PRESIDENT OBAMA SIGNS THE LILLY LEDBETTER FAIR PAY ACT:
WHAT IT MEANS FOR EMPLOYERS
The Lilly Ledbetter Fair Pay Act gives an employee alleging pay discrimination the right to sue within 180 days of the employee’s most recent paycheck. The Act, named after a former Goodyear Tire employee who sued the company for gender discrimination in 1998, essentially reverses the U.S. Supreme Court’s 2007 decision in Ledbetter v. Goodyear Tire & Rubber Co., which limited the time frame for filing a charge of pay discrimination within 180 days of the alleged unlawful employment decision or practice. In other words, under Ledbetter, the Court held that the limitations period to file a charge will begin to run when the employer makes an alleged unlawful decision about the employee’s compensation, not each time the employee receives payment affected by the alleged unlawful decision.
The Act amends Title VII, the Age Discrimination in Employment Act (“ADEA”), the Americans with Disabilities Act (“ADA”), and the Rehabilitation Act, to provide that, with regard to pay discrimination claims, an unlawful employment practice occurs:(1) when a discriminatory compensation decision or practice is adopted; or (2) when an individual becomes subject to a discriminatory compensation decision or other practice; or (3) when an individual 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. Most importantly for employers, the new law allows the filing of a charge alleging pay discrimination with the issuance of each paycheck. Consequently, each paycheck can be considered an unlawful employment practice which starts the limitations anew.
In addition, the Act expands the relief to an aggrieved person by allowing recovery of back pay for up to two years preceding the filing of the charge, so long as the unlawful employment practices that have occurred during the charge filing period are “similar or related” to those that occurred outside the time for filing a charge.
The Act will have a significant impact on employee record-keeping, including compensation decisions for current employees. Further, entitlement to the Act’s protections extend to employees on leave, retirees, or other inactive or former employees since the Act itself references benefits and is not strictly limited to wages. The new law is expected to result in increased numbers of pay-related lawsuits and employers should be cautioned to take steps now to insure that their compensation decisions do not subject them to additional risk.
The new law applies retroactively to May 28, 2007-- the date of the U.S. Supreme Court’s Ledbetter decision. Therefore, the new law will apply to all claims of pay discrimination under Title VII, the ADEA, the ADA and the Rehabilitation Act pending on or after that date.
Consideration by the Senate on a companion bill, the Paycheck Fairness Act, is currently underway. The Paycheck Fairness Act is expected to enhance remedies for sex-based discrimination and make it easier for plaintiffs to establish an Equal Pay Act violation.
Jackson & Campbell, P.C.’s Employment Law Practice Group can help you navigate through all the changes and advise you on best practices with regard to the new law to minimize your risk of compensation claims, as well as provide counsel on other related employment matters.
The contents of this Employment Law Alert are intended for general informational purposes only and should not be considered legal advice. Moreover, the mailing of this Employment Law Alert is not intended to create nor does it constitute an attorney-client relationship.
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