Thursday, February 12, 2009

Courts open Pandora’s Box in applying the Ledbetter Fair Pay Act

Today I am going to get technical and talk about statutory interpretation. Bear with me, though, because how some courts are incorrectly interpreting the Ledbetter Fair Pay Act has crucial implications for businesses

Michael Fox at Jottings by an Employer’s Lawyer highlights the following key passage in the Ledbetter Act:

For purposes of this section, an unlawful employment practice occurs, with respect to discrimination in compensation in violation of this title, 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.

Plaintiffs are arguing that the phrase “or other practice” covers the full panoply of employment decisions, such as promotions and demotions, and not just pay-setting decisions or policies. At least two courts have bought this argument:

  • Bush v. Orange County Corrections Dept., (M.D. Fla. 2/2/09), which held that plaintiffs could timely challenge demotions, which resulted in reductions in pay, that occurred 16 years before earlier than their EEOC charges.

  • Gilmore v. Macy’s Retail Holdings, (D.N.J. 2/4/09), which held that the Ledbetter Act applies to a discriminatory promotion that would have been to a higher paying job.

Applying the Ledbetter Act to cases such as Bush and Gilmore, which  involved long-ago promotions and demotions, is misplaced. For “or other commapractice” to have the expansive meaning given by the Bush and Gilmore courts, a comma is missing. Because there is no comma between “decision” and “or other practice,” “or other practice” modifies “compensation.” Thus, the more reasoned interpretation of this provision of the Ledbetter Act is that the Act covers a discriminatory compensation decision or other discriminatory compensation practice. A promotions or demotion is a personnel decision, not a compensation decision or practice.

The overly broad interpretation applied by the Bush and Gilmore courts goes well beyond the issue in the Ledbetter decision that the Ledbetter Act intended to overturn. Every employment decision, whether a hiring, promotion, demotion, or termination, has some effect on compensation. The Ledbetter Act cannot be so broad as to cover any and every personnel decision. This broad of a reading of the statute will eliminate virtually every statute of limitations in federal discrimination claims, providing employees with an unlimited amount of time to file any discrimination claim. If the Ledbetter Act means what Bush and Gilmore say it means, the Ledbetter Act could prove to be devastating for employers.

No Ohio court has yet to apply the Ledbetter Act. Ultimately, the meaning of “or other practice” will be up to the courts of appeals and the Supreme Court. Nevertheless, it is important for employers to realize that only two weeks into its life, at least two courts have broadly applied the Ledbetter Act to cover much more than the Ledbetter decision it overturned.