MMC, Inc. HR Tips Volume I Issue 3

February 2009  

Lilly Ledbetter Fair Pay Act - Tips for Employers

Written by: Michele O'Donnell, M.S. Human Resources Management

Recently there has been quite a bit of buzz surrounding the first employment related bill that President Obama signed into law, which was the Lilly Ledbetter Fair Pay Act. While the bill did not create any new requirements for employers to follow but has effectively amended a number of existing regulations that will alter how employers conduct business going forward.

In 1979 Lilly Ledbetter was hired at Goodyear Tire and Rubber Company in Alabama. Shortly before she retired in 1998, Mrs. Ledbetter received an anonymous note from a co-worker that disclosed the salaries of 3 of her male counterparts. Mrs. Ledbetter was being paid considerably less than her male counterparts who were performing the same duties as she was.

Mrs. Ledbetter filed an EEOC claim and eventually sued Good Year winning a $3.3 million dollar jury award, which was later reduced. Ultimately the Supreme Court voted 5 – 4 that Mrs. Ledbetter was not entitled to compensation because she filed her claim more than 180 days after receiving her first discriminatory paycheck. The 180 day filing deadline is a strictly enforced EEOC deadline.

Passing of the Act overrules the Supreme Court's decision and states that not only is the initial allegedly discriminatory compensation decision (most commonly upon hiring) an unlawful employment practice, but also when "the application of a discriminatory compensation decision or other practice, including each time wages, benefits, or other compensation is paid." In simple terms, each individual paycheck, or other compensation alleged to be discriminatory, can be considered its own separate unlawful employment act which starts the 180 day filing period over.

The Ledbetter Act amends Title VII, ADA, the Rehabilitation Act, and the Age Discrimination in Employment Act, and will therefore affect compensation claims based on age, race, disability, and other statutorily-protected classes.

Employers should review all of their existing compensation and benefit policies to ensure they are being applied consistently throughout the organization. The policy review should be conducted considering an employee’s potential life with the organization as the Act address not only compensation decisions at the time of hire, but those decisions made throughout an employees entire career with the organization.

Employee recordkeeping will also be greatly affected by the act and employers must become ever more diligent and aware in this area and keep detailed records regarding any compensation decisions related to current employees.

It is also important to note that the Act is not limited to paychecks as it references benefits. This means that any inactive or former employee who still receives some form of compensation from the organization may be entitled to the Act's protections.

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