Fair Pay Act

The Lilly Ledbetter Fair Pay Restoration Act of 2009 was the first piece of legislation signed by the President Mr.Barack Obama. The Act prohibits wage discrimination among employees doing equivalent jobs, based on sex, race or nationality. The Act is an amendment to the Fair Labor Standards Act of 1938 (FLSA) and an extension to the Equal Pay Act of 1963. The Equal Pay Act is limited to discrimination based on sex, in the same jobs. The Fair Pay Act expands this protection by prohibiting the pay discrimination based on race and nationality among workers performing dissimilar work in equivalent jobs. The Act implements fair pay by prohibiting employers from lowering the wage rate of any employee based on any discrimination.

The Act rejected the U.S. Supreme Court’s decision in Ledbetter v. Goodyear Tire & Rubber Co., holding that the charge-filing deadline on Title VII compensation discrimination claims begins to run on the date of the first allegedly discriminatory pay decision. The law extends the time period in which employees can pursue disparate pay claims under four antidiscrimination laws: Title VII, the Age Discrimination in Employment Act (ADEA), the Americans with Disabilities Act (ADA) and the Rehabilitation Act (Rehab Act).  The Act is a response to the Supreme Court’s ruling in the case Ledbetter v. Goodyear Tire & Rubber Co., which held that an employee had 180 days from the date a salary was agreed upon to file a lawsuit attesting pay discrimination. That meant that a female employee had only six months to establish that she was being paid less than her male counterparts doing the same job and then to file a lawsuit against the company.

In Ledbetter v. Goodyear Tire & Rubber Co., the plaintiff, Lilly Ledbetter, worked as a manager in Goodyear’s Gadsden, Alabama plant from 1979 until accepting an early-retirement package in 1998. By the time of her retirement, Ledbetter’s meager annual raises resulted in a large pay gap between her compensation and that of her male coworkers. The U.S. Supreme Court held that a pay-setting decision, like a termination or demotion, is “a discrete act” forming the basis of a Title VII claim and thus triggering the 180-day period to file a charge. The Court rejected Ledbetter’s argument that the issuance of each paycheck based on an allegedly discriminatory pay decision made outside of the statutory charging period resulted in a continuing violation of Title VII. In the dissent, Justice Ginsburg argued that the unlawful practice under Title VII was the “current payment of salaries infected by gender-based (or race-based) discrimination,” even if the “infection” occurred long before the plaintiff filed a charge. The dissent invited Congress to correct the Court’s “parsimonious reading of Title VII.” Congress accepted the invitation.

The new law amends Title VII of the Civil Rights Act of 1964, the Americans with Disabilities Act of 1990, the Rehabilitation Act of 1973, and the Age Discrimination in Employment Act of 1967 to provide that the charge-filing periods (300 days in most states and 180 days in states that do not have a fair employment agency) would commence when:

  1. a discriminatory compensation decision or other practice is adopted;
  2.  an individual becomes subject to the decision or practice; or
  3.  an individual is affected by an application of a discriminatory compensation decision or practice (including each time wages, benefits, or other compensation is paid).

Thus, the statute of limitations restarts each time an employee receives a paycheck based on a discriminatory compensation decision.

In addition, the new law provides that an unlawful employment practice occurs when “a person” is affected by a discriminatory pay decision or other practice. This broad language could sanction pay discrimination charges filed by non-employees, such as the spouses of deceased workers, so long as those individuals claim they have been affected by the discriminatory practice.

The Act amended Section 706 (e) of the Civil Rights Act of 1964 (42 U.S.C. 2000e-5(e)) by adding that an unlawful employment practice occurs with respect to discrimination in compensation when an individual is affected by application of a discriminatory compensation decision or other practice, including each time wages, benefits, or compensation is paid, partly or wholly resulting from such decision or other practice. The Act also added that “in addition to any relief authorized by section 1977A of the Revised Statutes (42 U.S.C. 1981a), liability may accrue and an aggrieved person may obtain relief as provided in subsection (g)(1), including recovery of back pay for up to two years preceding the filing of the charge, where the unlawful employment practices that have occurred during the charge filing period are similar or related to unlawful employment practices with regard to discrimination in compensation that occurred outside the time for filing a charge.”

The Fair Pay Act amended Section 7(d) of the Age Discrimination in Employment Act of 1967 (29 U.S.C. 626(d)) by adding that an unlawful employment practice occurs with respect to discrimination in compensation when an individual is affected by application of a discriminatory compensation decision or other practice, including each time wages, benefits, or compensation is paid, partly or wholly resulting from such decision or other practice.

The amendments made by Section 3 of the Act applies to claims of discrimination in compensation brought under Title I and Section 503 of the Americans with Disabilities Act of 1990 (42 U.S.C. 12111 et seq., 12203).
Section 3 of the Act also applies to claims of discrimination in compensation brought under Sections 501 and 504 of the Rehabilitation Act of 1973 (29 U.S.C. 791, 794). The Fair Pay Act amended Section 505(a) of the Rehabilitation Act of 1973 (29 U.S.C. 794a(a)). The Act also amended Section 717 of the Civil Rights Act of 1964 (42 U.S.C. 2000e-16) by adding that Section 706(e)(3) shall apply to complaints of discrimination in compensation. The Fair Pay Act amended Section 15(f) of the Age Discrimination in Employment Act of 1967 (29 U.S.C. 633a(f)). The Act and the amendments made by this Act, take effect as if enacted on May 28, 2007.

The Fair Pay Act covers both private business and government agencies. It requires the employers to use a legitimate and non-discriminatory system to set wages. Under the Fair pay Act, employers can pay differently for equivalent jobs if the disparity is a result of seniority or a system that measures pay by the quantity or quality of work. Moreover, differences in pay are justifiable for other reasons with a legitimate business interest. The Act requires employers to maintain a disclosure and reporting system for job classification and pay statistics. The disclosure helps the employers also to identify and remedy inequities that might not otherwise come to their attention, by analyzing compensation statistics.


Inside Fair Pay Act