Wednesday, January 7, 2009

Ledbetter Fair Pay Act likely to be first employment legislation of the Obama Presidency

According to Monday’s New York Times, Congressional Democrats are looking to fast-track the Lilly Ledbetter Fair Pay Act. This should not come as any surprise, given Ms. Ledbetter’s prominent speaking position at last summer’s Democratic convention.

Recall that in Ledbetter v. Goodyear Tire & Rubber Co., the Supreme Court ruled that in pay discrimination cases the federal statute of limitations begins to run when the pay-setting decision is made:

Current effects alone cannot breathe life into prior, uncharged discrimination.... Ledbetter should have filed an EEOC charge within 180 days after each allegedly discriminatory pay decision was made and communicated to her. She did not do so, and the paychecks that were issued to her during the 180 days prior to the filing of her EEOC charge do not provide a basis for overcoming that prior failure.

According to the Court, its narrow reading of the statute of limitations “reflects Congress’s strong preference for the prompt resolution of employment discrimination allegations through voluntary conciliation and cooperation.” Or, at least prior Congresses, as this Congress will certainly pass the Ledbetter Fair Pay Act.

This law will provide that a new and separate violation occurs each time a person receives a paycheck resulting from “a discriminatory compensation decision.” Thus, each paycheck that reflects an alleged discriminatory pay decision will start a new and distinct limitations period. 

Businesses should brace themselves for longer statutes of limitations for pay discrimination claims. Once the Fair Pay Act becomes law, it will be more difficult for companies to know at what point in time a pay decision can no longer be challenged. This law’s Congressional supporters have spoken of the need for fairness. Fairness, however, works both ways, both for employees and employers. A perpetual statute of limitations for pay discrimination claims fosters a perceived fairness for the former at the expense of the latter.