Obama Signs Ledbetter Legislation

President Barack Obama has signed his first piece of legislation of the new Democratic era, "The Lilly Ledbetter Fair Pay Act of 2009." The Washington Post has the story.

But let me direct readers to the Wall Street Journal's review of the Democratic majority's labor agenda, "Trial Lawyer Bonanza":

The Lilly Ledbetter Fair Pay Act is an effort to overturn a 2007 Supreme Court decision, Ledbetter v. Goodyear Tire & Rubber. Lilly Ledbetter had worked for Goodyear for almost 20 years before retiring. Only in 1998, after she took her pension, did she sue and allege wage discrimination stretching back to the early 1980s. The Supreme Court ruled 5-4 against her, noting the statute clearly said claims must be filed within 180 days, or sometimes 300 days, of the discrimination.

That ruling put to rest Ms. Ledbetter's creative theory that decisions made decades ago by a former boss affected her pay all the way to retirement, so that each paycheck was a new discriminatory act and thus fell within the statute of limitations. Yet that is exactly the theory Congress would now revive with the Ledbetter bill. There would no longer be time limits on such discrimination claims. They could be brought long after evidence had disappeared or witnesses had died -- as was the case with Ms. Ledbetter's former boss.

For the tort bar, this is pure gold. It would create a new legal business in digging up ancient workplace grievances. This would also be made easier by the bill's new definition of discrimination. Companies could be sued not merely for outright discrimination but for unintentional acts that result in pay disparities.

Since these supposed wrongs could be compounded over decades, the potential awards would be huge. Most companies would feel compelled to settle such claims rather than endure the expense and difficulty of defending allegations about long-ago behavior. The recipe here is file a suit, get a payday. And the losers would be current and future employees, whose raises would be smaller as companies allocate more earnings to settle claims that might pop up years after litigating employees had departed.

The Democratic majority is also resurrecting the concept of "comparable worth" with the Paycheck Fairness Act. This idea holds that only discrimination can explain why female-dominated professions (teachers, secretaries) tend to command lower wages than male-dominated professions (plumbers, truck drivers). Yet most of these pay disparities are explained by relative experience, schooling or job characteristics. Teachers do tend to earn less than truck drivers, despite more education. Then again, truck drivers work long, hard, often unpredictable hours. The market -- not some secret patriarchy - places different values on different jobs. And in the case of teachers, the main salary setter is the government.

The paycheck fairness legislation would nonetheless require labor officials to use comparable worth in creating "voluntary" wage guidelines for industries. Voluntary or not, these guidelines would become the basis for more litigation against companies that didn't follow them. Meanwhile, the bill strips companies of certain defenses against claims of sex-based pay discrimination. It also makes it easier to bring class actions, and it allows plaintiffs to claim unlimited punitive damages even in cases of unintentional discrimination.