Published by MOASBO, March/April 2009

On January 29, 2009, during his first official week at work, President Obama signed into law the Lilly Ledbetter Fair Pay Act (“Ledbetter Act”). The Ledbetter Act amends the discrimination laws, including Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act, the Americans with Disabilities Act, and the Rehabilitation Act to expand the time frame in which an individual can sue for unlawful pay discrimination.

This piece of legislation was enacted in reaction to the United States Supreme Court’s 5-4 decision Ledbetter v. Goodyear Tire & Rubber Co. Inc. handed down in 2007. Ledbetter was an employee of Goodyear for close to twenty years (1979 to 1998) and alleged that she was paid less than her male counterparts because of her gender. Ledbetter stated that she did not know of the discriminatory animus toward her gender until 1989. Then, in 1989, she filed a claim with the EEOC against Goodyear, for among other things, pay discrimination. Ledbetter won at trial and the jury awarded her $3.8 million in back pay and damages, which was reduced to $360,000 because of the caps on Title VII damages.

The case was appealed all the way to the United States Supreme Court. The central issue before the Court was whether Ledbetter timely presented her pay discrimination claim to the EEOC. Ledbetter asserted that the original discriminatory decision to pay her less occurred years earlier, but that she felt the effect of the discriminatory decision with every check until her last one in 1998. Thus, she argued that the time frame for filing a claim should begin anew with each separate paycheck that reflects the discriminatory practice of paying her less than a male.

The Supreme Court rejected Ledbetter’s argument and ruled that Ledbetter waited too long to bring her pay discrimination claim. The Supreme Court, in refusing to rule that every paycheck that she received was a separate and discrete act of discrimination in which a claim could be based, held that the illegal and discriminatory conduct was the decision by her employer to pay her less because of her gender, even though that decision was made years prior. The Supreme Court stated that the point in which the statute of limitations begins to run was the point in time in which a discrete act of intentional discrimination occurred, such as the date of termination, date of refusing to hire, and for Ledbetter, the date in which her employer made a discriminatory pay decision.

The Ledbetter Act expressly overturns the Supreme Court Ledbetter decision. The Act declares that the Ledbetter decision “undermined those statutory protections by unduly restricting the time period in which victims of discrimination can challenge and recover for discriminatory compensation decisions or other practices, contrary to the intent of Congress.” Further, the Act states that an unlawful employment practice occurs, with respect to discrimination in compensation when (1) an individual becomes subject to a discriminatory compensation decision or other practice, or (2) when an individual is affected by application of a discriminatory compensation decision or other practice, including each time wages, benefits, or other compensation is paid.

Accordingly, the Act broadens the discrimination laws and now allows for individuals to file a claim for pay discrimination, regardless of when the discriminatory decision was first made, as long as the individual files the claim with the EEOC within 300 days (or in some states 180 days) of receipt of a paycheck or compensation benefit arising from the discriminatory pay decision. Thus, each new paycheck starts the statute of limitations period all over again. Significantly, however, the Act does not require employers to pay for the years, be it 5, 10, 15, or 20 that the individual was paid less because of his or her protected status, but limits the individual’s back pay to two years prior to filing the charge of discrimination.

So what does this mean for Missouri school districts? Because the Ledbetter Act expends the time frame in which to sue for pay discrimination, there could be an influx of pay discrimination claims, especially in these hard economic times.

As such, school districts should do the following:

    • Review their pay decisions and practices to ensure they are non-discriminatory;

    • Review the pay of employees and ensure that any pay discrepancies are based on a non-discriminatory reasons; and

    • Retain records to prove the fairness regarding their pay decisions indefinitely in order to have the ability to defend against a discrimination claim that may occur decades later.

© 2009 Mickes Goldman O’Toole, LLC