On January 22, 2009, President Obama signed what is commonly known as the Lilly Ledbetter Fair Pay Act of 2007. The legislation amends portions of Title VII of the Civil Rights Act of 1964 (Title VII), the Age Discrimination in Employment Act of 1967 (ADEA), the Americans with Disabilities act of 1990 (ADA), and the Rehabilitation Act of 1973. To understand how these complex and rather lengthy laws have been modified, and to understand the impact of the recent modification, a bit of history is required.
The Lilly Ledbetter Fair Pay Act derives its name from the petitioner in the Supreme Court case Ledbetter v. Goodyear Tire & Rubber Co., 550 U.S. 618 that was decided in 2007. Ledbetter was a female employee for Goodyear Tire & Rubber Company for approximately twenty years. During her period of work, employees either received or were denied raises based upon their supervisors' evaluation of their performance. Ledbetter presented evidence that she received several poor evaluations because of her sex, and as a result, her pay was not increased as much as it would have been if she had been evaluated fairly. Goodyear claimed that Ledbetter was time barred for any discriminatory pay claims prior to 180 days before the filing of her Equal Employment Opportunity Commission (EEOC) complaint.
Generally, Title VII, the ADEA, the ADA, and the Rehab Act all prevent an action based on events that occurred prior to 180 days before the EEOC filing by the claimant. To succeed on a disparate treatment claim under these statutes, the employee must identify a specific employment practice at issue that evidences discriminatory intent. See e.g. National Railroad Passenger Corp. v. Morgan, 536 U.S. 101, 114 (2002). Ledbetter pointed to two events prior to her EEOC filing as specific events: the paychecks that were issued to her in the 180 days prior to the EEOC filing, and a decision by Goodyear in 1998 to not give her a raise. Ledbetter essentially argued that the effect of the discriminatory reviews continued to be felt in these events. In short, the Court held that Ledbetter's past claims of discrimination, the poor supervisor reviews that the trial court had found were based improperly on sex, were time barred. The Court held that these events, which happened years before the 180 day limit, could not be imputed to events that occurred in Ledbetter's situation. More specifically, the poor reviews that were communicated to the employee years before did not ‘leapfrog' to her most current paycheck or pay raise decision for purposes of violating Title VII. Ledbetter, 550 U.S. 618.
In direct response to this decision, Congress issued the Lilly Ledbetter Fair Pay Act. The Act amends federal discriminatory laws in a number of ways, but most importantly, to include the following language:
an unlawful practice occurs, with respect to discrimination in compensation . . . when a discriminatory compensation decision or other practice is adopted, when a person becomes subject to a discriminatory compensation decision or other practice, when a person becomes subject to a discriminatory compensation decision or other practice, or when a person is affected by application of a discriminatory compensation decision or other practice, including each time wages, benefits, or other compensation is paid, resulting in whole or in part from such a decision or other practice.
Available at http://www.thomas.gov/ at http://thomas.loc.gov/cgi-bin/bdquery/z?d110:h.r.02831: (last visited March 31, 2009).
Today, based on this amendment, the statute of limitations clock for an employee's discriminatory claim resets each time an employee gets paid. Therefore, if a discriminatory practice occurred twenty years ago that results in a disparate pay and the disparity is not remedied, the disparate act is renewed with each and every pay check.
The new law takes effect for all claims pending on or after May 28, 2007. Therefore, if there are any actions filed after this date that allege such a claim, and there indeed was a violation, employers should strongly consider resolution in lieu of litigation. Employers should note the effect that this new law will have and consider some of the following forward looking decisions, including:
-updating employment policies and handbooks,
-updating training for supervisors to ensure compliance with the Ledbetter Act,
-conducting exit interviews with supervisors to discover potential disparate pay decisions,
-ensuring that no retaliation occurs for an employee that raises a Ledbetter Act issue,
-and accurately document and track all pay decisions and payroll records,
See generally "Obama's first law: The fight for fair pay"
available at http://money.cnn.com/2009/02/02/smallbusiness/fair_pay_act.smb/index.htm (last visited March 31, 2009).
These considerations are obvious and general starting points, but further legal consultation may be required to ensure complete compliance with the current federal discrimination laws based on an employer's particular factual circumstances.
Finally, the amendment generally limits recovery to two years of back pay. See H.R. 2831 at § 3-5 available at www.thomas.gov; 42 U.S.C. 12117(a). Employers must evaluate if there are legitimate business reasons for a disparity in compensation for employees. If an employer discovers that a discriminatory practice has occurred, whether the action occurred in 1972, 1982, or 1992, the employer must immediately take action to remedy it. Obviously, the employee's pay must be adjusted to remedy the situation and potentially stop the clock, but if the employee claims a disparity, the savvy employee will also demand back-pay as well. In that case, the employer is advised to negotiate to resolve the claimed dispute. Otherwise, employers open themselves up to potential lawsuit liability, which would include all of the statutory remedies available in a discrimination suit including, attorney's fees. 42 U.S.C. § 2000e-5(k).
Simply and finally put, the Ledbetter Act changes the game for federal discrimination claims that every employer must take into consideration.
