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Obama Signs the Ledbetter Fair Pay Act of 2009

Natalie Klyashtorny, Esq. on 2/9/2009
On January 29, 2009, President Barack Obama signed into law the “Lilly Ledbetter Fair Pay Act of 2009,” which extends the time limitation for filing a charge of wage discrimination with the Equal Employment Opportunity Commission (EEOC) under Title VII or the Age Discrimination in Employment Act (ADEA).

The Ledbetter Fair Pay Act is the Congressional response to the Supreme Court’s controversial 2007 decision in Ledbetter v. Goodyear Tire&Rubber Co., in which the Court held that the deadline for an employee to file a charge of wage discrimination with the EEOC was 180 days from the date a discriminatory decision with regards to compensation is made and communicated to the employee.1 The decision was criticized as imposing an undue burden on employees, many of whom do not discover that the compensation decision was, in fact, discriminatory until many years later.

Plaintiff Lilly Ledbetter had been employed by Goodyear for close to twenty years. When she started working, her salary was equal to that of her male colleagues. However, over the years, a discrepancy developed to the point that by the time, Ms. Ledbetter retired in 1998, she was the only female area manager and also the lowest-paid area manager. She brought suit, alleging disparate treatment under Title VII and the Equal Pay Act. Although the Equal Pay Act was dismissed on summary judgment, a jury found in her favor as to the Title VII claim and awarded back pay and damages. After the Court of Appeals for the 11th Circuit reversed the jury’s decision, the Supreme Court granted certiorari.

In front of the Supreme Court, Goodyear argued that Ms. Ledbetter was time-barred as she had filed her charge of discrimination with the EEOC more than 180 days after the salary decisions were made that she alleged were discriminatory. Ms. Ledbetter maintained that the charging period should re-start every time she received a paycheck that was a product of a past discriminatory decision. Specifically, she argued that "each paycheck that offers a woman less pay than a similarly situated man because of her sex is a separate violation of Title VII with its own limitations period, regardless of whether the paycheck simply implements a prior discriminatory decision made outside the limitations period”. The Supreme Court sided with Goodyear, citing a long line of precedence for the proposition that the EEOC charging period begins to run from the time when a “discrete act of alleged intentional discrimination” occurs, not from the date when the “effects” of the discriminatory act are felt. In dismissing Ms. Ledbetter’s claim, the Supreme Court held her receipt of the paychecks was a mere “effect” of prior discriminatory decisions and that she was time-barred as she did not file a charge of discrimination within 180 days of every discriminatory compensation decision. Thus, under the Court’s decision, if an employee discovered that even a one (1) year-old decision regarding compensation was motivated by discriminatory animus, the employee would be time-barred from filing a charge of discrimination with the EEOC.  

The Ledbetter Fair Pay Act reverses the Court’s decision and amends Title VII, as well as the ADEA, to specify that a discriminatory compensation decision or other practice “occurs” every time compensation is paid pursuant to the discriminatory compensation decision or practice. Specifically, with respect to Title VII, the legislation states that “an unlawful employment practice occurs … when a discriminatory compensation decision or other practice is adopted, when an individual becomes subject to a discriminatory compensation decision or other practice, or 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.” The language is similar with respect to the ADEA. Accordingly, the EEOC charging period restarts each time an employee receives compensation that reflects past discrimination based on race, color, religion, age, gender or national origin.

The Ledbetter Fair Pay Act allows an employee to receive back wages for up to two years prior to the filing of a charge under Title VII if the unlawful employment practice that has occurred during the charge filing period is similar or related to the unlawful employment practice with regard to discrimination in compensation that occurred outside the charge filing period. The Ledbetter Fair Pay Act will retroactively take effect as of May 28, 2007, exactly one day before the Supreme Court decision, and will apply to all matters pending as of that date.

As mass layoffs are now a daily by-product of the economic crisis, the Ledbetter Fair Pay Act will surely increase employment discrimination litigation as it will make it easier for employees to pursue wage discrimination actions under both Title VII and the ADEA.

* Editor’s Note: In the original email announcing the February Edition, Ms. Klyashtorny’s article was mistakenly entitled “Obama Signs the Ledbetter Fair Play Act of 2009” and has been corrected.

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