The Lilly Ledbetter Fair Pay Act: Paycheck Discrimination Claims Get A Longer Life

By R. Joseph Leibovich
Shuttleworth Williams, PLLC
(901) 328-8269
jleibovich@shuttleworthwilliams.com

The first bill President Obama signed into law shortly after taking office was the Lilly Ledbetter Fair Pay Act of 2009. The law was specifically designed to nullify a Supreme Court decision, and to extend the reach of potential claims regarding disparate pay discrimination claims under Title VII of the Civil Rights Act (“Title VII”), the Age Discrimination in Employment Act (“ADEA”), the Americans with Disabilities Act (“ADA”) and the Rehabilitation Act.

History

The legislation was triggered by the United States Supreme Court’s decision in Ledbetter v. Goodyear Tire & Rubber Co., Inc., 550 U.S. 618 (2007). Lilly Ledbetter (“Ledbetter”) worked at a manufacturing facility as a salaried employee from 1979 through 1998. In March 1998 she filed a charge with the EEOC alleging discrimination based on her gender. After retiring in November 1998, Ledbetter filed a charge of discrimination with the EEOC. Ultimately, she filed a lawsuit under Title VII and under the Equal Pay Act (“EPA”). The EPA claim was dismissed by the trial court, while the Title VII claim went forward.

Ledbetter alleged that decisions regarding pay were based on supervisor evaluations, and that during the course of her employment, she was given negative evaluations due to her gender. The jury awarded her backpay and damages.

The case went through the appellate process, and ended up at the United States Supreme Court. The issue before the Court involved a statutory requirement for claims under Title VII. Specifically, Title VII requires that before a plaintiff may file a case in court, that individual must file a charge of discrimination with the EEOC. The individual must file that charge within 180 days of the alleged discriminatory act (or, in states such as Tennessee where there is also a state law protecting the same rights, the filing period is extended to 300 days).

In Ledbetter’s case, the negative evaluations in question took place more than 180 days before she filed her charge.

The issue was whether or not a new 180 day period commenced with each paycheck, or whether the evaluations represented “discrete acts” of discrimination from which the 180 day began to run.

The Ledbetter Court held that the pay system, which was based on supervisor recommendations, was not established for discriminatory purposes. Therefore, the Court reasoned that the supervisors’ recommendations stood as discrete acts. Since these acts occurred more than 180 days prior to the charge, the Court ruled that Ledbetter’s claim was not timely.

The Lilly Ledbetter Fair Pay Act of 2009

This decision, along with a strongly worded dissent by Justice Ginsburg, set legislative wheels in motion. The Lilly Ledbetter Fair Pay Act was initially shot down in the Senate in 2008, but was re-introduced, and ultimately passed the House and Senate in January 2009 as The Lilly Ledbetter Fair Pay Act of 2009. President Obama signed the bill into law days after that.

The law explicitly legislatively reverses the Ledbetter decision. Under the law, each paycheck triggers a new 180 (or 300) day period within which to file a charge of discrimination when the amount of the paycheck is affected by a discriminatory reason. This is a reintroduction of the “paycheck accrual rule” that the EEOC and most federal courts of appeals had applied prior to the Ledbetter decision.

The law does not only apply to discrimination based on gender. It applies to all categories protected by Title VII, the ADA, the ADEA and the Rehabilitation Act.

Under the Act, back pay of up to two years is recoverable where the acts earlier than 180 (or 300) days prior to the charge are similar or related to the acts within the statutory period.

The Act was enacted so as to retroactively apply to May 28, 2007 forward.

It is important to note that this law does not affect the Equal Pay Act, which is separate from Title VII. The EPA does not require the filing of an EEOC charge. In Ledbetter, the plaintiff’s EPA claim had been dismissed on summary judgment and she did not pursue that issue in appeals.


What Does This Mean to Employers?

The Act gives Title VII claims a significantly longer shelf life. Actions from the distant past can continue to haunt employers for as long as an individual draws a paycheck. In an effort to potentially limit liability, employers should look at how compensation decisions have been made. Where there has been subjectivity that could have been influenced by discriminatory intent, employers should consider make sure individuals’ compensation is not inequitable or influenced by discrimination. By fixing past mistakes now, employers can possibly break the links of the chain 180 (or 300) days after the appropriate changes are made.

The articles published in this blog are for informational purposes only, and are not intended to be legal advice or a solicitation for legal services. For specific legal questions and issues, you should contact an attorney of your choice.