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.

Top 10 Labor & Employment Law Stories of 2008: Nos. 2 and 1

Today brings us to the end of our countdown, and the top two labor and employment law stories of the year. Each of these stories will have far reaching implications into 2009:

2. The economic downturn and the proliferation of layoffs and shutdowns: It’s no secret that our economy is in the toilet, and will continue to be at least in the short term. Companies have been and will continue to shed employees and operations as they try to stay afloat or fail. Unemployment insurance systems will continue to be stressed to the max. As employers continue to feel economic pressure, acronyms like OWBPA and WARN will continue to be on the tips of their tongues and at the core of employees’ fears. This story very well could climb to number in 2009 as the economy is predicted to continue to suffer, and employment lawsuits are expected to continue to rise.

1. The election of President Obama: In the last two years, the Democratic majorities in the House and Senate have proposed a cornucopia of new labor and employment laws – Employee Free Choice Act, Employment Non-Discrimination Act, Ledbetter Fair Pay Act, Arbitration Fairness Act, Working Families Flexibility Act, Independent Contractor Proper Classification Act, RESPECT Act, Equal Remedies Act, Civil Rights Act of 2008, and the Health Families Act. While jump starting the economy should preoccupy the new administration, we cannot overlook that Senator Obama sponsored most if not all of these bills. With the Democrats in charge of the White House and Capitol Hill for the first time in 14 years, there is a real chance that we will see the most sweeping changes to our nation’s labor and employment laws in decades. This story is number one in 2008, and very well could repeat as the top story of 2009, 2010, 2011, 2012, and beyond.

WIRTW #46

With Ohio's Healthy Families Act officially dead, attention turns to legislation on the federal level. It is safe to say that if Barack Obama is elected President, employment law in this country will see its biggest transformation since perhaps 1964. On the horizon are landmark pieces of legislation, including the federal Healthy Families Act, the Employee Free Choice Act, the ADA Restoration Act, the Civil Rights Act of 2008, and the Lilly Ledbetter Fair Pay Act. The ABA Journal Daily News and Human Resource Executive Online have the details.

Work Matters, a blog I recently discovered, has an interesting take on race in the workplace.

The Business of Management points out that it is generally a bad idea to notify employees about a lay off via email.

The Delaware Employment Law Blog reports on the 10 best excuses for being late to work.

The Evil HR Lady gives some tips on how to handle an employee who frequently skips out of work because of headaches.

The Labor and Employment Law blog lists 8 steps employers should take to comply with HIPAA.

Fair Labor Standards Act Law talks about Kimoto v. McDonald's Corp., in which a California federal court refused to certify a wage and hour class action.

Finally, Workplace Prof Blog gives its opinion on a 3rd Circuit case which held that a Spanish-speaking employee could be bound by an arbitration agreement written in English.

What would President Obama look like to employers?

Yesterday, Senator Barack Obama gave some insight into employment policy in his administration. RealClearPolitics has his words from a speech given in Albuquerque. The highlights:

• He will push for the passage of the Lilly Ledbetter Fair Pay Restoration Act, which will overturn Ledbetter v. Goodyear Tire & Rubber. Recall that Ledbetter held that the statute of limitations for a pay discrimination claim under Title VII begins to run when the pay-setting decision is made, and not when the employee learns of the discrimination. The Ledbetter Fair Pay Act would start the statute of limitations when the employee learns of the pay discrimination. In my view, this law would create a floating statute of limitations for pay discrimination claims, which severely undermines the important aspect of certainty that statutes of limitations provide for businesses.

• To assist working parents, he would expand the Child and Dependent Care tax credit to 50%.

• He would expand the FMLA to cover employers as small as 25 employees, to permit leave for the care of elderly parents, to allow parents 24 hours of annual leave to join school activities with their kids, and to cover employees who are victims of domestic violence or sexual assault.

• Finally, he would require employers to provide all workers with seven paid sick days a year.

It's clear from Senator Obama's words that family responsibility will be a driving force in his administration:

As the son of a single mother, I also don't accept an America that makes women choose between their kids and their careers. It's not acceptable that women are denied jobs or promotions because they've got kids at home. It's not acceptable that forty percent of working women don't have a single paid sick day. That's wrong for working parents, it's wrong for America's children, and it's not who we are as a country.

It's hard to argue against greater family leave benefits on a national scale (The Ohio Healthy Families Act is an entirely different story). As I've said before, this country lags behind most of the civilized world, and even some of the third world, in family leave benefits. Until we solve this problem legislatively, aggressive plaintiffs will continue to push for judicial solutions - such as the $2.1 million verdict against Kohl's Department Stores in Cuyahoga County last year.

Ledbetter Fair Pay Act dies in Senate

Paul Secunda at the Workplace Prof Blog and CNN each have the details.

White House comes out against Ledbetter Fair Pay Act

It's been nearly a year since the Supreme Court decided Ledbetter v. Goodyear Tire & Rubber Co., which held that the statute of limitations for a pay discrimination claim under Title VII begins to run when the pay-setting decision is made, and not when the employee learns of the discrimination. The Ledbetter decision set of a reactionary wave in Congress. Less than 2 months after Ledbetter, the House passed the Lilly Ledbetter Fair Pay Act of 2007, which would amend Title VII, the ADEA, the ADA, and the Rehabilitation Act such that a discriminatory compensation decision occurs each time compensation is paid per that decision. In other words, each receipt of a paycheck would start a new statute of limitations running, regardless of when the actual discriminatory decision was made or implemented.

While the Senate mulls the Lilly Ledbetter Fair Pay Act, the White House has publicly come out against it. From CNN:

The White House said it supports anti-discrimination laws, but that statutes of limitations are crucial in fact-intensive cases. A prompt assertion of discrimination is critical for both employers and employees, the White House said.

"This legislation does not appear to be based on evidence that the current statute of limitations principles have caused any systemic prejudice to the interests of employees, but it is reasonable to expect the bill's vastly expanded statute of limitations would exacerbate the existing heavy burden on the courts by encouraging the filing of stale claims."

I've been on record opposing the Ledbetter Fair Pay Act. It would create a floating statute of limitations for pay discrimination claims, potentially granting all employees the right to sue in perpetuity. Statutes of limitations serve several important purposes, including promoting certainty. Businesses need to know that they will reach a point in time when decisions cannot be challenged in court. Moreover, the more time that elapses between a decision and a lawsuit, memories fade and evidence becomes stale, making it more difficult for a company to rebut the claim. Lilly Ledbetter, for example, sued for a decision nearly 20 years hence. Who at Goodyear still has any knowledge about that decision?

Supreme Court to hear arguments today on issue of "me too" discrimination

Sprint/United Management v. Mendelsohn, which will be argued today at the Supreme Court, raises an important evidentiary issue that arises time and again in discrimination cases: "whether a district court must admit 'me, too' evidence — testimony by nonparties, alleging discrimination at the hands of persons who played no role in the adverse employment decision challenged by the plaintiff." Although this is an age discrimination case, the Court's holding will almost certainly affect race, gender, and other discrimination lawsuits. The issue is important for businesses, as permitting "me, too" evidence of discrimination will likely make discrimination cases more time-consuming, expensive, and difficult to defend, by forcing companies to defend against allegations brought by employees not parties to the lawsuit.

The facts of Mendelsohn are relatively simple. Ellen Mendelsohn, 51 years old, was one of 18 people in her group laid off by Sprint in the fall of 2002. Company-wide, Sprint laid off 15,000 employees. Sprint claimed that it included Mendelsohn in the RIF because of poor job performance. Mendelsohn claimed age bias in the decision.

At trial, she sought to call five other former Sprint employees, all over the age of 40, to testify that they too suffered age discrimination at Sprint. Sprint objected on the grounds that none of those five employees had worked for the same supervisor who had made the decision to lay off Mendelsohn. The district court agreed, and ruled that only workers laid off by the same supervisor could be called to testify. Ultimately, the jury ruled in Sprint's favor.

The 10th Circuit reversed, ruling that a district court must admit any testimony of other workers who claimed to suffer the same sort of bias against them, even if a different decisionmaker was involved. It rejected Sprint's contention that the testimony was irrelevant because the witnesses were not terminated by the same supervisor as Mendelsohn. The court concluded that Mendelsohn was entitled to show that there was an unwritten "company-wide policy" of discrimination, under which multiple supervisors, and not just Mendelsohn's, were participating. Further, the court was unconcerned whether there was any evidence substantiating the existence of such a policy other than the plaintiff's subjective belief. Instead, the court found that the evidence is relevant and admissible because a jury could reasonably find the alleged discrimination was made more likely by proof of "an atmosphere of age discrimination" and "Sprint's selection of other older employees to the RIF."

There are any number of reasons why this decision should be reversed. In a discrimination case liability can only be shown by demonstrating discriminatory intent on the part of the decisionmaker (i.e, the person who made the relevant employment decision). Mendelsohn's five "me, too" witnesses, however, could offer nothing to show that Mendelsohn's supervisor acted with discriminatory intent. Additionally, no one had any proof that the various different decisionmakers were acting under some common scheme or plan, other than their own unsupported subjective beliefs. I would concede that the case would be different if there was some independent corroboration of a company-wide policy. Finally, I question the appellate court's reversal of a district court's discretionary evidentiary ruling.

This case will also be interesting from a Court-watching perspective, as it will be the third substantive employment decision out of the the Roberts Court. Last term, the Court was 1-1 in employments cases, with the Ledbetter pay discrimination case coming down for the employer, and the Burlington Northern retaliation decision for the employee. My prediction — a reversal with a holding that "me, too" evidence is not per se admissible in discrimination cases. Dicta will make it clear that such evidence is relevant when it is from the same decisionmaker, or from a different decisionmaker with independent evidence of a company-wide policy of discrimination.

A copy of the oral argument transcript is available from the Supreme Court here.

Big changes in the political winds?

I've written a lot since starting this blog about the various bills introduced in the House and Senate to amend Title VII and other employment law statutes. Indeed, one of my very first posts asked whether federal legislation would bring us new protected classes. Following my lead, the National Law Journal has nicely summarized the assorted employment law reforms Congress has introduced this session:

• Ledbetter Fair Pay Act: reverses the Ledbetter decision by setting forth that each discriminatory paycheck is a discrete act of discrimination for purposes of triggering Title VII's statue of limitations.
• American with Disabilities Restoration Act: amends the definition of "disability" to undo a decade of Supreme Court precedent.
• Employment Non-Discrimination Act: adds protections for sexual orientation and gender identity to Title VII.
• Genetic Information Non-Discrimination Act: prohibits employment decisions based on genetic information.
• Civil Rights Tax Relief Act: eliminates taxation of non-economic damages received by employment plaintiffs.
• Equal Remedies Act: removes Title VII's caps on compensatory and punitive damages.
• Arbitration Fairness Act: invalidates pre-dispute arbitration agreements requiring arbitration of employment disputes.

Some of these reforms, namely ending the loophole that allows companies to invidiously discriminate on the basis of sexual orientation, are long overdue. Others, such as the ADA Restoration Act, the Equal Remedies Act, and Ledbetter Fair Pay Act, will have far greater and more onerous consequences for employers. Because the Democrats don't have enough votes to overturn a Presidential veto, most of these bills currently are nothing more than political rhetoric. If, however, a Democrat wins the White House, 2009 will be a very interesting year, as companies should expect sweeping changes to federal employment laws, the likes of which have not been seen for more than a decade.

Bill Proposes Elimination of Damages Caps

On the heels of the passage of the Lilly Ledbetter Fair Pay Act, Congress continues to try to tinker with the federal employment discrimination laws. Senator Edward Kennedy has introduced legislation that would eliminate the caps on the amount of non-economic compensatory damages and punitive damages plaintiffs can recover in employment discrimination cases under Title VII and the ADA -- the Equal Remedies Act of 2007. Senator Kennedy bases this legislation on the inequities in available damages between race and national origin discrimination and all other forms of discrimination prohibited by Title VII and the ADA (sex, religion, disability, etc.). Employees suing under Title VII or the ADA are capped in the amount of damages they can recover, while employees suing under 42 U.S.C. 1981, which only prohibits race and national origin discrimination, has no such limits. Of course, the Senator could just propose capping damages under Section 1981. As with most of the other pro-employee legislation currently pending in Congress, there is little chance of President Bush actually signing the Equal Remedies Act into law. January 2009, however, is not that far off.

Are we overreacting to Ledbetter?

Today's New York Times reports on current efforts by Senate Democrats to introduce equal pay legislation in light of the Supreme Court's ruling in Ledbetter v. Goodyear Tire & Rubber Co. Recall that in May the Supreme Court ruled 5 to 4 against Lilly Ledbetter, who discovered, after working at Goodyear for nearly 20 years, that her male co-workers had been receiving higher salaries. The Justices started her 180-day statute of limitations upon alleged discriminatory pay decision, time barring her suit.

In light of Ledbetter, the House last month introduced and passed the Lilly Ledbetter Fair Pay Act, which would allow pay discrimination claims to be filed within 180 days of the issuance of a discriminatory paycheck. It seeks to amend Title VII, the ADEA, the ADA, and the Rehabilitation Act to specify that for a claim of compensation discrimination because of race, color, religion, sex, national origin, age, or disability, the discriminatory pay act does not occur, and the statute of limitations does not begin to run, until "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." In other words, the aggrieved employees would have, depending on the state, 180 or 300 days from the receipt of each alleged discriminatory paycheck to file a charge with the EEOC to challenge the pay decision as discriminatory. According to the New York Times article, Senators Edward Kennedy, Hillary Clinton, Barack Obama, and others intend to introduce similar legislation in the Senate.

If this legislation becomes law (which is doubtful while Bush is still President), pay discrimination claims would have a floating statute of limitations, potentially granting all employees the right to sue in perpetuity. Statutes of limitations serve several important purposes, including promoting certainty, in that a company needs to know that it will reach a point in time when a decision cannot be challenged in court, and recency, in that at some point in time employees leave companies, memories of events fade, and evidence becomes stale. Lilly Ledbetter, for example, sued for a decision nearly 20 years hence. Who at Goodyear still has any knowledge about that decision? Senator Kennedy is quoted as saying, “The rules for filing equal-pay claims should reflect basic fairness.” Fairness, however, works both ways, for the employer and the employee. Granting a perpetual statute of limitations fosters a perceived fairness for one at the expense of the other.

U.S. Supreme Court limits pay discrimination claims

Today, the United States Supreme Court, in Ledbetter v. Goodyear Tire & Rubber Co., ruled in a 5-4 decision that in cases alleging discrimination in pay, the federal statute of limitations begins to run when the pay-setting decision is made. Thereafter, an aggrieved employee has only 180 days or 300 days (depending on the particular state) in which to file an EEOC charge, or forever be time barred from challenging the discriminatory pay setting decision under federal law.

In Ledbetter, Lilly Ledbetter, an 19-year Goodyear employee, alleged that Goodyear had discriminatorily denied her raises throughout her tenure, because of her sex and in violation of Title VII. She filed her EEOC charge well in excess of 180 days past the last denial of a raise. Ledbetter did not claim that the relevant Goodyear decision makers acted with discriminatory intent either when they issued her checks during the EEOC charging period or when they denied her a raise in 1998. Instead, she claimed that her charge (and therefore her lawsuit) was timely because each paycheck she received with the allegedly discriminatory pay rate was, in and of itself, an act of discrimination for purposes of challenging the long-ago decisions. Thus, each paycheck was unlawful because each would have been larger if she had been evaluated in a nondiscriminatory manner prior to the EEOC charging period and during her entire tenure. Thus, according to Ledbetter, her 1998 rate of pay was unlawful because it carried forward the effects of the prior 18 years of uncharged discriminatory pay decisions. The District Court agreed with her and permitted her claim to proceed to a jury, which awarded her more than $3 million in back pay, compensatory, and punitive damages.

The Supreme Court, however, overturned that decision, and in doing so diverged with the vast majority of the appellate courts that have looked at this issue. Writing for the majority, Justice Alito opined that “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."

Ohio is a deferral jurisdiction, so employees in this State have 300 days to file EEOC charges of discrimination. This case has important implications under federal employment discrimination law, because a charge of discrimination is a prerequisite for the filing of any lawsuit under Title VII. I question, however, the overall effect this decision will have on companies that do business in Ohio. Under Ohio law, an employee can bypass the Ohio Civil Rights Commission and the EEOC and simply institute a private cause of action under Ohio Revised Code 4112.99 for all acts of discrimination. Such lawsuits have an astounding 6 year statute of limitations for all forms of discrimination, except age discrimination, which has a 6 month statute. This statute of limitations and the lack of any administrative exhaustion is one of the few areas where Ohio law differs from its federal counterpart. Until the Ohio legislature closes this anomaly, local businesses will probably not feel much effect from Ledbetter.