On January 29, 2009, President Barack Obama signed the Lilly Ledbetter Fair Pay Act of 2009 (“Act”) into law. The Act effectively expands the statute of limitations for employees asserting disparate pay under Title VII of the Civil Rights Act of 1964 (“Title VII”), the Age Discrimination in Employment Act (“ADEA”), the Americans with Disabilities Act (“ADA”), or the Rehabilitation Act.

Before the Act was passed, employees were required to file charges with the Equal Employment Opportunity Commission within 180 days (or 300 days in jurisdictions with local or state laws governing the alleged discrimination) of a discriminatory pay decision, regardless of the employees’ knowledge the alleged pay discrepancy. Under the Act, each allegedly discriminatory paycheck now restarts the clock for employees seeking to file disparate pay claims.

An opinion issued by a federal judge in Florida just one week after the Act was passed offers a dramatic example of the Act’s practical implications. In Bush v. Orange County Corrections Dept., 597 F. Supp. 2d 1293 (M.D. Fla. 2009), four female plaintiffs sued alleging race and gender discrimination under Title VII and the Equal Pay Act. The demotions and pay reductions at issue occurred 16 years before the plaintiffs filed suit. The employer sought summary dismissal of the case, asserting that the claims were untimely. The court rejected this contention, noting, “[W]hile [the] untimeliness argument was valid prior to last week, with the passage of the Act Plaintiffs’ Title VII claims are no longer administratively barred.” Bush, 597 F. Supp. 2d at 1292.

Notably, the Act's effective date is May 28, 2007, meaning that the Act applies retroactively to claims pending on or after that date. As a result, employers could face litigation over decades-old pay structures and from employees whose claims were previously deemed time-barred.

What These Changes Mean for Your Business

The Act could inspire employers to review their record retention policies with respect to records that may be relevant to disparate pay claims. Also, employers might consider auditing their pay structures or implementing new compensation policies to cut off any disparate pay claims that might have been deemed stale prior to the Act’s passage and to ensure future compliance with Title VII, the ADEA, the ADA, and the Rehabilitation Act.

For more information or for assistance in reviewing your company’s compensation structures or pay policies to avoid liability under the Lilly Ledbetter Fair Pay Act, contact a member of Eisenhower’s Labor and Employment Group.