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Ledbetter Law Poses Challenges to Human Resource Professionals

    Client Alerts
  • January 30, 2009

Congress has sent the final version of the Lily Ledbetter Fair Pay Act to President Obama, who is expected to signed the bill into law yesterday.  As reported last week in EmployNews, the Act is intended to undo a U.S. Supreme Court decision that applied Title VII’s limitations period to an employee’s claim that old acts of discrimination had a continuing effect on her current pay.  After Ledbetter, plaintiffs can revive claims of discrimination that occurred up to decades ago by claiming a cumulative effect on pay through biased performance or salary evaluations.

The Ledbetter Act will have the greatest impact on employers with long-term employees.  If faced with discrimination claims going back years, companies could have a difficult time defending accusations of bias.  While the plaintiff can testify regarding her own experiences at that time, supervisors, co-workers and others with possibly contradictory recollections may be long departed from the company.

Ledbetter will also prompt employers to revisit document retention and destruction policies.  Given that the statute of limitations for pay disparity claims under Title VII has basically been removed, employers will need to permanently retain any records that could relate to pay policy for active employees.  Employers may also consider better systematization of pay evaluation procedures, and documentation of business reasons for salary levels.  This may include a review of current salaries to determine if there are discrepancies that cannot be justified by demonstrable business reasons.

On a brighter note for employers, last week, the Senate declined quick passage of Ledbetter’s companion bill, the Paycheck Fairness Act, delaying consideration of that bill until the Spring at the earliest.