Lilly Ledbetter Fair Pay Act of 2009
On January 29, 2009, President Obama signed into law the Lilly Ledbetter Fair Pay Act of 2009 (the Act), effectively overruling a recent U.S. Supreme Court decision and lengthening significantly the statute of limitations for many pay discrimination claims. The new law eliminates the normal 180/300-day charge filing period for compensation discrimination complaints. Employers must now intensify their efforts to make certain that their pay practices are nondiscriminatory and to keep the records necessary to demonstrate that their compensation decisions are fair.
The Ledbetter Decision
In order to sue an employer under many federal employment discrimination laws, an employee must first file a charge with the U.S. Equal Employment Opportunity Commission (EEOC) within 180 days after the alleged discriminatory act (the time limit is extended to 300 days if the charge is also covered by a state or local anti-discrimination law). In Ledbetter v. Goodyear Tire & Rubber Co., 550 U.S. 618 (2007), the U.S. Supreme Court decided that the EEOC charge filing period began to run when plaintiff Lilly Ledbetter alleged that discriminatory evaluations by her supervisors, some made many years before she filed her EEOC charge, had resulted in lower paychecks for her throughout her employment with Goodyear. Although Ledbetter failed to contest a lower court’s ruling that there was insufficient evidence that any discrimination had occurred in the 180 days preceding her EEOC charge, she argued to the Supreme Court that the paychecks she did receive during that period were a valid basis on which to sue because they would have been larger if she had been evaluated in a nondiscriminatory manner prior to the EEOC charge filing period. In a 5-to-4 decision, the Supreme Court rejected Ledbetter’s contention that a new filing period should have been deemed to begin each time she received a paycheck allegedly affected by prior discrimination – even paychecks received long after the allegedly discriminatory evaluations ceased. Instead, the Supreme Court held that the EEOC charge filing period begins to run when the act committed with discriminatory intent occurs – and not whenever discriminatory effects of the wrongful act are felt.
Dissenting in Ledbetter, Justice Ginsburg invited Congress to reverse the Court’s holding by amending the relevant statutes. After an initial attempt to take Justice Ginsburg up on her suggestion came up four votes short in 2008, congressional Democrats reintroduced and finally passed the Lilly Ledbetter Fair Pay Act of 2009 just one week after President Obama’s inauguration.
The Act’s Provisions
Although Ledbetter’s original suit was a sex discrimination case, the Act amends several federal anti-discrimination laws subject to the EEOC’s 180/300-day charge filing period: Title VII of the Civil Rights Act, the Age Discrimination in Employment Act, the Americans With Disabilities Act, and the Rehabilitation Act. The Act’s amendments therefore affect compensation-related claims based on allegations of race, color, religion, sex, national origin, age and disability. The Act provides that the 180/300-day charge filing period begins to run on such claims when any one of the following occurs:
- a discriminatory compensation decision or other practice affecting compensation is adopted;
- an individual becomes subject to a discriminatory compensation decision or other practice; or
- 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 compensation decision or other practice.
Congress also made the Act’s changes retroactive to May 28, 2007 – the day before the Supreme Court issued its Ledbetter decision – so the Act applies to any existing claims that have been not litigated to a final judgment.
Historically, the very short statute of limitations applicable to most federal discrimination claims has been understood to be a congressional compromise balancing the employee’s right to be free from discrimination against the unfairness to the employer of defending suits based on long-past decisions. For a large class of pay discrimination claims, the Act has now swept away that compromise.
The clear effect of the Act’s amendments is that many pay discrimination claims – including any discrimination claims that can be tied to differences in pay or benefits – are no longer subject to the usual 180/300-day statute of limitations. Employees will now be able to assert discrimination complaints years, or even decades, after some alleged discriminatory conduct if that long-ago conduct can be said to have an effect on some form of compensation received within the 180/300-day charge filing period. The Act therefore potentially resurrects myriad discrimination claims arising out of past promotion, job assignment, and disciplinary decisions – the only de facto requirement becomes a plaintiff’s ability to allege a connection between such allegedly discriminatory conduct, no matter how distant, and the employee’s recent compensation. Even retired employees may now have viable claims that their present retirement benefits are depressed due to the effect of discrimination suffered during their employment.
Going forward, employers should review all compensation-related decisions carefully. Employers now also need to be more detailed in documenting such pay decisions. Management will also have to reevaluate company document retention policies for such compensation-related materials – including documentation relating to former employees. In addition, employers need to train managers and supervisors on how to conduct an appropriate performance evaluation and how to comply with document retention policies. In many cases, management should consider a self-audit of its compensation practices. Further, employers should be prepared to identify and litigate equitable defenses – i.e., laches and waiver -- to stale claims that are no longer barred by the 180/300-day charge filing period.