Jottings By An Employer's Lawyer

Thursday, August 02, 2007

The Legislative Front -- Employers Better Brace Themselves


Two developments, the passage by the House of Representatives of the Lily Ledbetter Fair Pay Act of 2007 and the announcement that Senator Kennedy has filed the Equal Remedies Act are just more indications that the battle ground for employers is about to shift to the legislative front.

Except for the whistleblower provisions of Sarbanes Oxley, you have to go back almost fifteen years (the passage of the FMLA in 1993) for any significant federal employment legislation.

The Lily Ledbetter Act is a Congressional reaction to the Supreme Court's interpretation of Title VII's statute of limitations in Ledbetter v. Goodyear Tire & Rubber Co., although the potential change seems to go much broader than just reversing that one decision.

Two Republican members of the House Committee on Education and Labor, which would have been the appropriate committee to have reviewed the bill, if the House could have been bothered to have hearings, took this view:
“By gutting the long-standing statute of limitations, an employee could bring a claim against an employer decades after the alleged initial act of discrimination occurred,” noted Rep. Buck McKeon (R - CA). “That means the employee could have received wages and benefits for dozens of years, while the employer’s senior leadership could have changed numerous times during that same time period.”

“This loophole would allow a retiree to seek damages against a company now led by executives who had nothing to do with the initial act of alleged discrimination,” said Rep. John Kline (R-MN), Ranking Republican on the House Health, Employment, Labor, and Pensions Subcommittee. “The person who allegedly committed that act could have passed away – and in fact, his or her children could have passed away as well. But, under this Democrat bill, the potential for abuse and ambiguity would live on and on. Trial lawyers, you can be sure, are salivating at this very prospect.”
As I said earlier, any legal theory which requires a court's application of the equitable doctrine of laches to hold it within bounds, as Justice Ginsburg's Ledbetter dissent calling for this legislative action did, is completely out of touch with the reality of every day litigation. See Payday Blues at the Supreme Court.

Although not yet announced on his website or available from the Senate's website, the Daily Labor Report is saying that Senator Kennedy has introduced the Equal Remedies Act of 2007. The intent is to remove the caps in Title VII which limits compensatory and punitive damages under that statute based on an employer's size. For an employer of more than 500, the cap is $300,000. That is in addition to back pay and other out of pocket damages, reinstatement and other equitable remedies and attorneys fees.

The stated reason -- to ensure equality for gender, disability and religious discrimination claims with those available to individuals who bring claims for race or national origin discrimination. Those claims can be brought under § 1981 which has no caps. (It also has a much longer statute of limitations and no requirement to file with the EEOC, so following the logic of this legislation, perhaps we could save some taxpayer money and abolish the EEOC.)

My only surprise is that it has taken this long to surface. Just from a political perspective it's a hard sell to argue that race and national origin claims are worth more than others.

The most appropriate action would be to place caps on §1981 claims to match those in Title VII. But that of course would violate the unwritten, but seemingly cast in stone, rule that no matter whether it is rational or not, no employee legislation is ever to be altered that could in any way be construed as adverse to a potential plaintiff. Congress can only give more; it cannot take away.

As important as it is, employment legislation and the impact the litigation that ensues from it has on employers is not very well understood by most members of Congress. If not now, perhaps in a new administration employers are going to have to make hard political choices whether to oppose totally or begin to negotiate to lessen the damage of coming legislation.

It is not too late, but certainly not too early, for employers to begin thinking about how their world may well be changing.

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