Reference no: EM131470956
Case: Pay Inequity at Goodyear Tire and Rubber
One evening when she came to work to start the night shift, Lilly Ledbetter found an anonymous note in her mailbox at the Goodyear Tire and Rubber plant in Gadsden, Alabama. She had worked for Goodyear for 19 years as a manager and was shocked at what she read. On the note, her monthly pay ($3,727) was written along with the pay (which ranged from $4,286 to $5,236) of three of her male colleagues who started working for Goodyear the same year that she did and did the same job. Ledbetter (2012) stated, “My heart jerked as if an electric jolt had coursed through my body.” She filed a gender pay discrimination lawsuit under the 1964 Civil Rights Amendment and was awarded $3 million in back pay and other benefits she lost due to pay discrimination (e.g., contributions to her retirement).
The case was appealed to the U.S. Supreme Court, which ruled against Ledbetter. In the case of Ledbetter v. Goodyear Tire & Rubber Co., 550 U.S. 618 (2007), the U.S. Supreme Court decided that the statute of limitations for presenting an equal-pay lawsuit begins on the date that the employer makes the initial discriminatory wage decision, not at the date of the most recent paycheck. This court decision ultimately led to the Lilly Ledbetter Fair Pay Act of 2009 (Pub.L. 111–2, S. 181), which states the 180-day statute of limitations for filing an equal-pay lawsuit resets with each new paycheck affected by discrimination. The act is a federal statute and was the first bill signed into law by President Barack Obama in 2009. Lilly’s website states the following:
For 10 years, Lilly Ledbetter fought to close the gap between women’s and men’s wages, sparring with the Supreme Court, lobbying Capitol Hill in a historic discrimination case against Goodyear Tire and Rubber Company.... Ledbetter will never receive restitution from Goodyear, but she said, “I’ll be happy if the last thing they say about me after I die is that I made a difference.”
The Lilly Ledbetter case shows that employees care a great deal about the rewards they receive from an organization, and these rewards must be fair. They pay attention to rewards—particularly what they are paid. Pay inequity may cause employees to feel undervalued by the organization and raises concerns regarding organizational justice.
Discussion Questions:
What are the implications of the Ledbetter case for the performance management system?
What can managers do to make sure such issues do not occur?
Explain Lilly Ledbetter’s reaction to learning she was being paid less than her coworkers based upon pay dispersion.
How do you feel about Ledbetter never receiving compensation from Goodyear for her lower wages for 10 years?
relate this case to what you learned about organizational justice. What type(s) of justice does the case illustrate?