LILLY LEDBETTER FAIR PAY ACT
By Sharon G. Hobbs

The first piece of legislation signed by president Obama after taking office was the Lilly Ledbetter Fair Pay Act of 2009.

This Act overturns the U.S. Supreme Court decision Ledbetter vs. Goodyear Tire & Rubber Co., Inc. (2007), which had held that the Statute of Limitations for bringing a compensation related discrimination charge begins to run on the date that the discriminatory pay decision was made, not with each paycheck the employee later receives as a result of the discriminatory decision.

The new law specifically states that an unlawful employment practice is deemed to occur not just when a discriminatory decision or other practice is adopted but also when an individual becomes subject to the discriminatory compensation decision or practice or when the individual is affected by application of the discriminatory decision or practice, including each time wages, benefits, or other compensation is paid resulting in whole or in part from the decision or practice.

The Act applies to Title VII of the Civil Rights Act of 1964 (race, color, sex, national origin, and religion), the Age Discrimination in Employment Act, the Rehabilitation Act, and the Americans with Disabilities Act.

The new law does not change the two year limit on back pay damages but it does allow employees and former employees to reach as far back as their first day of employment to demonstrate an act of discrimination - from an initial pay decision to any discriminatory pay decision or performance evaluation effecting a pay decision at any time during an employee’s tenure with the company.

CONCLUSION

The new law does make it more important than ever that compensation decisions are consistent within your company and that compensation decisions are properly documented. Some companies will also consider retaining their personnel and compensation decision files longer, internal audits to confirm that managers are consistent and fair in their compensation decisions, and also adding compensation practices to their mergers and acquisitions due diligence.

Sharon Hobbs practices in the areas of business law, employment law and estate planning.

This article is a general discussion of legal issues and is not intended to be legal advice. We would be pleased to review the specific facts and law regarding any given legal matter.