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Lilly Ledbetter Pay Act of 2009

Employment Alert

Lilly Ledbetter Pay Act of 2009
On January 29, 2009, President Obama signed into law the Lilly Ledbetter Fair Pay Act
(“Ledbetter Act”) into law. This was the first piece of legislation signed by President
Obama and will have a significant effect on pay discrimination claims based on all
protected categories, including race, gender, age, ethnicity, disability, national origin
and religion.

The Ledbetter Act was passed by Congress in response to the United States Supreme
Court’s decision in Ledbetter v. Goodyear Tire & Rubber Co., 550 U.S. 618 (2007),
which held that the statute of limitations for filing an equal-pay lawsuit begins to run on
the date the decision affecting pay is made, not on the date of an employee’s most
recent paycheck, as a lower court had ruled. The Supreme Court’s decision precluded
lawsuits by plaintiffs who alleged ongoing pay discrimination but did not discover the
discrimination until much later, sometimes years later.

Effect of the Ledbetter Act
Not only does the Ledbetter Act overturn the Supreme Court’s 2007 ruling, it amends
Title VII, the Americans with Disabilities Act of 1990 (“ADA”), the Rehabilitation Act of
1973, and the Age Discrimination in Employment Act of 1967 (“ADEA”). The new law
clarifies that unlawful discrimination occurs when: (1) a discriminatory compensation
decision or other practice is adopted; (2) an individual becomes subject to a
discriminatory compensation decision or other practice; or (3) an individual is affected
by application of a discriminatory compensation decision or other practice – including
each time wages, benefits, or other compensation are paid which are the result of the
discriminatory decision or other practice.

Under the new law:

• Employers may face liability for alleged discriminatory decisions or practices that
were made or which occurred years earlier if there is a continuing impact on an
employee’s compensation;

• Any action that affects compensation may trigger a claim, including decisions
concerning job evaluations, job classification, and other personnel actions that
result in discriminatory wages;

• A new limitations period is triggered every time a paycheck, benefit or other
compensation is paid. This likely means that employers may face exposure for
unequal allocation of health benefits, paid leave, bonuses, and stock options;

• An employee must file a claim within the statutory filing period after receiving a
discriminatory paycheck;

• Recovery of back pay is limited to the two-year period preceding the filing of a
discrimination claim;

• Employers may assert the equitable defenses of waiver, estoppel and laches in
arguing that an employee’s claim should be time barred;

• Employees cannot rely on post-retirement pension payments to stretch the
limitations period beyond the end of the employment relationship; and

• The amendments to Title VII, the ADA, the Rehabilitation Act and the ADEA take
effect as if enacted on May 28, 2007.

To Do
Employers should review their polices and procedures to ensure compliance with equal
pay and non-discrimination laws, should document the reasons for their compensation
decisions, and retain documents and supporting data concerning their compensation
decisions. Employers with questions about the Lilly Ledbetter Fair Pay Act should
contact their legal counsel.

The text of the Ledbetter Act can be found at:

The Harrang Long Gary Rudnick P.C. Labor and Employment Group
Specializing in providing labor and employment advice to public and private employers.

Our firm’s Employment Alerts are intended to provide general information regarding recent changes
and developments in the labor and employment area. These publications do not constitute legal
advice, and the reader should consult legal counsel to determine how this information may apply to
any specific situation.

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