On January 29, 2009, President Barack H. Obama signed into law the Lilly Ledbetter Fair Pay Act of 2009, drastically changing the time frame in which employees can file wage discrimination claims against their employers.1
The Act is Congress’ response to the Supreme Court’s decision in Ledbetter v. Goodyear Tire & Rubber Co., 550 U.S. 618 (2007), in which the court held that Lilly Ledbetter, who worked for 20 years at a Goodyear plant before discovering that she was paid less than her male counterparts, could not maintain a claim for wage discrimination against Goodyear because she did not file her claim within the applicable 180-day statute of limitation. According to the court, the statute of limitation ran from the date the employer made the discriminatory pay-setting decision, not from each subsequent payment made under the decision. Justice Ginsburg dissented, stating that “the ball is in Congress’ court . . . to correct this Court’s parsimonious reading of Title VII.”
Congress heeded Justice Ginsburg’s exhortation, finding that the Ledbetter decision (1) undermined statutory protections against wage discrimination by unduly restricting the time period in which victims of discrimination could challenge discriminatory compensation decisions or other practices and (2) ignored the reality of wage discrimination and was at odds with the robust application of the civil rights laws. Congress’ first attempt to “correct th[e] Court’s parsimonious reading of Title VII” fell just short, however, as the Lilly Ledbetter Fair Pay Act of 2007 was narrowly defeated in the Senate. Passage of the Act picked up steam again during last year’s presidential election, and it passed quickly through Congress last month and became the first major piece of legislation signed into law by President Obama.
The Act’s key feature is to allow employees to file claims for wage discrimination based on race, color, religion, sex, national origin and age within 180 days from “each time wages, benefits, or other compensation is paid” pursuant to a discriminatory pay-setting decision or practice. Essentially, each paycheck renews the 180-day statute of limitation, regardless of when the initial pay-setting decision occurred.
The Act also provides that aggrieved employees may recover up to two years of back pay from the date they file their claim if the wage discrimination that occurred during the charge filing period, i.e., 180 days from each time an employee is paid, is similar or related to wage discrimination that occurred outside the charge filing period. Thus, each time an employer pays an employee pursuant to a discriminatory pay-setting decision or practice, not only does the 180-day statute of limitation start anew, but the employer also subjects itself to liability for up to two years of back pay.
The Act is effective as if enacted on May 28, 2007, and applies to all claims of wage discrimination that are pending on or after that date under Title VII of the Civil Rights Act of 1964 (42 U.S.C. § 2000e et seq.), the Age Discrimination in Employment Act of 1967 (29 U.S.C. § 621 et seq.), Title I and Section 503 of the Americans with Disabilities Act of 1990, and Sections 501 and 504 of the Rehabilitation Act of 1973.