On January 29, 2009, President Obama signed the Lilly Ledbetter Fair Pay Act, legislation enacted to expressly overrule the United States Supreme Court’s decision in Ledbetter v. Goodyear Tire & Rubber Co., 550 U.S. 618 (2007) that limited the time frame for bringing pay bias claims. In Ledbetter, the Supreme Court held that the time limits for filing a discrimination claim with the EEOC begin to run when the employer makes the discriminatory decision about an employee’s compensation (i.e., decides to pay a female employee less than a male employee), not when the employee is affected by that decision (i.e., the female employee receives her paycheck).  

The Ledbetter Act amends the filing deadlines of Title VII, the Age Discrimination in Employment Act, the Americans with Disabilities Act, and the Rehabilitation Act to provide that the time period for filing charges of discrimination with the EEOC is triggered whenever the employee is affected by the discriminatory decision or practice. The Ledbetter Act will likely have a significant impact on employers because it allows employees to bring a claim for discrimination years after the discriminatory decision was made. In effect, each payday gives rise to a potential claim.  

What’s next for employers?  

On January 9, 2009, the House approved the Paycheck Fairness Act by a vote of 256 to 163. The Paycheck Fairness Act expands available remedies by making compensatory and punitive damages available in Equal Pay Act cases, authorizing class actions, and requiring training and other outreach efforts by the EEOC and the Department of Labor on wage discrimination issues. The bill also adds non-retaliation requirements, increases penalties for violations of the Act, and authorizes the Labor Secretary to seek additional compensatory or punitive damages. Finally, the bill also places the burden on the employer to justify unequal pay decisions by proving that its actions are job-related and due to business necessity.