The Corner

Laboring, Pre-Obama

This week, the Senate is trying to rush through several bills in anticipation of Barack Obama’s inauguration. One is the Lilly Ledbetter Paycheck Fairness Act, which has already passed the House (and was co-sponsored by then-senator Obama in the Senate). It deserves a bit more attention from conservatives than it has received so far. Like SCHIP, it is a difficult bill to oppose — who would speak out in favor of discrimination?

But this bill is quite terrible in its effects. To give one example, it would empower the federal Equal Employment Opportunity Commission to collect detailed employee and pay data from all employers nationwide. ’’

The bill is actually a combination of two bills, one of which was named after a woman who lost her discrimination lawsuit against Goodyear Tire because the statute of limitations had expired many years before. The bill seeks to fix this problem by eliminating any statute of limitations for such complaints as hers. Under the new law, one could retire and file claims based on decisions made decades ago. Pertinent records may no longer exist. Companies will feel great pressure to settle these suits, probably passing costs along to consumers where they can.

There are several other problems with this bill, these having to do with federal contractors. Because sound and accurate methods of identifying workplace discrimination have not produced enough lawsuits, the Democrats’ bill mandates the use of inaccurate and discredited methods that will justify far more lawsuits and put a greater number of employers in jeopardy.

The Act would require federal contractors to file the demonstratedly unreliable “Equal Opportunity Survey.” The survey provides summary information on employees and their pay, and was intended to be a basis for the government to decide whether to target any given contractor for a compliance audit. But the EO Survey, hastily introduced as a midnight regulation in the Clinton administration, was abolished in 2006 after it was found to be just 10-percent accurate in identifying discriminatory practices among federal contractors. (That is to say, 90 percent of the times the survey data suggested discrimination, none was ultimately found.) The results of the independent study outlining the EO Survey’s inaccuracy were published in the Federal Register, and no one in Congress has contested the accuracy of these findings. There has been no discussion of fixing the survey before putting it back into circulation and forcing 55,000 contractors to fill it out next year.

The bill would also require the Labor Department to use a highly inaccurate methodology for measuring whether a federal contractor is discriminating. The “pay-grade” method has been repeatedly rejected in court when discrimination cases have come forward, including by a unanimous Supreme Court decision written by Justice William Brennan. Currently, the Labor Department uses a much more accurate statistical regression analysis to find discrimination. It compares employees in similar occupations and situations to see that they’re being treated equally. The old, discredited method crudely lumps employees of different occupations who happen to fall within the limits of arbitrary pay scales. Not only does the new bill require the use of the bad methodology, but it also explicitly forbids the accurate method, apparently just because it is less likely to suggest discrimination.

If you are an employer, you should be afraid, and if you are a federal contractor, you should be very afraid. Your decision to hire someone for a bit more or a bit less because of the candidate’s previous salary could land you in court. You will be far more likely to find yourself on the witness stand, explaining why a former employee received a poor performance report in 1989. And prepare to pay the lawyers. This is not the sort of thing you want to deal with during tough economic times.


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