Wessels Sherman
On January 29, 2009, President Obama signed his very first piece of federal legislation. This legislation, known as the Lilly Ledbetter Fair Pay Act, directly impacts the workplace by substantially broadening the timetable for suing one's employer for pay discrimination claims.
The Lilly Ledbetter Fair Pay Act nullifies the prior May 29, 2007 U.S. Supreme Court decision of Lilly Ledbetter v. Goodyear Tire & Rubber Co. In Goodyear, the U.S. Supreme Court held that the decision to set Ledbetter's pay rate lower than her male counterparts was a separate/discrete act so that the period for filing a discrimination charge began when the decision to set the pay rate took place.
In March 1998, Ledbetter submitted a questionnaire to the Equal Employment Opportunity Commission (EEOC) and a formal EEOC charge was issued in July 1998 relating to her belief that she was being paid less than her male counterparts at a particular Goodyear facility. However, only after her November 1998 retirement did she file a lawsuit asserting sex discrimination under Title VII of the Civil Rights Act as well as unequal pay under the federal Equal Pay Act. The district court allowed her Title VII pay discrimination claim to proceed to trial, but dismissed her Equal Pay Act claim. Ledbetter abandoned her Equal Pay Act claim even though federal Equal Pay Act claims enjoy a two- or three-year statute of limitations. Ledbetter continued to pursue her sex discrimination claim under Title VII.
At trial Ledbetter presented evidence alleging that several supervisors had in the past given her poor evaluations because of her sex; and as a result, her pay had not increased as much as it would have if she had been evaluated fairly --- causing her earnings to be significantly less than her male colleagues. Goodyear maintained that the evaluations were legitimate. A jury found for Ledbetter awarding her $3 million in backpay and other damages.
On appeal, Goodyear contended that the pay discrimination claim was time barred with regard to all pay decisions made before September 26, 1997 (precisely 180 days before Ledbetter filed her EEOC questionnaire). Because the applicable statute of limitations under Title VII was 180 days from the date of the alleged discriminatory practice, Ledbetter could not be successful with her case since she filed her EEOC charge years after the alleged discriminatory decisions took place. In other words, any decision occurring before September 26, 1997 was, in effect, time barred under the applicable statute of limitations. Ledbetter did not assert that Goodyear acted with discriminatory intent when it issued her paychecks or when it denied her a raise in 1998. Rather, Ledbetter's central theory of liability against Goodyear was that the pay disparities should be viewed as taking place within the statute of limitations because each paycheck issued by Goodyear was an "effect of prior discriminatory conduct" from years gone by.
The U.S. Supreme Court ultimately rejected Ledbetter's contention and reasoned that "effects alone cannot breathe new life into prior, uncharged discrimination." The Lilly Ledbetter Fair Pay Act completely reverses this decision and makes it so that effects alone shall breathe new life into otherwise non-actionable, time-barred claims.
The Lilly Ledbetter Fair Pay Act not only covers Title VII of the Civil Rights Act, but also amends the Age Discrimination in Employment Act, the Americans with Disabilities Act, and the federal Rehabilitation Act. Consequently, employers can now be sued for actions on the part of supervisors, managers and other decision makers made several years ago. With each new paycheck, employees now have the opportunity to sue their employers for discrimination related to compensation.
This new law establishes an effective date of May 28, 2007. Accordingly, the law will be administered and enforced as if it has been in place immediately prior to the Ledbetter decision rendered on May 29, 2007. It should be no surprise to anyone that the Lilly Ledbetter Fair Pay Act will cause an absolute explosion of employee driven litigation. What remedies were not available to employees due to a defined statute of limitations are now readily available. The surge in employment-related lawsuits will, no doubt, rise substantially.
What should an employer do in light of this new law?
1. Create, review and/or revise up-to-date and accurate job descriptions.
2. Compare and contrast the pay rates for all similarly situated employees performing similar job functions.
3. Any pay disparity amongst individuals within a particular job group should be identified.
4. Written records and/or data should be in place to justify legitimate business reasons for pay disparity.
5. Once identified, pay disparities not justified by legitimate non-discriminatory business reasons established by written record and/or supporting data should be corrected in conformity with federal and state law.
6. Any member of management with the ability to set pay rates should be trained and educated on pay disparity and related discrimination issues.
7. Pay rates and payroll-related information should be protected to the greatest extent possible and as appropriate under the law.
8. Performance reviews and related evaluations must be performed by experienced and properly trained members of management. Any document related to performance will be one of the first pieces of evidence relevant in pay disparity claims and related lawsuits.
9. Consideration should be given to establishing appropriate pay grades or pay levels for all positions. Any pay grades or pay levels must be reviewed on an annual basis by appropriate members of management.
10. Auditing, correcting and/or establishing processes and procedures related to pay disparity matters should be completed with advice and consultation from experienced employment law counsel.
