The Lilly Ledbetter Fair Pay Act of 2009:

What You Need to Know

By Mike Rozensher, CAPLAW

September, 2009

 

Earlier this year, Congress passed the Lilly Ledbetter Fair Pay Act of 2009 in response the United States Supreme Court’s opinion in the case Ledbetter v. Goodyear Tire & Rubber Co., Inc.1 This new act has broad-ranging implications for employers, including Community Action Agencies (CAAs).

Background
For 21 years, Lilly Ledbetter worked as a supervisor at a Goodyear
plant in Alabama. During that time, she was paid significantly less
than any of her male colleagues. Shortly before taking early
retirement, Ledbetter submitted a questionnaire to the Equal
Employment Opportunity Commission (EEOC) alleging certain acts
of sex discrimination and filed a formal EEOC charge. After taking
early retirement, Ledbetter filed a lawsuit with the federal district
court in which she asserted, among other claims, a pay discrimination
claim under Title VII of the Civil Rights Act of 1964 (Title VII) and
a claim under the Equal Pay Act of 1963 (EPA).2 The basis for
Ledbetter’s claims was that poor performance evaluations she had
received earlier in her tenure with Goodyear were based on sex
discrimination and resulted in her consistently receiving lower pay
than her male colleagues through the end of her career.3
In May 2007, in a 5-4 majority opinion, the United States Supreme
Court sided with Goodyear, holding that Ledbetter’s claim was time
barred because it was not filed within the deadline set by Title VII.
The Court held that the mere act of issuing a paycheck did not
constitute a separate chargeable violation, even if that paycheck gave
present effect to past instances of discrimination such as the genderbased
poor performance evaluations. The current paychecks could
not “breathe life into prior, uncharged discrimination.”4 According
to the Court, Ledbetter needed to file her claims within 180 or 300
days (depending on the state) of the initial discriminatory actions.5 In
a passionate dissent, Justice Ginsburg implored Congress to pass a
bill that would reverse the majority’s opinion.

The Lilly Ledbetter Fair Pay Act of 2009
Though immediate congressional action was thwarted by
President Bush’s veto, the 2008 Democrat-controlled Congress
quickly revived the opposition to the Court’s Ledbetter decision and
President Obama signed the Lilly Ledbetter Fair Pay Act (LLFPA)
into law on January 29, 2009.  The new law, in effect overturned Supreme Court’s decision, expanding the definition of an unlawful employment practice to include situations not only when a discriminatory pay policy is
adopted, but also to cases “when an individual becomes subject to
such a policy, 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.”7 Thus, for
instance, each time an employee receives a paycheck reflecting an
unlawful discriminatory policy regardless of when that policy was
first established, the 180- or 300-day period within which the
complainant must file a claim begins to run anew.

Although the Ledbetter case was based on a sex discrimination
claim, the LLFPA applies equally to compensation discrimination
claims based on race, color, religion, or national origin, as well as to
those filed under the Age Discrimination in Employment Act, the
Americans with Disabilities Act, and the Rehabilitation Act of 1973.
The LLFPA is retroactive to May 28, 2007, the day before the
Supreme Court issued its decision in Ledbetter. Therefore, the
LLFPA applies to cases still pending a final ruling that had been filed
the day before the Court’s ruling. Employee recovery of back pay in
a successful suit, however, is limited to the two-year period preceding
the discrimination charge.

Implications for Community Action Agencies
The LLFPA mainly affects human resources procedures and
policies relating to record retention and employee compensation.
Steps CAAs should consider taking to ensure compliance with the
LLFPA are:
• Implement policies and procedures for documenting reasons for
compensation decisions.
• Retain indefinitely documents and data supporting compensation
decisions (i.e. payroll records, performance reviews, promotions,
etc.).
• Implement a policy to regularly analyze current and past
compensation data and decisions to unearth potential problems
and develop future solution.
• Ensure demonstrable business reasons exist for any disparities in
compensation, especially among similar positions.
• Work with a local attorney knowledgeable in state and federal
employment law matters and consult with your state’s department
of labor to ensure compliance with state laws that may govern
record retention periods.
• Digitize all records to alleviate the practical burdens of maintaining
paper files.
• Evaluate the concentration of authority and range of discretion
granted to managers when determining compensation rates for
subordinates.
• Implement managerial training and education to underscore the
importance of objectively determining compensation policies and
of maintaining records.
In short, to comply with the LLFPA, CAAs must be especially
vigilant in identifying and stamping out unlawful discriminatory
compensation policies and prudent in adopting sound record
retention procedures to bolster their defense in the event of a
discrimination lawsuit.

 

1550 U.S. 618 (2007).
2Ledbetter, 550 U.S. at 622-633.
3Ledbetter, 550 U.S. at 622-633.
4Ledbetter, 550 U.S. at 628-629.
5Ledbetter, 550 U.S. at 623.
6123 Stat 5 (2009)
7123 Stat 5 (emphasis added) (amending Section 706(e) of the Civil Rights Act
of 1964 (42 U.S.C. § 2000e-5(e)).