Lilly Ledbetter was a supervisor at a Goodyear tire factory in Alabama for more than 19 years. At the end of her career, she discovered she had been paid less than her male colleague.


The Supreme Court invalidated Ledbetter’s claim because the wage discrimination initially occurred when she started her job, nearly 20 years earlier. According to Title VII of the Civil Rights Act, claims must be filed within 180 days after the alleged unlawful practice or in our case, 300 days since Indiana operates equal employment agencies.


This new law, the first piece of legislation signed by President Obama on January 29, 2009 creates an open timeframe for filing wage claims. The 300-day Civil Rights Act deadline is retained, but anytime an employee or an employee’s beneficiaries receive compensation, the clock starts over.


The law reinstates the position of the Equal Employment Opportunity Commission (EEOC), that any discriminatory compensation is wrong, regardless of when the discrimination began. EEOC “intends to enhance enforcement in this area, in addition to increasing public outreach and education.” according to Stuart Ishimara, EEOC’s Chairman.
The Fair Pay Act does not change the fact that employees can only go back two years to recover damages. It merely states that each time compensation is paid, it may be questioned. And that question may result in a complaint of discrimination. President Obama called the Fair Pay Act, a simple fix to ensure fundamental fairness for American workers. President Obama said, “Ultimately, equal pay isn’t just an economic issue for millions of Americans…it’s a question of who we are…and whether we’re truly living up to our ideals.”


Opponents of the bill call it a stimulus package for trial attorneys and a method to keep all Human Resource professionals employed during the recession. Most experts agree that this will increase the number of related claims, especially class action litigation.


The Fair Pay Act refers to discriminatory compensation decisions and other practices. It’s expected that other practices will be defined through case law; and may include performance reviews, especially when tied to compensation, or lead to promotions. Other practices may include training and transfers that provide an opportunity to grow within the company.


Do all employers need to adopt an affirmative action plan? Clearly, we must document the reason for changes in compensation and retain that information.

What To Do

• Adopt a compensation philosophy. Document and communicate what compensation decisions are based upon; cost-of-living, performance, longevity, etc.
• Consider changing your compensation structure especially if it’s an annual merit increase based on a performance appraisal. Consider changing the merit increase to a meritorious bonus and providing across the board increases based on an objective factor, such as longevity or cost-of-living.
• Layer pay decisions. One person should not have the discretion to make compensation decisions.
• Reduce discretion of hiring managers by decreasing the salary’s band range . Perhaps, the range can be structured based on objective factors such as years of experience.
• Conduct a pay audit . It doesn’t need to be full audit; look for disparate impact.
• If you find pay disparity, investigate it and contact your attorney to help resolve it.

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