Lilly Ledbetter Fair Pay Act of 2009
President Barack Obama recently signed into law the Lilly Ledbetter Fair Pay Act of 2009 which significantly increases liability exposure for employers by overturning a U.S. Supreme Court decision and extending the statutes of limitation for lawsuits relating to employer decisions.
Case Background
Lilly Ledbetter sued her former employer, Goodyear Tire, claiming discrimination under federal Title VII because of disparate pay going back almost 19 years. She claimed the discrimination occurred on each paycheck comparing her lower pay to similarly situated male counterparts, and argued that the statute of limitations began at each paycheck.
The Supreme Court disagreed, ruling that she must file the claim with the Equal Employment Opportunity Commission ("EEOC") within 180 days of the pay decision and not within 180 days of the receipt of pay.
The Supreme Court noted that a pay decision is a “discrete act” and that the time period for filing a claim involving a discriminatory pay decision begins when the act occurs (the pay decision), not when the consequence of that decision arises (receiving the paycheck). Ledbetter v. Goodyear Tire & Rubber Co. (2007) 550 U.S. 618.
Impact on California
Not surprising, under California law, including equal pay statutes and the Fair Employment and Housing Act (Government Code section 129000, et seq.), provides these protections, though this just provides clarification when the statute of limitations begins to run for these types of cases. A claim for a "continuing violation" alleges that a series of actions by the employer have discriminated against an employee or employees. This Act defines for purposes of federal equal pay what a continuing violation is. It is unclear whether California courts will adopt this clearly defined standard in equal pay cases or across the board.
It also is important to note that should a person file a federal case under these new requirements, he or she will be eligible to recover damages going back only two years (the statute of limitations) even if the claim extends beyond that period. In California, the statute of limitations also is two years under the equal pay law, but can extend to three years if the violation is willful and further if the Unfair Competition Laws are implicated. (See Business and Professions Code section 17200, et seq.)
Language of the New Act
Title I of the Lilly Ledbetter Act reverses the U.S. Supreme Court decision from 2007 that limited the statute of limitations for federal claims of discrimination and unequal pay to when the pay decision was made. This new law, which amends Title VII, the Age Discrimination in Employment Act, the Rehabilitation Act and the Civil Rights Act, specifically states:
“An unlawful practice occurs, with respect to discrimination in compensation, when a discriminatory-compensation decision or other practice is adopted, when a person becomes subject to a discriminatory-compensation decision or other practice, or when a person 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.”
Title 2 of the new law is the Paycheck Fairness Act. This section expands retaliation protections and increases penalties for violations of equal pay requirements. It also provides for increased training within government agencies and for girls and women relating to negotiation skills and additional education.
Practical Effect on Employers
In California this federal law seems to mirror already existing decisional authority as it relates to continuing violations. It was interesting that the First Title of the new law did not modify the Fair Labor Standards Act, which already had in place the Equal Pay Act of 1963, though the practical effect on employers will be the same.
The new law basically extends time limits on pay discrimination claims and can now be brought long after evidence has been lost, deleted or witnesses have died, which was the case with Ms. Ledbetter's former boss.
The Paycheck Fairness Act creates a new, more difficult standard of proof for employers to meet in showing that their pay structures are not discriminatory. Under the new standard, employers have to show that wage disparities are job-related, not sex-based, and could only use a defense if they prove that business necessity demands the unequal pay. Under the current Equal Pay Act, employers need only show that the difference in wages results from “any factor other than sex” and the employer does not have to show a business necessity for the difference in pay. For example a woman earning less than a man with more experience could argue that her employer should be required to send her to training and then pay them identical wages. She would have a strong case to argue that experience was not a "bona fide" factor because an alternative employment practice would eliminate the difference.
The paycheck fairness legislation would also require the use comparable worth in creating "voluntary" wage guidelines for industries. In conclusion, the law strips companies of certain defenses against claims of sex-based pay discrimination and makes it easier to bring class actions based upon pay discrimination.
President Barack Obama recently signed into law the Lilly Ledbetter Fair Pay Act of 2009 which significantly increases liability exposure for employers by overturning a U.S. Supreme Court decision and extending the statutes of limitation for lawsuits relating to employer decisions.
Case Background
Lilly Ledbetter sued her former employer, Goodyear Tire, claiming discrimination under federal Title VII because of disparate pay going back almost 19 years. She claimed the discrimination occurred on each paycheck comparing her lower pay to similarly situated male counterparts, and argued that the statute of limitations began at each paycheck.
The Supreme Court disagreed, ruling that she must file the claim with the Equal Employment Opportunity Commission ("EEOC") within 180 days of the pay decision and not within 180 days of the receipt of pay.
The Supreme Court noted that a pay decision is a “discrete act” and that the time period for filing a claim involving a discriminatory pay decision begins when the act occurs (the pay decision), not when the consequence of that decision arises (receiving the paycheck). Ledbetter v. Goodyear Tire & Rubber Co. (2007) 550 U.S. 618.
Impact on California
Not surprising, under California law, including equal pay statutes and the Fair Employment and Housing Act (Government Code section 129000, et seq.), provides these protections, though this just provides clarification when the statute of limitations begins to run for these types of cases. A claim for a "continuing violation" alleges that a series of actions by the employer have discriminated against an employee or employees. This Act defines for purposes of federal equal pay what a continuing violation is. It is unclear whether California courts will adopt this clearly defined standard in equal pay cases or across the board.
It also is important to note that should a person file a federal case under these new requirements, he or she will be eligible to recover damages going back only two years (the statute of limitations) even if the claim extends beyond that period. In California, the statute of limitations also is two years under the equal pay law, but can extend to three years if the violation is willful and further if the Unfair Competition Laws are implicated. (See Business and Professions Code section 17200, et seq.)
Language of the New Act
Title I of the Lilly Ledbetter Act reverses the U.S. Supreme Court decision from 2007 that limited the statute of limitations for federal claims of discrimination and unequal pay to when the pay decision was made. This new law, which amends Title VII, the Age Discrimination in Employment Act, the Rehabilitation Act and the Civil Rights Act, specifically states:
“An unlawful practice occurs, with respect to discrimination in compensation, when a discriminatory-compensation decision or other practice is adopted, when a person becomes subject to a discriminatory-compensation decision or other practice, or when a person 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.”
Title 2 of the new law is the Paycheck Fairness Act. This section expands retaliation protections and increases penalties for violations of equal pay requirements. It also provides for increased training within government agencies and for girls and women relating to negotiation skills and additional education.
Practical Effect on Employers
In California this federal law seems to mirror already existing decisional authority as it relates to continuing violations. It was interesting that the First Title of the new law did not modify the Fair Labor Standards Act, which already had in place the Equal Pay Act of 1963, though the practical effect on employers will be the same.
The new law basically extends time limits on pay discrimination claims and can now be brought long after evidence has been lost, deleted or witnesses have died, which was the case with Ms. Ledbetter's former boss.
The Paycheck Fairness Act creates a new, more difficult standard of proof for employers to meet in showing that their pay structures are not discriminatory. Under the new standard, employers have to show that wage disparities are job-related, not sex-based, and could only use a defense if they prove that business necessity demands the unequal pay. Under the current Equal Pay Act, employers need only show that the difference in wages results from “any factor other than sex” and the employer does not have to show a business necessity for the difference in pay. For example a woman earning less than a man with more experience could argue that her employer should be required to send her to training and then pay them identical wages. She would have a strong case to argue that experience was not a "bona fide" factor because an alternative employment practice would eliminate the difference.
The paycheck fairness legislation would also require the use comparable worth in creating "voluntary" wage guidelines for industries. In conclusion, the law strips companies of certain defenses against claims of sex-based pay discrimination and makes it easier to bring class actions based upon pay discrimination.
posted by Richard Quintilone II Esq at
12:48 PM
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