Q. I have heard about a new federal law that makes it possible for a nonemployee to sue our company for discrimination. Is that correct? How could such a claim come up and is there anything we can do about it?
A. It’s possible. What you are describing is one of the potential effects of the Lilly Ledbetter Fair Pay Act, which became law in January 2009. The Ledbetter Act makes clear that an unlawful employment practice occurs each time “an individual” is affected by an illegal discriminatory decision or other practice, including each time that wages, benefits or other compensation reflecting the discriminatory decision is paid.
As long as compensation continues to be affected by discriminatory decision or practice, this law allows bringing a claim on the theory that the compensation is unfairly low because of illegal discrimination, regardless of how long ago the decision or practice that established the compensation difference occurred.
The possibility that a wage discrimination claim might be brought by a nonemployee stems from the fact that the law does not say that discrimination occurs each time an “employee” is affected by a discriminatory decision or practice. It says discrimination occurs each time “an individual” is affected.
Because it is illegal to discriminate in the payment of wages and benefits as well as other compensation, lawyers speculate that a spouse, dependent or other beneficiary entitled to receive benefit payments from an employer-offered plan could claim that the benefit amount they are receiving is lower than it should be as a result of discrimination. It will be up to the courts to determine if this is the case.
Your best course of action to avoid claims based on alleged discriminatory compensation programs is to ensure that your compensation programs are, to the extent possible, based on objective, demonstrable criteria that can be documented and preserved in company records.
In addition, monitor and auditfrom time to time to identify any discrepancies in pay that might suggest illegal bias or stereotyping at work.
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