May 30: US Supreme Court's pay decision ignores real world

[In another split decision on May 30, 2007, the US Supreme Court ruled that employees have only 180 days to make a pay discrimination complaint against their employers. The timer starts from the time of the employer's offense. This overly business-friendly decision allows employers to continue to exploit their asymmetry of information against their employees - i.e., employees have less knowledge of appropriate compensation than their employers, and that disparity in knowledge allows employers to get the minimum possible wage. Unions do a lot of questionable things too, but they can at least ameliorate the information asymmetry.]


(Fortune) -- How long have you been in your current job? Six months? Less than six months? How about six years, or 16? It hardly matters: In any case, you probably have only the foggiest notion (if any) of what your colleagues earn, or how big their last raise was.

If you're a woman, it's unlikely you know for sure whether your pay is commensurate with male peers in the same job. Employers encourage a "don't ask, don't tell" approach to the subject that usually prevents people from guessing - let alone being able to prove with hard evidence - if they're being fairly compensated. And new employees in particular are often so relieved to have been hired that they're the last ones who are going to ask awkward questions.

So how much sense does it make to decide, as the U.S. Supreme Court did Tuesday in a 5-4 ruling, that employees who want to take legal action against a discriminatory employer must file a formal complaint with a federal agency within 180 days of that employer's explicit offense (i.e. either hiring a woman for less pay than a man or giving her a smaller raise because she's female)? In too many instances, it takes far longer than that for an employee to realize what's going on.

That was what happened to Lilly Ledbetter, on whose case the highest U.S. court ruled yesterday. Ledbetter was a supervisor at a Goodyear Tire plant in Gadsden, Ala., and the only woman among 17 managers at the same level. Although she was hired at the same pay as her peers, she received smaller raises than theirs over a 20-year period. By the time she realized it, in 1998, her salary fell short of male supervisors' by 40%. She was earning $3,727 a month, while the lowest-paid man in her position made $4,286.

Under the Supreme Court's new ruling, systematically paying someone less on the basis of sex would be perfectly fine under Title VII of the Civil Rights Act of 1964 - as long as she doesn't figure it out within six months. After that, she can't sue on that basis. (Although she might be able to file under the Equal Pay Act, which doesn't have the 180-day deadline, that law has other requirements and doesn't allow punitive damages.) This is just dandy for employers who make a habit of paying women less than men in the same job, but it's an interpretation that surely undermines the spirit of Title VII if not its letter.

Worse, it ignores workplace reality. The majority opinion "overlooks common characteristics of pay discrimination," Ruth Bader Ginsburg - the court's only woman - wrote in her dissent, which she read from the bench. A single pay raise that is smaller than colleagues get, even if a woman knows it's smaller, may not seem worth "making waves" over, particularly if the woman - or, for that matter, member of a racial minority - is "trying to succeed in a nontraditional environment."

But, Justice Ginsburg noted, over the course of a whole career, even a small disparity in pay "will expand exponentially...if raises are set as a percent of prior pay." That robs women, or anyone else who is systematically and deliberately paid less for the same work, not just of many thousands of dollars in direct earnings, but of benefits like pensions that are linked to pay as well.

In her opinion, Ginsburg called on Congress to step up and overturn the Supreme Court's decision, as it did in the early '90s with a series of the court's rulings on civil rights. Hillary Clinton, perhaps hoping to win women voters' support, has said she'll lead the fight. Here's hoping that's more than just a campaign promise.

What do you think of the Supreme Court ruling? Post your thoughts on the Ask Annie blog