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The AEI Legal Center for
the Public Interest, formerly known as the National Legal Center for the
Public Interest, was founded in 1975 to foster knowledge about law and the
administration of justice, especially with respect to individual rights, free
enterprise, property ownership, limited government, and a fair and efficient
judiciary.
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Ted Frank is a resident fellow at AEI and director of the AEI Legal Center for the Public Interest, where he manages the Institute’s research in legal studies. Before joining AEI, Mr. Frank was a litigator from 1995 to 2005. He has written for law reviews, the Wall Street Journal, the Washington Post, and National Review Online. Mr. Frank clerked for Judge Frank H. Easterbrook on the Seventh Circuit Court of Appeals. He writes for the award-winning legal reform blogs Point of Law and Overlawyered, and the Wall Street Journal has called him a “leading tort-reform advocate.”
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By a 5-4 margin in
Ledbetter v. Goodyear Tire and Rubber
(PDF), the Supreme Court ruled last May that the 180-day deadline for filing
a discrimination lawsuit cannot be stretched to serve as the basis of
the filing of suits today based on the lingering effects of employment
decisions taken years ago.
This should be noncontroversial. Statutes of limitations are important for justice. Without a statute of limitations, someone can sue for very old alleged injuries, and a defendant would not have a fair chance to defend herself. (Ledbetter sued over her pay after she was retired!) Memories fade, evidentiary documents are discarded, people change employers. If an employee can wait until a middle manager of years ago died before accusing the company of discrimination, justice is impossible. Yet some in Congress, upset at the result in
Ledbetter
, propose a statute that would entirely abolish the statute of limitations. The House even passed such a law, though the Senate refrained once President Bush threatened to veto the bill.
Ironically, no change in the law was necessary for Ledbetter to recover. As
Hans Bader notes
, and the five-justice majority stated, there already exists a law that would have permitted Ledbetter to sue. The Equal Pay Act specifically bans sex discrimination in pay and has a longer statute of limitations. But Ledbetter's attorney chose to sue under the more difficult law, Title VII.
Similarly, those victimized by racial discrimination need not rely on the 180-day statute of limitations for Title VII. 42 U.S.C. § 1981 has a four-year statute of limitations for intentional racial discrimination in contracts.
What is really happening is that special interest groups hoping for an
unprecedented expansion of liability are misrepresenting the effect of
the Ledbetter case to create support for their legislation.
But who does such legislation expanding the right to sue really help? As I note in my
most recent law review article
, there is an inverse relationship between wages and legal restrictions on employment-at-will. Two economists working for Rand found in 1992 that wrongful termination suits cause a decline in employment about equivalent to a 10% decrease in wages--and that was before the effects of the Civil Rights Act of 1991 were fully measured.
Employers are not stupid. To the extent every employee is a potential lawsuit, that is a cost of hiring an employee. As those costs go up, employers will hire fewer employees, and charge "insurance" to the employees they do hire by reducing their wages to account for the possibility of a future lawsuit. If the misnamed "Lilly Ledbetter Fair Pay Act" passes, the vast majority of workers will be worse off, as money that would have gone to pay employees will instead go to pay attorneys. There should be a better reason to pass such harmful legislation than the fact that Ms. Ledbetter's attorney sued under the wrong statute. If Congress really wishes to help workers, they should reject this legislation, and aim a closer eye at the liability system that hurts our economy.
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