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Expect ‘lawsuit tsunami’ in wake of Ledbetter Fair Pay Act

by on
in Discrimination and Harassment,Human Resources

by David A. Copus, Esq.

On Jan. 29, President Obama signed the Lilly Ledbetter Fair Pay Act, which may be the most important change in anti-discrimination laws in decades. It applies to all pending compensation-related lawsuits, but limits back pay to two years.

The new law overturns the U.S. Supreme Court’s 2007 decision in Ledbetter v. Goodyear Tire and Rubber Co., Inc., where the court held by a 5-4 vote that Lilly Ledbetter’s charge of pay discrimination under Title VII of the Civil Rights Act came too late after she failed to complain to the EEOC within 180 days, as required by Title VII of the Civil Rights Act. (The law allows 300 days in states with their own anti-discrimination agencies.)

The Ledbetter basics

The Ledbetter Fair Pay Act amends Title VII, the Age Discrimination in Employment Act and the ADA.

It applies to alleged discrimination on the basis of gender, race, religion, color, national origin, age and disability.

The statute adopts the so-called “paycheck accrual” rule. That means each paycheck triggers a new EEOC charging period during which the complainant may properly challenge any prior discriminatory conduct that affected the amount of that paycheck, no matter how long ago the discrimination occurred.

For example, an employee hired 10 years ago at an allegedly discriminatory starting salary can now challenge her starting pay on the grounds that each subsequent paycheck, including the current paycheck, was diminished by that 10-year-old allegedly discriminatory starting-pay decision.

Way beyond the basics

Because the act covers “compensation decision[s] or other practice[s],” lawyers will undoubtedly argue that each current paycheck triggers the 180/300-day charge-filing period, allowing an employee to challenge any past employment decision—not just a “compensation decision”—that directly or indirectly affects the employee’s current paycheck.

Thus, for example, plaintiffs’ lawyers will argue that employees may challenge an allegedly discriminatory denial of promotion that occurred years ago, on the theory that the employee’s current paycheck would be larger but for the past discriminatory failure to promote.

On Feb. 5, the EEOC issued its first interpretive guidance on the act and adopted that broad interpretation. The EEOC guidance indicates that the Ledbetter Act applies to “a discriminatory compensation decision” or “other discriminatory practice affecting compensation.”

The first reported decision under the Ledbetter Fair Pay Act came in February.

A Florida court ruled in favor of employees who filed EEOC charges 16 years after they had been allegedly discriminatorily demoted. The employees argued that their current paychecks are less than they would have been had they not been demoted 16 years earlier. Thus, the court said, their claims are timely under the new law.

The case is Bush v. Orange County Corrections Dept., No. 6:07-cv-588-Orl, 2009 WL 248230, M.D. Fla., 2009.

A legal tempest looms 

Employers can look ahead to many years of legal wrangling over the interpretation of the seven key words of the act: “a discriminatory compensation decision or other practice.”

The outcome of this legal squabbling may turn on how the courts view the act’s sparse legislative history—a single committee report and limited debate in both the House and the Senate—and how the courts use so-called canons of statutory construction.

As lawyers know only too well, however, important decisions that depend on the interpretation of a statute’s ambiguous language generally produce much heat and little light—until the Supreme Court pronounces the final word. Even then, Congress stands in the wings.

 A tsunami of Ledbetter Act-inspired lawsuits is likely just over the horizon.

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Author: David A. Copus is a shareholder in Ogletree Deakins’ Morristown, N.J., office. He is one of the nation’s leading employment discrimination lawyers.

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