The first bill signed into law by President Obama was the Lily Ledbetter Fair Pay Act, which overruled a controversial 5-4 decision by the Supreme Court, Ledbetter v. Goodyear Tire & Rubber Co., Inc., issued in 2007. The Act amends both the Title VII and the Age Discrimination in Employment Act and modifies the operation of the Americans with Disabilities Act and the Rehabilitation Act of 1973. The Act provides that in cases involving discrimination in compensation, under Title VII or the ADEA, an unlawful employment practice (which would trigger the running of the statute of limitations) occurs (1) when a discriminatory compensation decision or other practice is adopted; (2) when an individual becomes subject to a discriminatory compensation decision or other practice; or (3) 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.” (emphasis added)
The Act further provides that in addition to the damages recoverable under the Civil Rights Act of 1991, 42 U.S.C. § 1981a, Title VII claimants may recover 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.”
The provisions of the new statute are also extended to compensation claims under the Americans with Disabilities Act and the Rehabilitation Act of 1973.
Employers must now be aware that discriminatory compensation decisions made in the past which have a continuing effect on one or more employees today could now give rise to a sustainable claim of discrimination.
My advice to employers is to do a compensation audit in cooperation with employment counsel to determine whether there is any pay disparity in the work force. Even if the disparity is the result of a decision years ago, you could be subject to litigation today, including class action litigation. By taking steps now to remedy unlawful disparities, you can stop the clock running on old claims and prevent costly litigation.
Labor and Employment Law: Current Developments 