President Signs Lilly Ledbetter Fair Pay Act of 2009

On January 29, 2009, President Obama signed into law the Lilly Ledbetter Fair Pay Act of 2009 ("Act"). This Act responds to the United States Supreme Court's 2007 decision in Ledbetter v. Goodyear Tire & Rubber Co., 550 U.S. 618 (2007), where the Court ruled that Ms. Ledbetter's equal pay claim was barred by Title VII's 180 day statute of limitations despite the fact that Ms. Ledbetter had only discovered the unequal treatment within that 180-day period. The basis of Ms. Ledbetter's claim was that she was paid less than similarly situated male employees for doing comparable work.

The new Act amends Section 706(e) of the Civil Rights Act of 1964, (42 U.S.C. 2000e-5(e)), otherwise known as Title VII, by adding the following:

(3)(A) For purposes of this section, an unlawful employment practice occurs, with respect to discrimination in compensation in violation of this title, 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.

(B) In addition to any relief authorized by section 1977A of the Revised Statutes (42 U.S.C. 1981a), liability may accrue and an aggrieved person may obtain relief as provided in subsection (g)(1), including recovery of back pay for up to two years preceding the filing of the charge, where the unlawful employment practices that have occurred during the charge filing period are similar or related to unlawful employment practices with regard to discrimination in compensation that occurred outside the time for filing a charge.

Title VII prohibits discrimination in employment on the basis of sex (including pregnancy), race, color, national origin, and religion.

The Act similarly amends the Age Discrimination in Employment Act of 1967, the Americans with Disabilities Act, the Rehabilitation Act of 1973 with respect to claims of discrimination in compensation on the basis of age and disability.

The Act is retroactive to May 28, 2007, the date of the Supreme Court's decision, and applies to all claims of discrimination in compensation brought under any of the above statutes that were pending on or after May 28, 2007.

The practical effect of the Act is that it permits individuals to file a lawsuit alleging compensation inequality based on when the individual learns of the inequality, even if this is after the applicable statute of limitations period expired. In other words, even if an employer first began paying the plaintiff inequitably at some point in the distant past, he/she cannot avoid liability while continuing the practice because the unlawful conduct renews each time the employee is paid, and the statute of limitations period restarts with each paycheck.

Practice Pointer: All employers should conduct an audit of their pay practices to ensure no disparities exist among employees performing the same or comparable job duties or positions, or if disparities do exist, that they are justified by a gender-neutral pay policy linking compensation to seniority or other similar objective criteria.

For additional information on this topic, please contact Kathryn V. Hatfield at kvh@zuckerhatfield.com or Douglas S. Zucker at dsz@zuckerhatfield.com.