President Obama Signs Lilly Ledbetter Fair Pay Act

President Barack Obama signed the Lilly Ledbetter Fair Pay Act into law today, extending employees' opportunity to challenge allegedly discriminatory pay practices under Title VII and other anti-discrimination statutes. Prior to this law's enactment, employees were required to file an EEOC charge within 180 or 300 days (depending on the state) of the first time an allegedly discriminatory pay decision was made. Under the new law, each allegedly discriminatory paycheck triggers a new 180- or 300-day statute of limitations, thus extending employees' opportunity to sue to the entire duration of their employment.

New Legislation Overrides Supreme Court Decision in Ledbetter

The Lilly Ledbetter Fair Pay Act, which was passed in the Senate and the House of Representatives largely along party lines after several amendments introduced by Republicans were rejected, expressly overrides the U.S. Supreme Court's May 2007 decision in Ledbetter v. Goodyear Tire & Rubber Co. In Ledbetter, the Supreme Court held that a plaintiff claiming pay discrimination under Title VII must file an EEOC charge within the statutory time period (300 days, or 180 days in the few states that do not have a parallel state fair employment agency) after each alleged discriminatory pay decision is made and communicated to the employee.

The new law extends the statute of limitations periods for pay discrimination claims brought under Title VII, the Americans with Disabilities Act (ADA), the Rehabilitation Act and the Age Discrimination in Employment Act (ADEA). Under the new law, a discrete unlawful practice occurs—thus renewing the limitations period—each and every time a person is "affected by application of a discriminatory compensation decision or practice, including each time wages, benefits, or other compensation is paid, resulting in whole or in part from such a decision or other practice."

The new law changes only the statute of limitations period, not the damages available. Title VII, for example, has always provided for up to two years of back pay in compensatory damages, and continues to do so. Damages provisions in the other anti-discrimination statutes also remain unchanged.

A similar bill was first passed by the House of Representatives in July 2007, less than two months after the Supreme Court decided the Ledbetter case, but that legislation was blocked in the Senate and fell three votes shy of the 60 required to overcome a filibuster.

The Lilly Ledbetter Fair Pay Act is retroactive, taking effect as if enacted on May 28, 2007 (the day before the Supreme Court issued the Ledbetter decision), and applies to all claims of pay discrimination that are pending on or after that date.

Considerations for Employers

With the passage of this new law, a new statute of limitations is triggered every time an employee is paid. Employers should consider taking some time to review pay practices—even those that have been in effect for years—for pay disparities among employees. Any disparities should be remedied or justified based on objective and documented factors.

Click here to read the full text of the Lilly Ledbetter Fair Pay Act.