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The Impact of Lilly Ledbetter Fair Pay Act

January 29, 2021 | By Jeramy Gordon

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Enacted in 2009, the most recent piece of legislation enforced by the EEOC is the Lilly Ledbetter Fair Pay Act. As you may already know, Lilly Ledbetter, and her determination for equal rights in the workplace, became a victory for the nation, making it easier for workers to challenge unequal pay. But do you know her story, and what this Act means for employers?

Lilly’s Story

Back in 1979, Lilly Ledbetter applied for her dream job at the Goodyear tire factory, and became one of the first women hired at the management level within the organization.

This was a great personal victory, but unfortunately during her time at Goodyear, she faced constant gender prejudice and sexual harassment. Lilly, however, remained steadfast, believing that the inequitable environment would eventually evolve. Fast forward nineteen years later. Lilly was still with Goodyear, and one day received an anonymous note, revealing that she was making thousands less per year than men in equivalent roles. She swiftly filed a sex discrimination case, and over the next eight years took her case all the way to the Supreme Court…where she sadly lost.

The Supreme Court’s ruling in Ledbetter v. Goodyear Tire & Rubber Co., Inc., 550 U.S. 618 (2007) severely restricted the time period for filing complaints of employment discrimination concerning compensation. According to the decision, Lilly was required to file suit within 180 days of her first unequal paycheck. But how could she, when she had no way of knowing that she was being paid unfairly all those years?

That is when the late Justice Ruth Bader Ginsburg stepped in, urging Lilly to fight back. She did, and was ultimately victorious. On January 29, 2009, President Obama signed his very first piece of legislation, the Lilly Ledbetter Fair Pay Act, overturning the Supreme Court’s decision and amending the Civil Rights Act of 1964.

The Act states that each paycheck that contains discriminatory compensation is a separate violation, regardless of when the discrimination began, so unfair pay complaints can be filed within 180 days of a discriminatory paycheck—and that 180 days continuously resets after each paycheck is issued. Essentially, the Act requires employers to redouble their efforts to ensure that their pay practices are non-discriminatory, and to make certain they keep the records needed to prove the fairness of pay decisions.

What Do Employers Need to Know?

As an employer, it is critical to understand the scope of the Lilly Ledbetter Fair Pay Act, and to be aware of exactly what the law declares as unlawful employment practices. These unlawful practices take place when:

  • A discriminatory compensation decision or other practice is adopted
  • An individual becomes subject to the decision or practice
  • An individual is affected by application of the decision or practice, including each time there is a payment of compensation

The statute allows the filing of charges alleging pay discrimination with the issuance of each new paycheck or post-retirement benefits check. Consequently, each check potentially serves as an unlawful employment practice for which an employee may file a charge, even if the alleged pay discrimination occurred years before. With that in mind, it is important for employers to consider these two suggestions:

  1. Examine record retention policies and review pay practices. Because current and former employees can now challenge pay decisions made in the distant past, employers should consider modifying their record retention policies (if they have not already), and retain records surrounding pay decisions indefinitely, rather than the few years required by federal regulations.
  2. Consider conducting a consistent, statistical self-audit of recent pay decisions and policies. Areas of focus for a self-audit should include starting pay, promotional pay increases, and merit pay increases over the past two years, to determine if a pattern of discrimination is anywhere in existence. Employers without formal pay grades should consider putting this in place. Without established pay grades, managers have wide discretion in setting pay, which could turn into a liability.

In the end, the Lilly Ledbetter Fair Pay Act bolstered worker protections against pay discrimination, allowing individuals who face pay discrimination to seek rectification under federal anti-discrimination laws. In this time of ongoing turbulence in our country, let us all take a moment to be inspired by the work of Lilly Ledbetter, who stood firm in her belief of making a difference for the American people within the workplace, to ensure equal rights for all, no matter the gender, race, sexual orientation, age or religion.

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