Butler Williams & Skilling Blog

Lilly Ledbetter Fair Pay Act Passes Senate!

On Thursday, January 22nd, the U.S. Senate passed S. 181, the Lilly Ledbetter Fair Pay Act.  Swift action is expected in the House to pass the bill and present it to President Obama, who is expected to sign it into law.  In fact, this may be the first law signed by President Obama, who campaigned in favor of this legislation.  The law, when enacted, will restore the 'paycheck accrual rule' making every instance of pay discrimination, every paycheck, actionable discrimination.  

When it decided Lilly Ledbetter v. Goodyear Tire and Rubber Company in 2007, the U.S. Supreme Court had reversed years of decisions which had followed the 'paycheck accrual rule'.  In Ledbetter v. Goodyear, the Supreme Court held that Ms. Ledbetter's time to challenge the discriminatory pay practices at Goodyear had expired because she did not file an administrative charge with the EEOC within the short time window, measured from the time the discriminatory pay practice was instituted, even though the discriminatory pay practice continued with each pay check she received.  The decision in the Ledbetter case dismissed Ms. Ledbetter's claim, and did not allow Ms. Ledbetter to challenge the discriminatory practice by filing a claim within the time allowed if measured from the date of the last discriminatory pay check.  This was recognized as a timely claim under the 'paycheck accrual rule.'  Opposition to the Supreme Court decision was immediate, and a legislative fix was narrowly defeated last year.

The law passed by the Senate reverses the Ledbetter v. Goodyear case and returns the law to the pre-Ledbetter v. Goodyear 'paycheck accrual rule.'  The new law is retroactively effective to the date of the Supreme Court's Ledbetter v. Goodyear decision so that there is no gap in the law's application of the 'paycheck accrual rule.'  Victims of pay discrimination will again be able to challenge illegal pay practices measured from the time of the last discriminatory pay check received, and will not be foreclosed because they did not recognize or challenge the practice on the first pay check received (or the first time an employer treated them unfairly in pay, unbeknownst to the employee).  The unfairness in this rule lies in the recognition that employers do not often issue memos to their employees advertising their discriminatory pay practices.  The passage of this law by the Senate is a strong statement that the Ledbetter decision was contrary to public policy and the intent of our anti-discrimination laws, notably Title VII to the 1964 Civil Rights Act and the Equal Pay Act, to allow a limitations-based dodge of this form of discrimination.  This law will assist to remedy discrimination in pay that has long plagued our economy and undermined the laws intended to end pay disparities based on gender, race, national origin or religion. 

With the passage of this Act, workers can eradicate lingering discrimination in pay.  Many, many companies have historically paid women and minorities less than they have paid other employees and have placed obstacles in the way of their promotion in their respective organizations - and continue to do so.  It is time to stop this form of discrimination, once and for all.  With the assistance of this law, employees can again expect the courts to enforce the law's requirement that they be paid the same wage for the same work, irrespective of gender, race or other protected class. 

Observers are predicting that litigation regarding this form of discrimination will return to its pre-Goodyear levels or, employers argue, will increase.  Employer groups who mounted efforts opposing efforts to pass this legislation have complained that employers should be able to rely upon the limitations periods that would bar such claims if not brought early in the discriminatory pay practice and that the law would encourage frivolous suits.  However, the truth is that these groups did not suggest that employers abandon discriminatory pay practices, but simply encouraged Congress to enforce a rule rewarding employers for hiding discriminatory practices for the applicable 180 or 300 day period (depending on the rules that apply in your state) after they were instituted.  If the practices were not detected and continued over time, the effect would be to insulate employers with discriminatory pay practices from the application of the law through the application of the very short administrative limitations period an employee had to preserve a claim by filing an EEOC discrimination charge. 

Application of the Ledbetter rule would have effectively gutted the laws prohibiting pay discrimination.  How many employees would be in a position, or even know of, the first date that a discriminatory pay practice was instituted against them?  Many employers try to strictly prohibit discussions of compensation.  In our experience, employers who engage in this form of discrimination have not posted the discriminatory pay schedules for all to see.  Rather, they conceal the pay schedules and, even after their pay systems have been challenged, go to great lengths to attempt to avoid disclosure of this information - as it is clearly illegal.  Reportedly, Ms. Ledbetter only learned about the discriminatory pay system at Goodyear through an anonymous tip as she was retiring.

This correction to the law is overdue.  It is only fair to return the law to the paycheck accrual rule to avoid an employer's 'gotcha' defense that, even though it had discriminated against an employee in pay, the employee didn't act soon enough to challenge the practice.  Many employers and employer advocacy groups are voicing complaints that this law increases the threats of lawsuits hovering over the heads of businesses.  Employers can avoid the threat of suits very simply - by paying their employees the same wages and benefits, and recognizing merit and their achievements, as they do with other employees and by not giving preferences based on gender or race.  The outcry from the business community comes from the recognition of how widespread this form of discrimination has penetrated business practices through the years.  Pay fairly and based on merit.  Now.  Employers who continue to violate the law should not be rewarded by continued efforts to conceal their discriminatory actions.    

Congratulations to the National Employment Lawyers Association, American Association of University Women (AAUW), Leadership Conference on Civil Rights (LCCR), National Organization of Women (NOW), American Association of Retired Persons (AARP) and other coalition partners for their strong efforts to have this bill passed and to resist diluting amendments offered before the Senate's passage of the Act.