Although the Ledbetter Act was the first bill signed into law by President Obama, it is undoubtedly not the last one which will affect employers. While the Ledbetter Act does not make unlawful any practice previously lawful, it will have a great effect on employers' exposure to wage discrimination claims. Following is a summary of the Act prepared by Potter Anderson's Labor & Employment Group.
On January 29, 2009, President Obama signed the Lilly Ledbetter Fair Pay Act of 2009, which significantly alters the time frame in which employees can file wage discrimination claims. The Ledbetter Act was enacted to overturn the United States Supreme Court's 5-4 decision in Ledbetter v. Goodyear Tire & Rubber Co.,[1] which limited the time period for which employees in discrimination cases can recover damages.
In Ledbetter, the Court ruled that Ledbetter's claims were barred by the 180-day statute of limitations period under Title VII, and rejected her argument that each paycheck she received during the charging period violated Title VII and triggered a new EEOC charging period. The Court, relying on precedent, ruled that "the EEOC charging period is triggered when a discrete unlawful practice takes place." The Court concluded that the issuance of a paycheck constituted a discriminatory act, and Ledbetter's claims were time barred. In writing the dissent, Justice Ginsberg concluded that the "ball is in Congress' court," and suggested that Congress could move to correct the ruling of Ledbetter.
Congress wasted no time acting upon Justice Ginsberg's suggestion. The Ledbetter Act applies not only to claims of gender discrimination, but also to all claims that can be brought under Title VII, the ADEA, the ADA and the Rehabilitation Act. With respect to claims brought under these statutes, the Ledbetter Act provides that an unlawful practice occurs, with respect to discrimination in compensation (and thereby starts the charging period), "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 practice." In some states, including Delaware and Pennsylvania, the EEOC charging period is 300 days.
Notably, Congress has made the Ledbetter Act retroactive to May 28, 2007— the day before the Supreme Court's decision. As a result, the Ledbetter Act will impact both claims filed after the effective date that are already pending in courts as well as claims that have already been dismissed. Finally, with respect to damages under the Ledbetter Act, plaintiffs are permitted to recover "back pay of up to two years preceding the filing of the charge, so long as the unlawful employment practices that have occurred during the charge filing period are similar or related to unlawful employment practices with regard to discrimination in compensation that occurred outside the time for filing a charge.
