Lilly Ledbetter Fair Pay Act Amends
Federal Employment Laws
President Obama signed the Lilly Ledbetter Fair Pay Act of 2009 (the Act) into law on January 29, 2009. The Act is significant because it reverses the holding in Ledbetter v. Goodyear Tire & Rubber Co., a 2007 United States Supreme Court decision that limited the ability of employees to file pay discrimination charges with the U.S. Equal Employment Opportunity Commission (EEOC).
Background - The Ledbetter Decision
An employee must file a discrimination charge with the EEOC within 180 days after a discriminatory act occurs, unless the applicable state has a fair employment agency, in which case the time period may be extended to 300 days. If the discriminatory act continues over a period of time, such as with harassment that takes place over a period of years, the 180 or 300 day period is considered to begin on the date of the last discriminatory or harassing act.
In Ledbetter, a former employee (Lilly Ledbetter) filed a pay discrimination charge with the EEOC within 180 days after her employment with Goodyear ended. In her Charge, Ms. Ledbetter alleged, among other things, that she was paid less than her male counterparts while employed with Goodyear. Even though Ms. Ledbetter filed her charge within 180 days (the applicable time period) after her employment at Goodyear ended, the Supreme Court held that she had filed her Charge too late because the discriminatory pay decisions on which she based her allegations occurred several years before she filed her Charge and were, therefore, outside the charge-filing time period. According to the Supreme Court, Ms. Ledbetter could not base her discrimination allegations on paychecks issued more than 180 days after the pay decisions occurred, even though she argued that those decisions affected all of her subsequent paychecks. Thus, the Supreme Court held that pay discrimination charges must be filed with the EEOC within 180 (or 300) days after the first allegedly discriminatory pay decision, not 180 (or 300) after any subsequent paycheck is issued.
The Lilly Ledbetter Act
The Act essentially reverses the holding in the Supreme Court's Ledbetter decision to state that an employee may file a pay discrimination charge within 180 or 300 days after the employee's last-issued paycheck. In doing so, the Act changes the rules for calculating the statute of limitations for pay discrimination claims under Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act, the Americans With Disabilities Act, as amended, and the Rehabilitation Act of 1973 to state that each paycheck issued after a discriminatory pay decision occurs - not just the first one - triggers a new statute of limitations period. For purposes of the Act, a "discriminatory pay decision" occurs when (i) a discriminatory compensation decision or other practice is adopted; (ii) an individual becomes subject to the decision or practice; or (iii) an individual is affected by application of the decision or practice, including each time compensation is paid.
The Act applies to all pay discrimination claims pending on or after May 28, 2007, the date of the Ledbetter decision.
Steps Employers Should Take Now to Protect Themselves
The Act extends the time period during which employees may file pay discrimination charges, thereby allowing employees to more easily file pay discrimination charges and lawsuits. Employers should expect increased litigation as a result. To minimize the liability associated with such litigation, employers should:
- Review compensation policies and practices for any evidence of potential disparities in pay among similarly-situated employees.
- Make sure that all compensation decisions are supported by proper documentation, as an employer's ability to prove merit-based pay decisions will likely become crucial in defending pay discrimination claims.
- Review document retention policies to ensure that all compensation-related documentation is maintained for an adequate time period.
Whom to Contact
Please contact Laura Pfeiffer, Mark Pihart, or Megan Ruwe at Winthrop & Weinstine, P.A., if you have any questions regarding the Act, pay discrimination issues, or steps your business should take to minimize the risk and liability associated with litigation pursuant to the Act. We're here to help.
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