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5 Things You Need to Know About The Lilly Ledbetter Fair Pay Act

Posted by Campbell & Chadwick, PC in Dallas-Fort Worth-Arlington, TX on Jul 08, 2009

1. What The Ledbetter Act Does

It Amends the Civil Rights Act of 1964 to provide that in the context of pay discrimination on the basis of race, color, religion, sex or national origin, an "unlawful employment practice" occurs when:
    (a) a discriminatory compensation decision or other practice is adopted;
    (b) an individual becomes subject to a discriminatory compensation decision or other practice; or
    (c) an individual is affected in whole or in part by the application of a discriminatory compensation decision, including each time wages, benefits or other compensation is paid.

Statutory Provisions At Issue:

“It shall be an unlawful employment practices for an employer to discriminate against any individual with respect to his compensation, term, conditions, or privileges of employment, because of such individual’s race, color, religion, sex, or national origin.” 42 U.S.C. §2000e-2(a)(1)
“It shall not be an unlawful employment practice for an employer to apply different standards of compensation provided that such differences are not the result of an intention to discriminate because of race, color, religion, sex, or national origin.” 42 U.S.C. §2000e-2(h).
“A charge under this section shall be filed within 180 days after the alleged unlawful employment practice occurred.” 42 U.S.C. §2000e-5(e)(1).

Result: The 180-day statute of limitations to file a claim with the EEOC resets with each paycheck. However, it does not expand the amount of compensatory damages an employee can recover and an employee is still limited to 2 years of back pay preceding the filing of the discrimination charge with the EEOC.

2. Why More Time Matters

Employee’s Position:

Equal Pay and Title VII discriminatory pay claims are:
(1) most commonly undiscoverable at the time the discriminatory pay decision is made, or
(2) inherently not provable except over a period of time as the disparate pay decision continues unabated by the employer.

Ledbetter has been the rule of law in most lower courts for years and employers cannot show any actual evidence of discriminatory pay lawsuits being based on 15- to 20-year-old discriminatory pay decisions.

Title VII and Equal Pay Acts limit recovery of back wages to 2 years from the date suit filed so fear of huge verdicts based on 15-year-old discriminatory practices is unfounded.

Employer’s Position:

A discriminatory pay decision made 15-20 years earlier, even by a predecessor owner, can become the basis for other future raises that are non-discriminatory.
The employer must bear burden of periodically reviewing pay records of every employee to make sure that there has never been an act of discrimination at any point in the past that is affecting current pay.

If employer finds disparate pay, it doesn’t escape liability by paying everyone the same going forward because employee can still bring suit for past discriminatory pay practices

Without the 180-day statute of limitations, these earlier discriminatory act can form the basis of an Equal Pay or Title VII lawsuit years later and employers cannot limit liability.

3. The Philosophy Behind The Lilly Ledbetter Fair Pay Act

Reverses Ledbetter v. Goodyear Tire & Rubber Co., 550 U.S. 618 (2007) because Congress concluded that the statute of limitations period imposed by the Supreme Court on the filing of discriminatory compensation claims ignores the reality of wage discrimination and is at odds with the robust application of the civil rights laws that Congress intended. When it was passed in the Senate (61-36) the vote was split entirely along party/gender lines — every Democratic congressman and all 4 female Republican Senators voted in favor of the Act while every male Republican Senator voted against it. (Likewise, the House vote was 250-177.) Pres. Barack Obama signed it into law on January 29, 2009 as the first act of congress signed after he took office.

Signing the Ledbetter Fair Pay Act

“This legislation reflects the reality of the American workplace, that most of us just don’t know our coworkers’ salaries relative to our own. In fact, many employers prohibit workers from discussing their salaries, making it that much more difficult to uncover wage discrimination. Employers who pay their workers unequally should not be allowed a ‘get out of jail free’ card because they’re able to keep the decision to discriminate secret for more than 180 days.”
    Caroline Fredrickson,
    Director, the American Civil Liberties Union
    Washington Legislative Office

4. What started it all:

Lilly Ledbetter worked at Goodyear Tire & Rubber, Co., Gadsden, Alabama.

As a salaried, union employee, all raises required substantiation by formal evaluations of worker's performance.

At retirement in 1998, Ledbetter earned $3,727 per month. 15 men employed at plant averaged between $4,286 and $5,236 per month.

After taking early retirement, Ledbetter sued under Title VII of the Civil Rights Act of 1964 and the Equal Pay Act of 1963.

5. The Act Reverses Court Decisions in Ledbetter v. Goodyear Tire & Rubber Co., 550 U.S. 618 (2007)

United States District Court: The Court dismissed Equal Pay claim because that Act allows pay differences based on merit; it allowed the Title VII and other claims to proceed to jury. Jury found for Ledbetter and awarded back pay and damages from the time of her employment to the date of retirement. Goodyear appealed to the 11th Circuit Court of Appeals.

11th Circuit Court of Appeals: The Court reversed the trial jury verdict. It held that the statute of limitations barred all recovery for all pay decisions that took place more than 180 days before Ledbetter began EEOC process in March 1998. It further concluded that all company decisions concerning pay during that 180 day period could not unequivocally linked to her gender. Ledbetter appealed to the United States Supreme Court.

United States Supreme Court: The opinion delivered on March 29, 2007, affirmed 11th Circuit. The Court split entirely along ideological lines (5-4 decision). Justice Alito wrote the majority opinion; joined by C.J. Roberts, Scalia, Kennedy, and Thomas. Justice Ginsberg wrote the dissent, which she read from the bench in an extremely rare move; joined by Stevens, Souter, and Breyer.

Timothy B. Soefje is a Senior Associate with the law firm of Campbell & Chadwick P.C. Mr. Soefje's practice areas include Professional Negligence, Construction, Insurance, Commercial Litigation, Personal Injury Litigation, and Creditor-Debtor. Mr. Soefje was licensed to practice law in Texas in 1994 and is admitted to all Texas State Courts. He is also admitted to practice in the Northern and Eastern Districts of Texas, the Fifth Circuit Court of Appeals, and the United States Supreme Court. He is a member of the Dallas Bar Association. Mr. Soefje received his law degree from South Texas College of Law and a Bachelor of Arts from Southwest Texas State University.