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President Obama Signs Legislation
Extending Time For Employees To File Discrimination Claims
January 29, 2009
Summary
Today, President Obama signed into law the
first piece of new legislation of his administration. The
Lilly Ledbetter Fair Pay Act, which passed convincingly in
both houses of Congress, amends federal employment
discrimination laws to all but eliminate the statute of
limitations on pay discrimination claims.
Discussion
The Lilly Ledbetter Fair Pay Act overrules the
controversial Supreme Court decision of Ledbetter v. Goodyear
Tire & Rubber Co. In that case, the Supreme Court held that
the 180-day statute of limitations for an employee to bring a
charge of gender based pay discrimination before the EEOC was
triggered when a discrete discriminatory pay practice takes
place. Essentially, this meant that an employee had only 180
days from the time the initial discriminatory pay decision was
made to file a charge with the EEOC. Thus, pay discrimination
claims, rooted in decisions made years earlier, were time
barred.
With Ms. Ledbetter at his side as he signed the
new law, President Obama remarked that she lost over $200,000.00
over the course of her career as a result of being paid less
than men working in her same position. However, under the
Supreme Court’s ruling, her claim, based on a discriminatory
decision made years earlier, was barred by the statute of
limitations.
The new law amends Title VII, the Americans
with Disabilities Act, the Rehabilitation Act, and the Age
Discrimination in Employment Act to provide that the statute of
limitations on a pay discrimination claim is renewed: (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. Thus, every time an employee receives a
paycheck, the statute of limitations period is renewed.
Although “old” claims will now be viable under
the new law, damages available under such claims will be limited
in most cases to two years preceding the filing of the claim.
It remains unclear, however, exactly how such damages will be
calculated, especially in circumstances where multiple
employment decisions or events affecting the plaintiff’s
compensation occur after the alleged discriminatory act.
Notably, Congress drafted the new law so that
it would be retroactive to May 28, 2007, the day before the
Supreme Court issued the Ledbetter decision.
What This Means
The Lilly Ledbetter Fair Pay Act may spark a
wave of new pay discrimination claims that were previously time
barred. It will also provide future plaintiffs with a longer
window of opportunity to file discrimination claims based not
only upon gender, but also age, race, color, national origin,
and religion. This law will create challenges for employers
faced with defending decisions made years, or even decades,
earlier where decision-makers are gone, missing or simply don’t
remember.
This new law, and all of the publicity
surrounding the Ledbetter decision, has raised the
profile of pay claims and pay equity issues and serves as a
reminder to employers of the importance of documenting the basis
for compensation and promotion decisions. Employers should
educate supervisors and other decision-makers how to effectively
document the rationale for such decisions. Prudent employers
will also analyze their document retention policies and
practices to make sure they are preserving information necessary
to prove the basis of their compensation and promotion
decisions.
This
e-update was authored by
Timothy
Keegan and Denise
Brucker. For
more information, or questions, please contact Mr. Keegan, Ms.
Brucker or any Paul, Plevin attorney at (619) 237-5200.
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