Question:

I understand that the legislature in Washington is voting on a bill that will allow employers to be sued more easily for wage discrimination. I am a small employer, and this seems hard to believe. Can you tell me whether this is true, and what I can do to protect myself?

Answer:

I believe you are referring to the Lilly Ledbetter Fair Pay Act (H.R. 11) that effectively expands the time limits in which an employee can file a claim for wage discrimination. The Senate, after failing to approve the identical House bill last year, passed H.R. 11 on January 22, 2009. President Obama has already said he will sign it.

The Act is retroactive to May 27, 2008, the date that a controversial United States Supreme Court decision, Ledbetter v. Goodyear Tire and Rubber Company, was issued. Lilly Ledbetter was a 20 year employee of Goodyear who discovered that her pay was significantly less that the lowest paid of her fifteen male counterparts. She filed a formal wage discrimination complaint with the Equal Employment Opportunity Commission (EEOC) shortly before her retirement. After her retirement, she filed suit under Title VII of the Civil Rights Act of 1964, alleging that several supervisors had in the past given her poor evaluations because of her sex; that as a result, her pay had not increased as much as it would have if she had been evaluated fairly, that those past pay decisions affected the amount of her pay throughout her employment, and that by the end of her employment, she was earning significantly less than her male colleagues. Goodyear claimed that the time to file a discrimination claim under Title VII had run out. Justice Alito, writing on behalf of a 5-member majority of the Supreme Court, interpreted the statute’s time limitations very narrowly, and Ledbetter’s claim was deemed untimely. The Court held that an individual wishing to bring a Title VII lawsuit must first file an EEOC charge within 180 days “after the alleged unlawful employment practice occurred,” which in Ledbetter’s case occurred years earlier when her pay was set in a discriminatory manner. The court declined to agree with Ledbetter’s assertion that the clock should have been restarted each time she received a paycheck reflecting the earlier discriminatory pay decisions, and again when she failed to receive a raise shortly before her retirement.

Justice Ginsberg wrote a spirited dissent, arguing that the majority’s interpretation overlooked the common characteristics of pay discrimination, where the disparities often occur in small increments developed over time, where employers may keep pay differentials under wraps, and where employees trying to succeed in a non-traditional work environment may be reluctant to make waves. Public opinion and Congress sided with Justice Ginsberg, and the Lilly Ledbetter Fair Pay Act of 2009 is the result.

The new Act amends Title VII and the Age Discrimination in Employment Act of 1967 to clarify that an occurrence of illegal compensation discrimination occurs not only when the discriminatory practice or decision is adopted, but also each time resulting discriminatory wages are paid. Violations of the law entitle employees to compensatory and punitive damages, including recovery of back pay for up to two years. The law is retroactive to May 28, 2007, effectively reviving all federal wage discrimination claims that are pending or after that date.

The impact of the Lilly Ledbetter Fair Pay Act on California employers is that claimants could file their wage discrimination claims in federal or state court. California courts already use a “continuing violation” doctrine when reviewing wage discrimination cases. Although a discrimination claim under the Fair Employment and Housing Act (FEHA) must be filed within one year of the alleged discriminatory act, California courts generally permit a plaintiff to sue for an entire course of discrimination, including employer actions occurring outside the one year charging period.

Employers who are concerned that their past or current practices may create liability should review their compensation and promotion procedures. Any promotion decisions that may have been affected by earlier discriminatory actions should be reconsidered. Additionally, employers should review their document retention policies to ensure that records are kept showing the historical basis for company compensation and promotion decisions.
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