In a unanimous decision Monday in Thompson v. North American Stainless (opinion), the U.S. Supreme Court ruled that an employee who was fired for cause — performance reasons — could sue his employer under the Title VII of Civil Rights Act, claiming the company discriminated against him for comments made by his fiance. In effect, the court invented a law allowing for third-party claims.

This is a bad decision for business. The National Association of Manufacturers had filed an amicus brief in support of the company, and our Manufacturing Law Center entry explains the consequences of the ruling for business:

A rule that permits third-party retaliation claims would increase even more dramatically retaliation charges, which are the fastest-growing category of charges filed under Title VII, and would put employers in the untenable position of having to speculate about possible relationships an employee may have that could give rise to potential liability each time they contemplate disciplinary or other action against that employee.

This decision should — but won’t — put to rest the much-repeated claim from left-leaning pundits and bloggers that the U.S. Court, led by Chief Justice John Roberts, is a reactively pro-business court.

Ed Whelan, President of the Ethics and Public Policy Center, made the case at the National Review Online’s Bench Memos blog, “Those Sneaky Corporatist Justices”:

As I explained in my testimony at Elena Kagan’s confirmation hearing, “allegations that the Roberts Court engages in conservative judicial activism frequently involve a highly selective skewing of the evidence—drastically inflating the supposed importance of cases that fit (or that are distorted to fit) the desired narrative while simply ignoring those that don’t.” (continue reading…)

The White House theme on Thursday was economic opportunity for woman, with messaging pegged to a new National Economic Council document, “Jobs and Economic Securityfor America’s Women,” President Obama’s “backyard” event in Seattle, and his campaigning for Sen. Patty Murray (D-WA).

Unfortunately, in its highlighting of the Paycheck Fairness Act, the White House’s messaging Thursday conflicts with the President’s overarching theme, that of economic recovery and jobs growth. At the same time, the messaging reminds the public of the political power of the litigation lobby.

The White House blog listed the Paycheck Fairness Act as No. 2 in its list, following Lilly Ledbetter Act Fair Pay Act, in its list, “10 Ways Our Economic Policies Benefit Women.”

It’s weird to be boasting about a bill that hasn’t passed yet. But more importantly, the legislation would lead to a more stagnant labor market, transfer more business wealth into the pockets of trial lawyers, and raise marginal costs of each new hire. A White House concerned about jobs should be renouncing the bill, not touting it.

The Paycheck Fairness Act would extend the federal government’s control over employers’ personnel decisions through rigid “pay equity” mandates and then expanding the grounds for litigation for even unintentional violations. In making hiring and salary decisions, an employer’s chief concern would not be whether the person is worth the price in the competitive labor market, but rather, “Am I going to get sued?”

As the National Association of Manufacturers’ 2009 “Key Vote” letter to the House explained:

By removing all limits to punitive and compensatory damage awards on claims made under the Equal Pay Act (EPA), the Paycheck Fairness Act (H.R. 12) would expose employers to increased threats of litigation – even when unintentional pay disparities may have occurred. Its passage would likely prompt many employers to purchase additional legal liability insurance, increasing their costs and decreasing their ability to raise wages, increase benefits or hire new U.S. House of Representatives workers. In fact, it is difficult to imagine a scenario in which the bill would not lead to lower wages and fewer jobs.

Senate Majority Leader Reid re-introduced the Senate version of the bill, S. 3722, in late September and filed cloture for possible Senate consideration in a lame-duck session of Congress. We tend to think the maneuvering is more about exciting the political base than actually pushing through the bill in a very crowded, riven post-election Congress.

Still, for employers it’s hard to ignore: A President campaigning on expanded economic opportunities for women by touting legislation that would diminish opportunities for men and women, both.

In his Cincinnati speech today, President Obama told the labor crowd “I support EFCA,” actually using the acronym, in order “to level the playing field.” One way to ensure not being quoted verbatim: Use acronyms that mean nothing to most people.

He quickly moved on to touting his signing of the Lilly Ledbetter Fair Pay Act, which opens the floodgates to old, impossible-defend employment discrimination lawsuits against businesses. That’s not the way he described it, though.

In Pittsburgh, Vice President Joe Biden today said the Employment Free Choice Act will pass. He didn’t say what version of the legislation he meant.

President Obama’s first bill-signing ceremony was a celebratory affair with Ms. Ledbetter and top Congressional Democrats on hand. No point in reciting our arguments about why the new law will invite speculative litigation and discourage the hiring of new employees — it’s a done deal.

Save for one point: We see that the American Association for Justice, the national trial lawyers lobby, issued a statement from its president, Les Weisbrod, today, “Ledbetter Act Delivers Justice for Working Americans, Says AAJ.” It’s boilerplate.

Today marks the end of a long road for Lilly Ledbetter and the beginning of justice being served for countless workers who have been victims of pay discrimination. For too long big business has tried to sweep pay discrimination under the rug and justify unethical corporate practices as necessary to bolster the economy. Today’s victory shows that corporations will be held accountable for their actions and that even ordinary citizens can get justice when taking on the most powerful interests. In one stroke of a pen, the Obama administration has strengthened the role of the civil justice system and restored legal protections for all working Americans.

AAJ has been remarkably silent on the bill, we suspect because the trial lawyers did not want to provide any ammunition to opponents who argued that the legislation would really benefit litigators more than employees. But with the bill signed, they can now speak freely and take credit. Smart politics, really.

Also, we’re still waiting for a reporter to ask Ms. Ledbetter if she intends to reopen the litigation. The law’s effective date was clearly written to allow her to revive her legal claims against Goodyear Tire & Rubber.

The President’s statement upon the bill-signing ceremony is here. Washington Post story, “Obama Signs First Piece of Legislation.” For more background, see this post or just search for Ledbetter on the blog.

The House is voting now on passage of S. 181, the Lilly Ledbetter Fair Pay Act, which will lift the statutes of limitations on and otherwise encourage the filing of employment discrimination claims. A clear partyline vote developing.

UPDATE (4:25 p.m.): Passes 250-177. Roll call vote here.

The bill now goes to President Obama for his signature.

Now up, H.R. 1, the American Recovery and Reinvestment Act, the hope-to-heck-it’s stimulating bill.

UPDATE (5:40 p.m.): From the National Association for Women, a statement by NOW’s president, Kim Gandy.

This day has been a long time coming for Lilly Ledbetter and every woman who has suffered pay discrimination. It is an important symbol that the Lilly Ledbetter Act will be the first piece of legislation signed by President Barack Obama.

Agreed.

From the White House blog, Sunday, “Now Comes Lilly Ledbetter”

President Obama has long championed this bill and Lilly Ledbetter’s cause, and by signing it into law, he will ensure that women like Ms. Ledbetter and other victims of pay discrimination can effectively challenge unequal pay.

Unfortunately, the Ledbetter bill (S. 181) does far more than “correct” the Supreme Court’s decision in Ledbetter v. Goodyear Tire & Rubber, as we’ve documented at length at Shopfloor.

The White House website has so far offered little news or other interesting new information; by just being posted, the Ledbetter commentary represents a strong statement.

Senate Democratic leadership pushed through the Ledbetter bill last week, eschewing committee meetings and arranging the mostly partyline defeat of amendments to make the bill the true “narrow fix” of the court’s ruling, rather than an invitation to a flood a litigation.

Why such a push?

Organized labor rallied around the Ledbetter legislation in its campaigns against business and the U.S. Supreme Court last year, using it as an effective issue to mobilize political support with. After the Employee Free Choice Act, Ledbetter was one of the second, but still very high tier of issues for labor.

Democratic leaders in Congress (see comments by George Miller, Nancy Pelosi) are signaling that the Employee Free Choice Act has been put on the back burner. As Sam Stein at the Huffington Post reports, “There is a bubbling concern among officials in the labor community that Barack Obama will not act on their most cherished legislative item within the next year.”

The White House is certainly not sending strong signals about the need for quick action on EFCA. Usually, when a nominee goes up to the Senate for a confirmation hearing, the candidate will have a good understanding of where the White House stands on key issues. Yet Rep. Hilda Solis (D-CA), nominated for Secretary of Labor, was unable to provide any clear response to Senators’ questions about the Employee Free Choice Act. (Ruth Marcus of the Washington Post had a good column on Solis’ difficulties, “Hearings and Evasions.“) We read that as an expression of internal White House disagreement…or uncertainty…or too many other things on the plate right now.

So no Employee Free Choice Act anytime soon. You can understand, then, the quick passage of the Ledbetter bill as a consolation prize for organized labor, as well as a political message: Hang in there with us.

As Senator Barbara Milkulski (D-MD), manager of the bill, noted, this is the first legislation passed by the Senate since President Obama took office. Not sure that should be a point of pride: Legislation that will encourage litigation against employers, discourage new hires, and do nothing to inspire economic recovery.

S. 181, the Lilly Ledbetter Fair Pay Act, was approved by a 61-36 vote. (Roll call.)

Every amendment offered to clarify the law or apply it more directly to those employees who had a legally credible claim was rejected on a nearly partyline vote.

Sen. Mikulski and Senate Majority Leader Reid commented on the constructive tone taken during the debate, which in most legislative bodies means one side has an overwhelming majority. Senator Mike Enzi (R-WY), who offered several meritorious amendments, noted that the bill was run directly to the floor without a committee mark-up, the standard and respected process step that could have addressed legal ambiguities and provided a more complete consideration. But the tone…

Just defeated by a vote of mostly partyline vote of 40-55 was Sen. Kay Baily Hutchison’s amendment to S. 181, the Lilly Ledbetter Fair Act. (Roll call vote here.) The amendment would have made sure that complaints and lawsuits were made promptly — a half-year being considered prompt — after the alleged discrimination was learned of, and would have limited the legal claims to those who had actually experienced the discrimination as opposed to anyone “affected.”

The arguments on the Senate floor tend to repeat themselves, invidiously: If you oppose the Ledbetter Act because it does more than merely “fix” the Supreme Court ruling in Ledbetter v. Goodyear Tire and Rubber, will cause of a flood of litigation against business, and discourage the hiring of new employees, you support discrimination against women. So glad to see there’s a new tone in Congress.

Senate Majority Leader Reid says he would like to complete action on the amendments tonight.

Andrew Grossman of the Heritage Foundation outlined the logic behind the Hutchison amendment in a WebMemo today, “Making Ledbetter Better, or At Least Less Bad“:

The most thoughtful alternative to the Ledbetter Act’s approach is embodied in an amendment (SA 25) proposed by Senator Kay Bailey Hutchison (R-TX) and based on her Title VII Fairness Act (S. 166). Rather than allowing any claim–no matter how old, no matter if the plaintiff delayed filing just to gain an upper hand–this amendment would start the limitations period running only when an employee reasonably suspects, or should reasonably suspect, that he or she has been discriminated against.

This kind of filing deadline, known as a “discovery rule,” protects employees who are kept in the dark about pay disparities and the like, while preventing stale claims and gaming of the system. It also preserves the incentive to bring claims quickly so that discrimination is halted sooner, to the benefit not just of the plaintiff but also other potential victims and the public. That, in the end, is what Title VII is all about: ending discrimination.

Oh, Andrew, you just want to discriminate against women.

Seriously, the Grossman memo is excellent, also explaining how the Ledbetter legislation is drafted to maximize the potential payoff for trial lawyers filing speculative lawsuits against employers. One suit begets many others.

UPDATE (1:52 p.m.): In presenting two amendments to limit the discrimination claims to only the affected employee, Sen. Enzi (R-WY) notes repeatedly that the bill was not considered in committee, allowing a mark-up that could have corrected many of the problems with the language.

From Sen. Kay Bailey Hutchison’s floor statement Wednesday on S. 181, the Lilly Ledbetter Fair Pay Act:

[In] the bill before us there is a major change in common law and in tort law that has also been a part of our legal system and our case law since the beginning of law in our country and in other countries that have the types of laws we do; and that is that a tort accrues a right to the person who is offended or damaged or hurt by another action. It does not accrue to another person who is affected by or might be considered affected by this claim.

Now, there are exceptions to that. But in the main, it is, I think, essential, if we are going to have a statute of limitations that goes beyond the act itself–and in this case it would be 6 months, which is the law today–that it accrue to the person actually injured, the employee, and not some other person on behalf of the person who did not bring the case.

Under the Mikulski bill, the Ledbetter Act, a new right has been given to a person who may not be the person with the injury. So it could be a case where the person dies after working at a place of employment, a business. The person dies, and within 6 months of that person’s last paycheck and subsequent death, some other person–an heir, a child, a mother, a father–could bring a case, which the person who has allegedly been discriminated against chose not to bring or did not bring. In such an absurd case, possible under the Ledbetter bill, you do not even have the person discriminated against to testify.

I think this is a very big hole in the concept of fair play that our legal system tries to provide. By saying “other affected parties,” I think we have opened up a whole new right and possible class of plaintiffs that has not been contemplated before and could achieve an inequitable result.

Also, from the Pennsylvania Labor and Employment Blog, “Record Retention Nightmare Created by Ledbetter Fair Pay Act .” (Hat tap: Point of Law.)

UPDATE (10:40 a.m.): The Enzi amendments are designed to narrow the scope of the change, allowing claims ONLY by the victim, not “other affected parties”:

• Enzi Amendment No. 28, to clarify standing.
  Page S710
• Enzi Amendment No. 29, to clarify standing.
  Page S711

Prologue: The NAM’s Key Vote letter to U.S. Senators opposing S. 181, the Lilly Ledbetter Fair Pay Act.

Now, from the Daily Digest in today’s Congressional Record, yesterday’s summary of Senate action of S. 181, the Lilly Ledbetter Fair Pay Act, and the program for today’s debate (fixed broken links):

Lilly Ledbetter Fair Pay Act: Senate resumed consideration of S. 181, to amend title VII of the Civil Rights Act of 1964 and the Age Discrimination in Employment Act of 1967, and to modify the operation of the Americans with Disabilities Act of 1990 and the Rehabilitation Act of 1973, to clarify that a discriminatory compensation decision or other practice that is unlawful under such Acts occurs each time compensation is paid pursuant to the discriminatory compensation decision or other practice, taking action on the following amendments proposed thereto:

Pages S693-S712

Pending:
Hutchison Amendment No. 25, in the nature of a substitute.
Pages S693-96, S698-S712

Specter Amendment No. 26, to provide a rule of construction.
Pages S696-97

Specter Amendment No. 27, to limit the application of the bill to discriminatory compensation decisions.
Page S697

Enzi Amendment No. 28, to clarify standing.
Page S710

Enzi Amendment No. 29, to clarify standing.
Page S711

A unanimous-consent-time agreement was reached providing for further consideration of the bill at approximately 10:30 a.m., on Thursday, January 22, 2009, and that there be up to 60 minutes of debate equally divided and controlled between Senators Hutchison and Mikulski, or their designees, relative to Hutchison Amendment No. 25 (listed above), prior to a vote on or in relation to the amendment; provided further, that there be no amendments in order to Hutchison Amendment No. 25 prior to the vote.

Page S732.

We’ll put Sen. Hutchison’s explanation of her substitute amendment in the extended entry below. Short version: It retains a 180-day statute of limitations for filing pay discrimination complaints, started when the employee actually discovers the incident of alleged discrimination.
(continue reading…)