In January, 2009 President Obama signed into law the “Lilly Ledbetter Fair Pay Act of 2009.” The Act, in effect, overturns the widely publicized Supreme Court decision in Ledbetter v. Goodyear Tire and Rubber Co. In that case, Ledbetter worked for Goodyear for the approximately 19 years, but in 1988, as she was close to retirement, she learned that her male colleagues were making significantly more money than she was, and had been doing so for close to her entire employment.1 Ledbetter commenced an action based upon Title VII of the Civil Rights Act of 1964 for pay discrimination and the Equal Pay Act of 1963, 29 U.S.C. 206(d).2
The court held that plaintiff, Lilly Ledbetter, was estopped from suing her employer Goodyear Tire for pay discrimination because she did not file her complaint within the then statutorily required 180 days from the date of the first instance of discrimination.3 Title VII requires an individual challenging an employment practice to first file a charge with the Equal Employment Opportunity Commission, within a specified period after the alleged unlawful employment practice occurred. In Ledbetter’s case, the charge had to be filed within 180 days.4 “The EEOC charging period is triggered when a discrete unlawful practice takes place.”5However, “a new charging period does not commence, upon the occurrence of subsequent nondiscriminatory acts” that are the result of the prior discriminatory acts.6 Similarly, while a new EEOC charging period is triggered whenever an employer issues paychecks based upon a discriminatory pay structure, in violation of Title VII, “[a] new charging period is not triggered when an employer issues paychecks pursuant to a system that is ‘facially nondiscriminatory.’”7 Thus, the court reasoned that the later effects of Goodyear’s past discrimination did not reset the clock for Ledbetter to file a charge with the EEOC, and therefore, her claims were untimely.
The new act amends Title VII of the Civil Rights Act of 1964 and the Age Discrimination in Employment Act of 1967 and modifies the operation of the American with Disabilities Act of 1990 and the Rehabilitation Act of 1973.8 The need for this amendment was based on Congress’s finding that [t]he Ledbetter decision undermines those statutory protections by unduly restricting the time period in which victims of discrimination can challenge and recover for discriminatory compensation decisions or other practices, contrary to the intent of Congress.9
A majority in Congress believed that the Supreme Court’s decision put an unnecessary burden on employees to (1) realize that they were not being treated fairly, (2) to timely file within 180 days of the first instance of discrimination, and (3) prevented any recovery if the employee did not timely file within 180 days from the date of the first instance of discrimination.
This Act, in turn, seeks to remove those burdens and inequities. Specifically, the Act amends Title VII’s section on discrimination in compensation based upon race, color, religion, sex or national origin, by adding that
3(A) For the purposes of this section, an unlawful employment practice occurs, with respect to discrimination in compensation…, when a discriminatory compensation decision or other practice is adopted, … [becomes subject to same], or when an individual is affected by… [the application of same], including each time wages, benefits, or other compensation is paid, resulting in whole or in part from such a decision or other practice.
3(B) Liability may accrue and an aggrieved person may obtain relief as provided in subsection (g)(1), including recovery of back pay for up to two years preceding the filing of the charge, where the unlawful employment practice that have occurred during the charge filing period are similar or related to unlawful employment practices with regard to discrimination in compensation….10
This added language effectively eliminates those burdens the Supreme Court’s decision in Ledbetter v. Goodyear Tire & Rubber imposed, by in essence resetting the 180 day statute of limitations period each time wages, benefits or any other compensation is paid out, based upon the original discriminatory decision.
This is a major change in the law, and critics of the legislation charged that it opens employers to law suits by its employees filed at any point during their employment when and if they discover a discriminatory inequity. Yet, while this subjects employers to the potential of being sued based upon decisions made several years prior,11 the potential liability for remedies such as back pay do not relate back to the alleged first occurrence of a discriminatory decision. Instead, the aggrieved employee will be entitled to back pay for up to two years preceding the filing of the charge. The law applies retroactively, to any claim filed on or after May 27, 2007, the day before the Supreme Court published its opinion.12
Although the overall effect this Act will have is still unknown, it has many companies increasing their litigation budgets for fear of what is “coming down the pipeline.”13 Given the current economic crisis which has many companies making large scale lay-offs, and the unemployment rate steadily rising, there is a fear that more and more employees will be filing employment discrimination
suits. Employers must now continuously maintain detailed documentation of any action relating to employee, including but not limited to salary or wage decisions, in order to avoid and/or adequately defend against those suits filed.
1 Ledbetter v. Goodyear Tire and Rubber, Co., 550 U.S. 618 (2007)
3 Id.; see also 42 USC § 2000e-5 (2007).
4 Id. citing 42 U.S.C. § 2000e-5(e)(1) and (f)(1).
5 Ledbetter, 550 U.S. 628.
7 Id. at 636 (emphasis added).
8 Lilly Ledbetter Fair Pay Act of 2009, 123 Stat 5 (West 2009); The Age Discrimination in Employment Act of 1967, 29 U.S.C. § 626 was amended to reflect the language in section 3(A) below, supra note 6; American with Disabilities Act of 1990, is modified to apply to claims of discrimination in compensation set forth in section 3, supra note 6, for claims brought under 42 U.S.C. § 12111 et seq., 12203; the Rehabilitation Act of 1973 is modified to apply to claims of discrimination in compensation set forth in section 3, supra note 6, for claims brought under 29 U.S.C § 791 and 29 U.S.C. § 794.
10 Id. (emphasis added); see also 42 U.S.C. § 2000e-5(e)(3)(b) (West 2009).
11 See e.g. supra note 1 (where in Ledbetter filed suit based upon decisions made 19 years prior).
12 Supra note 3.
13 Brian Katkin, GCS Warned to Prep Litigation War Chest Employment Lawyers Say Significant Shift In Labor Laws Combined With Mass Layoffs Will Lead To More Suits, Legal Times, February 2, 2009, available on Westlaw at 2/2/2009 LegalTimes 11.
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Joshua A. Goldstein is a partner in the firm’s West Palm Beach office. He practices in the areas of Commercial Litigation, Labor and Employment Law, Legal Malpractice, Directors and Officers Liability, Banking and Financial Litigation,[...] Read more