Question.1086 - 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 & 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). Lilly’s 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. Lilly became famous after she lost the Supreme Court case. While she did not win the case, it did result in new legislation regarding when an equal-pay lawsuit can be filed. 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.” (www.lillyledbetter.comLinks to an external site.) 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. Lilly learned of the pay disparity with her male coworkers after a number of years on the job. She experienced a sense of moral outrage and filed a lawsuit to address the unfairness. As you learned, fairness is one of the guidelines for the effective implementation of reward systems in organizations. Employees pay attention to rewards— particularly what they are paid. Pay inequity may cause employees to feel undervalued by the organization and may reduce motivation. As seen in this case, unfair pay practices may also result in litigation. The federal statute based on Lilly’s case is clear that pay discrimination lawsuits may be based on every paycheck that a person receives throughout their employment. Equal pay for equal work is a concept that individuals in the same workplace be given equal pay for doing the same work. This concept is most commonly applied with respect to the gender pay gap—it was once estimated that women are paid 77.5% of men’s earnings (U.S. Census Bureau, 2008). On the seventh anniversary of the passage of the Lilly Ledbetter Fair Pay Act, the Council of Economic Advisors published an update on the wage gap between men and women. In 2014, median earnings for a woman working full-time all year in the United States totaled only 79% of the median earnings of a man working full-time all year. Phrased differently, women earned 79 cents for every dollar that men earned. The gender wage gap has many causes and contributors, including differences in education, experience, occupation and industry, and family responsibilities. But even after accounting for these factors, a gap still remains between men’s earnings and women’s earnings. Organizations should be proactive in examining their pay policies to ensure equal pay for men, women, and minorities. Employers must design reward systems that are fair and follow organizational justice guidelines to avoid litigation—but also because it is the right thing to do. Here is a 16-minute video of Lily Ledbetter explaining the situation (you can move to 2:48 in the video for the start of her story): https://www.youtube.com/watch?v=APeem8JEHVkLinks to an external site.. 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? Explain how the case illustrates the justice(s) you selected.
Answer Below:
1) Considering the Ledbetter case with Goodyear, some of the possible intervention manager indulge in order to streamline the performance of management system are: Firstly, regarding the primary issue that is the pay equity manager should practice regular checks that evaluates pay disparities by ensuring that gender, race, or any other discriminatory factors do not play influential role in the organization. Secondly, manager can work on establishing a robust transparent compensation policy practices, whereby it should be easily accessible by all the internal stakeholders, this should also include pay decisions and what factors are considered to make such decisions and this intervention could also aid in managers setting up an inclusive environment wherein the stakeholder could be a part of potential problem solving; with this understanding the third intervention could be flat lining the flow of communication, corporate operation often establish pyramid hierarchy that hampers the flow of communication whereby the lower cadre employees will find it difficult to communicate with the top management employees pertaining any internal discrepancies, and these low level employees who work on the field could have a better solution, so managers could practice effective communication that should be implemented across organizations including various departments wherein on regular basis they should encourage open dialogue forums. Lastly, update their training practices for managers and HRs about the legal and ethical aspects about wage and compensation decisions and to be made mandate that they abide by the relevant laws and regulations like the Lilly Ledbetter Fair Pay Act in order to avoid any future legal repercussions. 2) Considering Ledbetter reaction pay dispersion, was due to the fact the discrimination was based on the gender with her co-workers, if in a scenario she was unaware this couldve been a sense of hidden injustice to all the women. Ledbetter experienced a moral outrage due the reason that Ledbetter was a loyal employee for 19 years, her expectation towards the pay was fair and equitable; Secondly, the injustice motivated her to take the action by filing a lawsuit, being determined to address the underlying. 3) It is disheartening to realize that Ledbetter faced hidden discrimination by not receiving lower wage for 10 years, it draws in several questions related to the effectiveness of the organizations policy and practices including the legal system. 4) In terms of organizational justice, firstly considering distributive justice questions the fairness in the outcomes pertaining the compensation, in Ledbetters case the pay disparity depicted the lack of distributive justice since over a prolonged she was unfairly compensated when compared to male coworkers. Secondly, procedural justice the questions the fairness of the process that is utilized to make any decision, in this case procedural injustices in Goodyear's compensation decisions as there was no transparent and equitable process for determining pay, leading to gender-based pay disparities. Lastly, the interactional justice that questions the fairness of interpersonal interactions and communications, as the case highlights a note Ledbetter anonymously received can be considered as a violation of interactional justice as it exposed a lack of open and honest communication within the organization. PRs 1) Amberly Dunn, great post, I would like to counter argue your initial post, while the Ledbetter case highlighted issues of pay discrimination and their impact on employee motivation and job satisfaction, it's essential to consider the potential drawbacks of increased legal action against companies for pay disparities. In such scenarios legal actions could redirect towards unintended consequences, even this situation has possibilities for rise in litigation costs for businesses, in the long it could impact in terms reduction in resources for employee benefits which will also impact job security factor and result in higher burnout rate. Moreover, an overreliance on legal recourse might strain employer-employee relationships, hindering open communication and collaboration. Instead of solely relying on legal action, fostering transparent pay structures and promoting fair internal processes could be more effective in addressing pay disparities while maintaining a positive work environment. 2) Hi, Veronica Tapia-Brewster great post, I would like to counter argue your initial post, the Ledbetter case may encourage employees to scrutinize pay disparities, potentially leading to excessive internal disputes and a culture of mistrust within the organization. Although Lilly Ledbetter's emotional reaction is understandable, it's essential for employees to address such issues through established channels rather than reacting emotionally, which could disrupt workplace dynamics. It's regrettable that Ledbetter didn't receive compensation, but compensation decisions can be complex and should be based on evidence. The case highlights the importance of addressing pay disparities promptly rather than waiting for legal action. The Ledbetter case primarily illustrates the limitations of legal action in achieving justice, as it took many years and legislative changes to rectify the situation. This may raise doubts about the effectiveness of procedural justice within the legal system.More Articles From Operation Management
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