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Lilly Ledbetter Fair Pay Act- Specific Elements of Unlawful Employment

Overview Specific Elements of Unlawful Employment Additional Resources Rate this QuickCounsel

Overview

The Lilly Ledbetter Fair Pay Act (FPA or Act), which Congress passed in January 2009, amended Title VII, the Age Discrimination in Employment Act (ADEA), the Americans with Disabilities Act (ADA), and the Rehabilitation Act. The impetus for the law’s passage was the United States Supreme Court’s 2007 decision in Ledbetter v. Goodyear Tire & Rubber Co. In Ledbetter, the Supreme Court held that a plaintiff alleging discrimination in pay under Title VII must point to a specific discriminatory decision within the relatively short filing period of 180 or 300 days for a charge before the Equal Employment Opportunity Commission. In doing so, the Court rejected the notion that each issuance of a paycheck based upon a prior discriminatory decision under Title VII reopened the 180 or 300 day period to file a charge with the EEOC. Rather, it was the tangible decision that resulted in that lower paycheck that triggered the time for the plaintiff to file a charge. If the decision was made more than 180 or 300 days before the charge was filed, the Supreme Court said the claim was time-barred under Title VII.

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Specific Elements of Unlawful Employment

Congress enacted the FPA to overrule the Ledbetter decision and codify what is known as the “paycheck accrual rule.” Under this rule, if a discriminatory decision is affecting an employee’s compensation today, the employee still has a cause of action, even if the decision occurred years prior to the current paycheck. Specifically, the Act states that an unlawful employment act with respect to compensation occurs:

• When a discriminatory compensation 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 main change that the Act brings is that any “discriminatory compensation decision or other practice,” no matter when it occurred, can be the basis for a pay discrimination claim so long as it is affecting wages, benefits, or other compensation paid within the 180 or 300 day filing period.

By referring not only to discriminatory compensation decisions, but also to “other employment practices,” numerous actions that an employer commonly takes could give rise to a claim under the Act so long as they affect compensation. Potentially among these are:

• The setting of initial pay
• Annual pay increases
• Performance evaluations
• The establishment of and assignment of employees to pay levels, grades, or bands
• Promotion decisions

Without a definition of “other employment practices,” the courts will have to decide the precise practices upon which an employee could base a pay discrimination claim.

Because the FPA amended not just Title VII, but also the ADEA, ADA, and Rehabilitation Act, it protects against compensation discrimination on the basis of race, color, religion, sex, and national origin, as well as on the basis of age (for employees aged 40 and older) and disability status.

The remedies available under the Act are the same as under Title VII, including back pay for up to two years prior to the filing of the charge, and compensatory and punitive damages up to the limits set forth in the Civil Rights Act of 1991.

The FPA is retroactive to May 28, 2007 — the day before the Supreme Court issued the Ledbetter decision. Employees with pending litigation that was filed in the nearly two years between the issuance of the Court’s decision and the passage of the Act may add claims to assert pay discrimination claims, which until January 29, 2009 were untimely. Pending pay discrimination claims that were on the verge of being dismissed for untimeliness may be saved. Claims that were dismissed may be resurrected.

The FPA is only the beginning of the effort to address pay equity issues. There is proposed legislation before Congress - the Paycheck Fairness Act - that, if passed in its present form, would significantly broaden the scope of the Equal Pay Act, which requires pay equity by gender. Unlike the FPA, the Equal Pay Act allows an employee to recover if there are unexplained pay disparities without the need for the employee to point to a specific discriminatory decision. Also, the Equal Pay Act allows up to three years of back pay for willful violations. In addition, the Paycheck Fairness Act would allow uncapped compensatory and punitive damages.

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Additional Resources

Statutes, Legislative History, and Pending Legislation

Sponsor Resources

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