This morning, President Obama signed the Lilly Ledbetter Fair Pay Act of 2009 ("Ledbetter Act"), amending Title VII, the Age Discrimination in Employment Act of 1967 ("ADEA"), the Americans with Disabilities Act of 1990 ("ADA"), and the Rehabilitation Act of 1973. The Ledbetter Act, which applies retroactively to claims pending on or after May 28, 2007, overturns the Supreme Court’s May 29, 2007, decision in Ledbetter v. Goodyear Tire & Rubber Co., in which the Court held that an unlawful employment act occurs only when the discriminatory compensation decision is made and not each time a paycheck is issued. The Act provides that the statute of limitations for claims of discrimination in compensation is re-started each time an employee is affected by application of a discriminatory compensation decision or practice.
Specifically, the Act states: "For purposes of this section, an unlawful employment practice occurs, with respect to discrimination in compensation in violation of this [title/Act], when a discriminatory compensation decision or other practice is adopted, when an individual becomes subject to a discriminatory compensation decision or other practice, or when an individual is affected by application of a discriminatory compensation decision or other practice, including each time wages, benefits, or other compensation is paid, resulting in whole or in part from such a decision or other practice."
This Act potentially broadens the scope of liability and damages for employers in discrimination cases. Not only does it arguably permit employees to bring claims years after a decision is made based on its ongoing effect on the employee’s compensation, but also the inclusion of "other practice" will likely lead plaintiffs' counsel to argue that the Act encompasses all types of employment decisions that affect compensation, including promotion and job assignment decisions.
The Act further provides that, under Title VII, the ADA, and the Rehabilitation Act, if an employer is found to have engaged in pay discrimination, an affected employee would be entitled to back pay dating to two years prior to the filing of the charge, in addition to other damages provided by the statute. The Act specifies no temporal limitation on back pay damages for claims under the ADEA or for compensatory and punitive damages under any of the statutes.
The likely effect of this Act will be to increase the number of discrimination suits filed. Thus, employers would be well advised to review promptly their employment policies and procedures, including specifically their document retention practices, in light of this Act.