Impact of the Ledbetter Act
President Obama signed the Lilly Ledbetter Act this month to broaden an employee's right to sue for pay discrimination. A great summary of the Ledbetter act was just prepared by the American Bar Association's subcommittee on Labor and Employment Law. I posted in an excerpt below.
Implications of the Ledbetter Act
The Ledbetter Act exposes employers to pay discrimination liability for alleged discriminatory decisions, even though they may have been made years earlier, based on whether they have continuing impact on an employee's compensation. Furthermore, applying to claims of pay discrimination under Title VII, the ADA, the Rehabilitation Act, and the ADEA, the Act is not limited to claims based on gender discrimination, but also applies to pay discrimination based on race, national origin, religion, age, and disability.
The broad language of the Ledbetter Act also expands the potential pool of plaintiffs in several other respects. The Act re-triggers the limitations period with each paycheck, and whenever "benefits" or "other compensation" are paid. These terms arguably include the full gamut of entitlements that an employer's discriminatory decision could impact, including health benefits, paid leave, bonuses, stock options, and pension payments, though the Act clarifies that it will not allow employees to rely on post-retirement pension payments to stretch the limitations period beyond the end of the employment relationship. Specifically, the Act is not intended to "change current law treatment of when pension distributions are considered paid." This language preserves the rule that "pension distributions are considered paid upon entering retirement and not upon the issuance of each annuity check." See H.R. Rep. No. 110-237, at 18 (2007), citing Florida v. Long, 487 U.S. 223, 239 (1988); Maki v. Allete, Inc., 383 F.3d 740, 744 (8th Cir. 2004).
The Act also prohibits discriminatory compensation decisions as well as "other practices" that affect compensation. This language suggests that any practice that affects compensation-not just discreet decisions-may trigger a claim. Senator Arlen Specter proposed an amendment to the Act that would have stricken the "other practices" language, arguing it would "promote an enormous amount of litigation as to whether 'other practices' included such items as promotion, hiring, firing, training, tenure, [or] demotion." 155 Cong. Rec. S755 (daily ed. Jan. 22, 2009) (statement of Sen. Specter). Senator Barbara Mikulski, who sponsored the Senate bill, rejected Senator Specter's amendment because it did not cover "job evaluations," "classifications" and other "personnel actions that still result in discriminatory wages." 155 Cong. Rec. S758 (daily ed. Jan. 22, 2009) (statement of Sen. Mikulski, in effect confirming that the Act is intended to include a wide variety of practices.
The Ledbetter Act does not alter the limit on recovery of back pay to a maximum of two years preceding the filing of a discrimination charge under Title VII. Furthermore, the Act does not prevent an employer from asserting that an employee's claim is time-barred under the equitable doctrines of waiver, estoppel, or laches. 155 Cong. Rec. S754 (daily ed. Jan. 22, 2009) (statement of Sen. Mikulski).
Employer Perspective
Employers should ensure they have policies and procedures in place for documenting the reasons for their compensation decisions and retaining those documents and the data supporting the pay decisions they make. While retaining data can become quite burdensome and expensive over time, technology vendors are increasingly offering viable solutions, and the benefits may prove to outweigh the costs if litigation arises long after decisions are made. Employers should weigh these considerations in making compensation decisions and assessing their retention policies and programs.
Employee Perspective
The Ledbetter fix restores common sense to litigating claims involving compensation discrimination. Pay discrimination is an on-going and cumulative injury. Its harms do not become stale simply because the genesis for the discrimination occurred more than 180 or 300 days before the plaintiff filed an EEOC charge. The Ledbetter fix appropriately allows plaintiffs who are presently affected by compensation discrimination to redress that wrong, while limiting employer liability for back pay to the two years preceding the filing of the charge.
