Following 'best practices' will reduce exposure to pay-discrimination claims.

• Author: Meyer, Louis
• Position: LAW JOURNAL 2009

On Jan. 29, President Obama signed into law the Lilly Ledbetter Fair Pay Act of 2009. The act amends Title VII of the Civil Rights Act, the Age Discrimination in Employment Act and parts of the Americans with Disabilities Act so that an unlawful employment practice occurs not only when a discriminatory compensation decision is initially made or a discriminatory pay practice is implemented but also each time an employee receives a paycheck resulting from a discriminatory compensation decision.

The Fair Pay Act reverses the U.S. Supreme Court's decision in Ledbetter v. Goodyear Tire & Rubber Co. In that case, Lilly Ledbetter sued Goodyear for sex-based pay discrimination. The court did not deny that Ledbetter had suffered discrimination but ruled against her because her claim did not satisfy Title VII's requirement that a discrimination claim be filed within 180 days of the "alleged unlawful employment practice." The court rejected Ledbetter's argument that each paycheck was a new and separate unlawful employment practice for purposes of this 180-day deadline. Instead, the Supreme Court decided that Goodyear's initial decision to pay Ledbetter less than men performing similar work was the "alleged unlawful employment practice," and Ledbetter's failure to file a discrimination claim within 180 days of that decision barred her claim.

The Fair Pay Act is significant for employers because it extends the time in which an employee may initiate claims based on allegedly discriminatory pay practices. Although the act does not extend the 180-day time period within which an employee must file a charge of discrimination based on a pay practice, it provides that every paycheck can start a new 180-day filing period.

The U.S. Chamber of Commerce and other opponents of the Fair Pay Act contend it will gut the statute of limitations, cause an explosion of litigation against employers, and make it possible for claims to be filed decades after an alleged discriminatory act occurred. How much additional litigation will result from the law remains to be seen, however, because the act does not change the requirement that a plaintiff prove there was discrimination nor does it change the current law limiting awards of back pay to two years.

Defending pay-discrimination claims

In a pay-discrimination claim, an employee alleges that he or she is paid less than other employees doing the same work and that the lower pay is the result of a discriminatory decision by the...