Changes Employers Can Expect

On January 29, 2009, President Obama signed the Lilly Ledbetter Fair Pay Act.  The Fair Pay Act is the first law passed by the new Congress and the first law signed by President Obama.

The Act will require employers to redouble their efforts to ensure that their pay practices are non-discriminatory and to make certain that they keep the records needed to prove the fairness of their pay decisions.

The law allows individuals to file charges of alleged pay discrimination under Title VII of the 1964 Civil Rights Act, the Age Discrimination in Employment Act, the Americans with Disabilities Act, and the Rehabilitation Act without regard to the normal 180/300-day statutory charge filing period.  The law declares that an unlawful employment practice occurs when:

(1) a discriminatory compensation decision or other practice is adopted;

(2) an individual becomes subject to the decision or practice; or

(3) an individual is affected by application of the decision or practice, including each time there is a payment of compensation.

By eliminating the normal 180/300-day charge filing period for pay discrimination claims, the statute allows the filing of charges alleging pay discrimination with the issuance of each paycheck tainted by alleged past discrimination.  Thus, each new paycheck or post-retirement benefits check serves as a potentially unlawful employment practice for which an employee may timely file a charge, even if the allegedly discriminatory pay decision occurred years, perhaps even decades, before. The new law overturns the U.S. Supreme Court’s decision in Ledbetter v. Goodyear Tire and Rubber Co., Inc., (2007), where the Court held by a 5-4 vote that the plaintiff did not file a timely charge within the statutory 180/300-day time limit.

Because current and former employees can now challenge pay decisions made in the past, employers need to modify their record retention policies and begin retaining records surrounding pay decisions indefinitely.