Client Alert - Employment Law Update
President Obama Signs the Lilly Ledbetter Fair Pay Act
On January 29, 2009, President Barack Obama signed into law the Lilly Ledbetter Fair Pay Act of 2009 (the Act). The new law amends various federal statutes, and extends the time period within which pay discrimination cases can be filed. Along with invariably resulting in increased litigation, the Act also raises new and unique challenges for employers.
The Act essentially reverses a previous Supreme Court decision, which found that the filing period for pay discrimination cases begins to run when an employee knows, or should have known about the allegedly discriminatory act. Thus, employees had to file within 300 days from the time the underlying pay decision was made (or 180 days in those few states that do not have a fair employment agency). In the case of Lilly Ledbetter, poor performance evaluations resulted in her being paid significantly less than male counterparts. Nevertheless, she filed suit 20 years later, and argued that each paycheck constituted a separate discriminatory act. The Supreme Court disagreed, and wrote "current effects alone cannot breathe new life into prior, uncharged discrimination."
With the passage of the Act, Congress and the President have reshaped the legal landscape. Under the new law, employees may now bring suit as long as they do so within 300/180 days of the last time they are paid. This means that lawsuits may be filed years after pay decisions are made even if employees knew of the decision. Importantly, the Act is not limited to discrimination charges on the basis of sex. It applies to all claims under Title VII, which include race, color, religion, national origin, and sex, along with the Americans with Disabilities Act, the Age Discrimination in Employment Act, and the Rehabilitation Act.
What to Do
Employees should begin by reviewing their pay practices. Specifically, existing pay differentials should be evaluated to ensure that they are the result of legitimate, non-discriminatory factors. In addition, pay decisions should be supported by objective criteria, adequately documented, and applied uniformly across departments. Lastly, employers should retain pay decision records for sufficient periods of time because documentation may be required years later.
If you have any questions about how this legislative enactment will affect your business, or about your employment policies and practices in general, please contact Mr. Gonzalez at 312-558-9779 or at egonzalez@elvisgonzalezltd.com.
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