress was not being capricious or mean-spirited when it established time limits for employees to file complaints. In requiring employees to take formal action within a clear timeframe, statutes of limitations prompt employers to take notice and act. Early notification allows company officials to investigate, discipline, if necessary, and fix problems right away.
Without the deadline, alleged discrimination might go undetected for many years, subjecting more workers to disparate, unfair and illegal treatment. At the same time, employers will be forced to defend against a potential avalanche of decades-old, potentially frivolous claims.
Enactment of the Ledbetter legislation means companies may soon get complaints based on alleged discriminatory acts made decades ago. Picture this scenario, not so far-fetched: “My shift supervisor in the mid-’80s didn’t like women on the factory floor, and he gave me a bad review. So now I’m filing a complaint in 2009. And I’m suing too.”
What business can defend against that? Memories fade, employees move on, and supervisors retire or die. Companies are bought or merged.
Attorneys know full well that many employers will be reluctant to assume the prohibitive legal costs of fighting these kinds of suits. The real goal will be to force a cash settlement without ever stepping foot in the courtroom.
Another sweeping provision would expand the legal right to file a complaint to anyone potentially “affected” by the discrimination. It’s no longer the individual victim of discrimination who has a claim, it’s anyone!
Given the inventiveness of the trial bar, expect lawsuits from family members or a college buddy who will surely blame the unfair treatment of a parent or colleague: “If only they had enough money to front me that loan. It’s the company’s fault, and I’m suing.”
The reality is that American workers are already protected from discrimination through remedies available under existing law. The Equal Pay Act protects men and women from pay disparities in jobs that require equal skill, effort and responsibility and are performed under similar working conditions.
Passage of the Ledbetter legislation does little if anything to improve these protections. Instead, it opens up employers all across the country to legal extortion, delighting trial lawyers but discouraging the creation of new jobs. Every hire will represent a greater potential legal liability to businesses, a greater cost.
With the economy in recession and unemployment on the rise, this is Congress’ priority: Making it more costly to hire someone. Is that really the way we want to stimulate the economy?
Jeri G. Kubicki is vice president for human resources policy at the National Association of Manufacturers.
