Employment Law Report

Update on Lilly Ledbetter Fair Pay Act

By George Miller

On January 29, 2009, President Obama signed the Lilly Ledbetter Fair Pay Act (“Act”), which addresses the issue of discrimination in compensation.  The Act amends Title VII, the Age Discrimination in Employment Act, the Americans with Disabilities Act, and the federal Rehabilitation Act, to state that, “. . . a discriminatory compensation decision or other practice that is unlawful under such Acts occurs each time compensation is paid pursuant to the discriminatory compensation decision or other practice, and for other practices.”  The statute’s effective date was retroactive to May 28, 2007, the day before the U.S. Supreme Court’s decision in the case of Lilly Ledbetter vs. Goodyear Tire and Rubber Co., Inc., in which the Court held that a new violation of the law does not occur each time an employee is paid following a discriminatory compensation decision.  The Act effectively overrules the Supreme Court’s decision and allows claims to be pursued that would otherwise have been barred by applicable statutes of limitations because the original, allegedly discriminatory compensation decision was made outside the limitations period. 

Since January of this year when the Act was signed into law, the federal courts have issued over thirty decisions interpreting the Act. 

To date these decisions have adhered strictly to the language of the Act and have applied it only to cases involving compensation decisions under Title VII, the ADA, the ADEA, and the Federal Rehabilitation Act.  For example, a number of the cases in which the courts have said the Act applies have involved alleged discriminatory failures to promote employees and, hence, to increase their compensation.  The courts have rejected attempts to apply the Act to claims under the Family and Medical Leave Act, the federal Fair Housing Act, the Sarbanes-Oxley Act, and Section 1981 of the Civil Rights Act of 1866. 

One significant decision narrowly construing the Act was in a case filed by the Equal Employment Opportunity Commission in a federal court in Iowa, alleging that an employer maintained a sexually hostile work environment.  The court dismissed the case based upon the statute of limitations and rejected the EEOC’s argument that the Lilly Ledbetter Act broadened the statute of limitations for all kinds of discrimination claims.  The court said: “There is no indication that Congress intended the Ledbetter Act to serve as a trump card the EEOC might use to supersede all statutes of limitation in our nation’s various civil rights acts.”

At the time the Act became law, there was fear that the phrase “other practices” could be construed by the courts to broaden the reach of the Act beyond compensation decisions or practices.  The decision by the federal court in Iowa is an indication that this may not come to pass.  However, whether that decision will hold up on appeal, and what other courts do in the future, remains to be seen.  The fact that there have been more than 30 decisions in just seven months indicates that there is much more to come. 

George J. Miller
George Miller is a member of the Firm’s Labor & Employment Service Team.  He concentrates his practice in the areas of labor and employment law and eminent domain law. Read More