Ledbetter Act Expands Employer Liability

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On January 29, 2009, the Lilly Ledbetter Fair Pay Act (Public Law 111-01) became the first bill signed into law by President, Barack Obama.  There are two principal effects of the law:  1). Employees will now have repeated opportunities to file charges and recover damages against their employers for equal-pay violations, because the employers’ acts will be construed as a continuing violation of federal equal pay rights existing under Federal, anti-discrimination laws.  2).  The effective date of the Ledbetter Act is retroactive to May 28, 2007, which means that any pending federal pay discrimination lawsuits filed after May 27, 2008 will be subject to this new law.  

Under existing, Federal anti-discrimination laws, a pay discrimination claim can be made on the basis of race, color, religion, sex, national origin, disability and age.  The Ledbetter Act amends these laws, including Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act of 1967, the Rehabilitation Act of 1973 as well as the Americans with Disabilities Act of 1990.  The Ledbetter amendments makes these significant changes:

More Lawsuits Against Employers-The Per Paycheck Violation Rule:  To allege pay discrimination under Federal Laws, employees are first required to file a charge of pay discrimination with the Equal Employment Opportunity Commission (EEOC) within 180 days (or 300 days for those states with equal opportunity agencies, such as California) of the alleged, discriminatory pay practice.  Now, with the Act’s amendments, each time an employer pays wages, benefits or other compensation to an employee, the clock resets and the employee has a new opportunity to file a charge of  pay discrimination.   The Act reversed the Supreme Court’s decision in Ledbetter v. Goodyear Tire & Rubber Co., 550 US 618 (2007).  The Court had ruled that the time period for filing a charge began immediately after a discriminatory pay decision was first made and communicated to employees, not each time the employer paid compensation to employees.  This decision had the practical effect of excluding many pay discrimination claims as untimely.  For civil rights activists and employee rights groups, this decision became the driving force to change the law to its present form.

Family Members May Sue Employers?:  According to the Act’s language, when “any individual is affected by application of a discriminatory compensation decision or other practice,” they may file a claim pursuant to the provisions of the Act.  This statutory language would seem to suggest that spouses and children might become eligible plaintiffs in a pay discrimination lawsuit if they claim to be adversely “affected” by the pay practice in question.

A Federal, Two Year, Wage Recovery Window:  Pursuant to the provisions of the Act, the person seeking compensation may now seek recovery of compensation for a period of up to two years preceding the filing of the charge of pay discrimination.

Effect on California Equal Pay Claims:  California law provides equal pay protection under the Fair Employment and Housing Act (FEHA, California Government Code §§ 12940, et seq) and also its equal pay statutes (California Labor Code 1197.5).  Because Federal law now states that a new, equal pay violation may occur each time an employer pays compensation or benefits to an employee, California courts will no doubt evaluate and consider that federal precedent as a clear example of a continuing violation of equal pay act protections under California law.  Predictably, plaintiffs’ attorneys will be encouraged to file more pay discrimination suits in California.

And, in California, an employee would seem to have greater rights and remedies available for recovery on a claim of pay discrimination than under Federal law.  Under existing laws in California, an employee already has at least a (2) two year window of opportunity to commence a civil action  for recovery of back pay due to the alleged, discriminatory pay practice and, up to three years to commence litigation for a willful violation of these laws (California Labor Code § 1197.5(h)).   None of this is good news for California’s employers.

Because of this potential financial exposure, a prudent employer might consider a comprehensive review of its current pay practices, policies and procedures to insure that it remains in compliance with both state and federal equal pay act statutes.

February 9th, 2009|Blog|0 Comments

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