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EMPLOYER CLIENT ALERT: March 2009 The Lilly Ledbetter Fair
Pay Act of 2009: President Obama recently signed the Lilly Ledbetter Fair Pay Act of 2009 (the “Ledbetter Act’). The Ledbetter Act reverses a May 2007 Supreme Court decision, Ledbetter v. Good Year Tire & Rubber, 550 U.S. 618 (2007). In that case, Plaintiff Ledbetter alleged that her employer paid her less than her male co-workers during most of her 19-year career. The Court held that she could not recover in the discrimination suit against her employer because her claim had not been filed in a timely manner. The dissent by Justice Ginsberg called upon Congress to reverse the decision. The Ledbetter Act is Congress’ response to that challenge. The new law eases the statute of limitations for compensation-implicated personnel actions including promotion, hiring, evaluation and employee benefit decisions under Title VII. Although the Ledbetter decision involved sex-based compensation discrimination claims under Title VII, the new Legislation also amends all of Title VII, as well as the Age Discrimination in Employment Act (“ADEA”), the Americans With Disabilities Act (“ADA”), and the Rehabilitation Act. Thus, the Ledbetter Act now applies to claims alleging compensation-implicated discrimination based on sex, age, race, color, religion, national origin and disability. The Act adopts the “Paycheck Rule” which restarts the time period for filing a charge with the EEOC for compensation related discrimination claims each time an employee receives a paycheck that is a manifestation of that discrimination. As long as the worker files an EEOC charge within either 180/300 days of receiving a discriminatory paycheck, their charges are considered timely. This is so even if the decision to pay them the discriminatory wage, was made long ago. Significantly, the law expressly applies retroactively to all compensation discrimination claims pending on or after May 28, 2007, the day before the Supreme Court made its decision in the Ledbetter case. The Ledbetter Act applies to both intentional discrimination and disparate discrimination claims alike. The new law also applies to retirees who claim their pension benefits manifest a discriminatory decision concerning compensation, restarting the time period for filing a charge to the first time a retiree receives an annuity check which is a manifestation of that discriminatory decision. It is not clear whether the Paycheck Rule will apply to each new pension payment. The good news for employers is that while employees and retirees may now use evidence from their first day of employment to prove a discriminatory pay decision, employees can only recover back-pay for up to the two years preceding the filing of their EEOC charge. THE BOTTOM LINE What can an Employer do? Document, document, document! Document the reasons for pay decisions especially the rationale for why certain employees receive higher or lower pay, benefits, or better performance evaluations than similarly situated co-workers. Retain complete personnel files forever. Train managers and supervisors on how to conduct an appropriate performance evaluation and consider establishing a committee to review all personnel evaluations that impact merit-based pay decisions to insure that they are not discriminatory in nature. Always, seek the advice of your employment attorneys when you are unsure of your obligations under the law. Documentation is the key to defending against a payment
discrimination claim. Also, insure that your workplace practices include
merit-based decisions arising from performance evaluations and that a
practice is in place for setting and reviewing all decisions. If you have any questions about any of the issues raised in this
Employer Alert, or any employment and labor issue or concern, please
call Thomas Ryan, Esq. or Linda Day, Esq. of Laddey, Clark & Ryan’s
Employment and Labor Practice Group at (973) 729-1880. If you do not
wish to receive updates concerning developments in the law which could
affect your business in the future, please indicate your preference
below, and we will take you off our e-mail list. The Employment and Labor Practice Group
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