Each year, National Equal Pay Day marks the day by which an average working woman would have earned the amount of money earned by an average working man in the previous year. This year the day fell on Tuesday, April 8 and came with more fanfare than usual. President Barack Obama issued a Presidential Proclamation acknowledging “the injustice of wage inequality” and calling on Congress to pass the Paycheck Fairness Act.
The PFA fell six votes short of passage in the U.S. Senate, but congressional Democrats and the President made clear that they think the time is right, at least politically, to push measures designed to reduce the pay gap between men and women. On National Equal Pay Day the President signed an Executive Order making it illegal for federal contractors to retaliate against employees for discussing their unequal pay. The White House described this policy as “a critical tool to encourage pay transparency,” Considering that the large majority of employers have policies that workers are not permitted to discuss their compensation, and that employment is generally “at will,” legal protection for those who raise the issue of pay equity is a crucial step.
Along these same lines, the President also signed a memorandum instructing Labor Secretary Tom Perez to create new regulations requiring federal contractors to report salary data to the government, including breakdowns of pay rates by sex and race. In addition to the direct effect of further increasing transparency among federal contractors regarding disparate pay, the White House also expressed its hope that this new policy would have the indirect effect of encouraging private sector employers to submit such data voluntarily.
One of the President’s well-known accomplishments on this issue in past years was his successful promotion of the Lilly Ledbetter Fair Pay Act, which was passed by Congress in 2009. The legislation was in response to a decision by the U.S. Supreme Court in Ledbetter v. Goodyear Tire & Rubber Co., 550 U.S. 618 (2007), in which Justice Alito, writing for the five-justice majority, held that the Plaintiff was not legally entitled to sue under Title VII of the Civil Rights Act of 1964 over race or gender pay discrimination, because her claims were based on decisions made by the employer 180 days ago or more. The justices reasoned that each paycheck received did not constitute a discrete discriminatory act, implying that the only action which could have been found unlawful was the employer’s original decision to pay her less than her male peers; however, that original decision was outside the 180-day statute of limitations for a claim of gender discrimination under Title VII of the Civil Rights Act of 1964. The central provision of the Lilly Ledbetter Fair Pay Act was to effectively redefine define each act of paying a woman less than her male counterparts as a discrete discriminatory act, so that the 180-day statute of limitations resets with each new paycheck, effectively extending the length of time during which an employee can pursue a claim of pay discrimination under Title VII.
In our economic system, money is supposed to be a reward for ingenuity and hard work. We hear over and over that we cannot enact policies which decrease the profitability of companies, because it is the maximization of profit that provides the incentive for business owners to have the initiative, invention, sacrifice and investment on which the health of our economic system depends. Since these are truisms for most of us, why, the President asked, would we allow ourselves to waste the labor and talents of women by offering them less financial reward for their initiative, sacrifice, innovation and investment? Thus, he suggested, while there are reasons to promote pay equity having to do with justice and politics, there are also economic reasons.
If you believe your employer has discriminated against you based upon your gender, please contact The Harman Firm LLP