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President Obama Signs Legislation Extending Time For Employees To File Discrimination Claims
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President Obama signed into law the first piece of new legislation of his administration. The Lilly Ledbetter Fair Pay Act, which passed convincingly in both houses of Congress, amends federal employment discrimination laws to all but eliminate the statute of limitations on pay discrimination claims.
Discussion
The Lilly Ledbetter Fair Pay Act overrules the controversial Supreme Court decision of Ledbetter v. Goodyear Tire & Rubber Co. In that case, the Supreme Court held that the 180-day statute of limitations for an employee to bring a charge of gender based pay discrimination before the EEOC was triggered when a discrete discriminatory pay practice takes place. Essentially, this meant that an employee had only 180 days from the time the initial discriminatory pay decision was made to file a charge with the EEOC. Thus, pay discrimination claims, rooted in decisions made years earlier, were time barred.
With Ms. Ledbetter at his side as he signed the new law, President Obama remarked that she lost over $200,000.00 over the course of her career as a result of being paid less than men working in her same position. However, under the Supreme Court’s ruling, her claim, based on a discriminatory decision made years earlier, was barred by the statute of limitations.
The new law amends Title VII, the Americans with Disabilities Act, the Rehabilitation Act, and the Age Discrimination in Employment Act to provide that the statute of limitations on a pay discrimination claim is renewed: (1) when a discriminatory compensation decision or other practice is adopted; (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. Thus, every time an employee receives a paycheck, the statute of limitations period is renewed.
Although “old” claims will now be viable under the new law, damages available under such claims will be limited in most cases to two years preceding the filing of the claim. It remains unclear, however, exactly how such damages will be calculated, especially in circumstances where multiple employment decisions or events affecting the plaintiff’s compensation occur after the alleged discriminatory act.
Notably, Congress drafted the new law so that it would be retroactive to May 28, 2007, the day before the Supreme Court issued the Ledbetter decision.
What This Means
The Lilly Ledbetter Fair Pay Act may spark a wave of new pay discrimination claims that were previously time barred. It will also provide future plaintiffs with a longer window of opportunity to file discrimination claims based not only upon gender, but also age, race, color, national origin, and religion. This law will create challenges for employers faced with defending decisions made years, or even decades, earlier where decision-makers are gone, missing or simply don’t remember.
This new law, and all of the publicity surrounding the Ledbetter decision, has raised the profile of pay claims and pay equity issues and serves as a reminder to employers of the importance of documenting the basis for compensation and promotion decisions. Employers should educate supervisors and other decision-makers how to effectively document the rationale for such decisions. Prudent employers will also analyze their document retention policies and practices to make sure they are preserving information necessary to prove the basis of their compensation and promotion decisions.
This e-updated was authored by Timothy Keegan and Denise Brucker. For more information, or questions, please contact Mr. Keegan, Ms. Brucker or any Paul, Plevin attorney at (619) 237-5200.
