Ledbetter Fair Pay Act Is Now Law

As predicted in this blog and by most employment law pundits, President Obama is expected today to sign bill favoring employees as his first piece of major legislation. The Lilly Ledbetter Fair Pay Act overturns a U.S. Supreme Court decision from 2007, which restricted the statute of limitations on Equal Pay Act claims.

Lilly Ledbetter worked for Goodyear Tire & Rubber Co for 19 years before she found out that she was the lowest paid supervisor there, even though she had more experience than some of her male counterparts. She sued for pay discrimination based on gender, and the jury agreed with her. But the case was appealed all the way to the Supreme Court, which decided that the 180-day statute of limitations for complaining about discrimination had run out when 19 years before, when the pay inequity first occurred, regardless of when she found out.

The new law, which will go into effect tomorrow, clarifies that each new paycheck is a discriminatory act that starts the 180-day clock running again if an employee is being paid less because of her gender, race, age, disability, or national origin. An employee can now claim discrimination on the basis of pay when he discovers the inequity and seek two years of back pay for the amount he should have been paid.

What can you do as an employer to prevent an Equal Pay Act suit? Senator Barbara Mikulski, who sponsored the bill, had a point: “If you don’t want to be sued, don’t discriminate,” she said.

The Equal Pay Act has been around since 1963, enacted even before Title VII of the Civil Rights Act of 1964 outlawed other types of discrimination. It has helped women go from earning $.62 for every dollar a man earned for the same job to earning $.80 for his dollar. But there is still obviously some subtle discrimination or women and men would both earn the same amount for performing the same job. Since the law has been around since most of us who are business owners and managers were in elementary school or even diapers, maybe it is time that we learned to comply with it.

How do you do that? Look at what every employee performing the same job is earning. For example, if you have five engineers working for you, pull out your payroll and figure out if you really could justify their salary discrepancies and the demographics. If Engineer Bill has 30 years experience and Engineer Tiffany has 10, that is a pretty convincing justification for Tiffany making less than Bill. But if they both have about 10 years of experience and he is still paid more, you may have some explaining to do. He may actually perform much better than Tiffany, but you better have lots of paper to back that theory up.

I know this evaluation will take some time ( probably a day) and will be a PITA (as my teenage son says). But as I always say, you can either spend a day now to prevent a suit, or spend weeks or months in investigations, discovery, depositions, mediations and trial with a disgruntled employee, her lawyer and me later.

Leave a Reply