|January 26, 2009|
Schiff Hardin Labor and Employment Alert
Reflecting the new administration in Washington, the Lilly Ledbetter Fair Pay Act of 2009 (S.B. 181) (the "Ledbetter Act") sailed through the U.S. Senate on January 22, 2009. The legislation is certain to pass in the House of Representatives and to be signed into law by the president.
The Ledbetter Act reverses the Supreme Court's decision in Ledbetter v. Goodyear Tire & Rubber, 550 U.S. 618 (2007). In Ledbetter, the Supreme Court, in a 5-4 decision, held that a claim for equal pay must be filed with the Equal Employment Opportunity Commission ("EEOC") within 180 days of the decision giving rise to the pay disparity. The Court rejected plaintiff Lilly Ledbetter's argument that each separate paycheck constituted a separate discriminatory act. The Court's decision meant, effectively, that equal pay claimants needed to file their EEOC complaint within 180 days of the hiring decision or annual performance review that resulted in an unlawful pay disparity.
The Ledbetter Act amends Title VII of the Civil Rights Act by establishing that an EEOC complaint for discriminatory compensation may be filed within 180 days of when an individual "becomes subject to" or "is affected by" a discriminatory pay decision. The Ledbetter Act clarifies that this time period includes "each time wages, benefits, or other compensation is paid" resulting from a discriminatory decision. The Ledbetter Act authorizes an individual to recover back pay for up to two years preceding the filing of the EEOC charge for discriminatory pay. By its express terms, the Act will take effect retroactively on May 28, 2007, and apply to all claims that are pending on or after that date.
While equal pay claims are traditionally viewed in the light of gender-based claims, the Ledbetter Act amends equal pay claims brought under any protected category under Title VII, including race, color, religion and national origin. The Ledbetter Act also similarly modifies the limitations period for equal pay claims brought under the Age Discrimination in Employment Act, the Americans with Disabilities Act, and the Rehabilitation Act of 1973.
In the wake of the Ledbetter Act, employers can expect that their compensation decisions at the time of hiring and in annual performance reviews will be tested. Employers should develop guidelines ensuring that their compensation decisions are based on legitimate factors, such as prevailing labor market conditions and job performance. Employers should also review their documentation procedures for compensation decisions to ensure that they can prove up the legitimate basis for compensation decisions, even many years after the compensation decisions were made.
ABOUT SCHIFF HARDIN LLP
Schiff Hardin's Labor and Employment practice group represents employers and management in all aspects of the employment relationship, including discrimination claims under Title VII, the American with Disabilities Act, the Age Discrimination in Employment Act, and the Fair Labor Standards Act. The firm's employment attorneys have litigated and tried numerous cases in federal and state courts around the country. Schiff Hardin offers clients comprehensive payroll practices and policy reviews, as well as advice, counseling and training on equal pay issues.
For more information, please feel free to contact us.
RECENT LABOR AND EMPLOYMENT PUBLICATIONS
"Department of Labor Implements Sweeping Changes to FMLA," Labor and Employment Update (January 14, 2009)