New law gives women better chance at equal pay

Shannon Craig-Mulvaney • April 5, 2009

In 1979, Lilly Ledbetter accepted a supervisor job at Goodyear Tire and Rubber. Of the four supervisors at the plant, Ledbetter was the only female. In 1998, she received an anonymous note listing the four supervisors' salaries. Hers was $3,727 per month. Her male counterparts were being paid between $4,286 and $5,236.
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Ledbetter filed a charge with the Equal Employment Opportunity Commission. They told her she had a strong case. She hired and attorney and sued.

Ledbetter was initially awarded $3.8 million, but Goodyear appealed. By 2006, her case reached the Supreme Court, which determined that Ledbetter had not filed her complaint in a timely manner. The justices interpreted the law as providing 180 days from the date of a decision affecting compensation to file a complaint.

The flaw in this logic is that women often don't know they're being paid less than their male counterparts. Many corporations prohibit employees from discussing compensation and impose disciplinary action on those who do.

Additionally, pay differences that start small grow over time. Raises are often given as a percentage of base pay. If a person's base wage starts smaller, that wage will fall further behind even if raises of equal percentages are awarded simultaneously.

Other forms of compensation are calculated as a percentage of base wages. According to Gail Cochrane of Bancroft & Associates, retirement is particularly affected, as pensions, 401(k) contributions and Social Security benefits are based in part on wages: "Lower earnings throughout a woman's career lead to lower funds for retirement."

In 2007, women earned 77.8 cents for every $1 men earned for full-time, year-round work. Although this difference is often attributed to women choosing lower-paying career fields, the disparity exists even among women with college degrees and in gender-mixed fields.

The American Association of University Women Educational Foundation reports that in 2001, men and women who had attained bachelor's degrees one year earlier entered full-time business and management occupations at comparable percentages. Women in these occupations were paid 81 percent of what men were paid. In 2003, the AAUW looked at people who had graduated 10 years earlier. The percentage of women employed in business and management occupations had dropped slightly, but women were earning 69 percent of what the men earned.

Is this decline in relative earnings caused by women leaving the workforce, even briefly, such as often occurs during childbearing years? It is to some extent, but not completely. A U.S. General Accounting Office study found that the wage gap could not be fully explained by work-related factors like education and training, occupation, unionization or work hours. This suggests that gender directly influences compensation.

On Jan. 29, President Barack Obama signed the Lilly Ledbetter Fair Pay Act. Under the new law, the time to file a compensation-related complaint starts each time a discriminatory compensation action affects an employee.

That still includes the initial wage decision, but also includes each paycheck issued, providing a more realistic period of time to file a complaint and for it to be properly documented and addressed. The hope behind the act is to provide women a better chance at equal pay for equal work.

Shannon Craig-Mulvaney is director of Equal Employment Opportunity services at HR Works Inc., a Perinton-based human resources outsourcing and consulting firm.