Ledbetter Act giving HR big headaches already
February 17, 2009 by Sam NarisiPosted in: Discrimination, Recent Decisions, Special Report
Though it was only signed a few weeks ago, the Lilly Ledbetter Fair Pay Act has already caused big legal problems for some companies.
Signed by President Obama on January 29, the Ledbetter Act gives employees more time to sue when they believe they’re victims of pay discrimination. The Supreme Court had previously ruled pay bias suits had to be filed within 180 days of the discriminatory decision.
But the new law gives employees a new 180-day window to sue every time they receive a paycheck in which they claim they are discriminated against.
The act was effective immediately — and applies retroactively to lawsuits still pending as of May 28, 2007, the day before the Supreme Court’s decision.
It’s already made it tougher to prevent discrimination suits:
In one case, three women sued their employer, claiming they were unfairly demoted because of their gender.
The demotions occurred in 1990 — so the company argued the employees missed out on the statute of limitations.
But the court issued a ruling on February 2 — four days after the Ledbetter Act was signed. And, since the demotions resulted in a loss of pay that continued to the present day, the court ruled the new law applied to their lawsuit.
The judge noted that just a week earlier, the case would have been tossed on those grounds. But not anymore.
Eventually, the case was thrown out because the company proved the demotions were based on non-biased factors (Cite: Bush v. Orange Counry Corrections Dept.).
In another recent case, an employee believed he was being paid less than his colleagues based on his race and gender. He sued.
The company tried to have the case dismissed because his pay was set several years before — well outside the statute of limitations. But the judge let the case go forward, applying the Ledbetter Act to his claims (Cite: Rehman v. State University of New York at Stony Brook).
What can HR do now?
Given the law’s immediate impact, what steps can HR take now to prevent lawsuits based on decisions that occurred far in the past?
Some experts recommend conducting a self-audit to uncover anything that could look like pay discrimination.
First, examine company policies on starting salaries and raises. Many companies don’t have a formal policy, giving individual managers wide discretion in pay decisions — which could turn out to be a liability under the new law.
Next, consider analyzing pay data to make sure no employees have been harmed by unfair decisions that violated your policy. Then, your company can remedy the situation without having to go to court.
Tags: Lilly Ledbetter, Obama, pay discrimination
February 18th, 2009 at 11:40 am
Just wondered how Lilly Ledbetter was supposed to have sued within the time frame if she never knew she was being underpaid.
February 18th, 2009 at 1:46 pm
She was receiving retirement checks for years after she left the company. With each check she received, it opened a new “window.” Madness.
February 18th, 2009 at 2:08 pm
It does not seem fair to be able to throw out a case based on time limits when the person didn’t have access to the information showing she was underpaid. The above company did the right thing in proving the demotions were based on non-biased reasons. The company would probably have preferred not to go through the hassles and expense involved, and likely spent more by trying the time limits defense first. As employers, we can prevent or reduce these claims by treating people fairly and making employment decisions based on ability to do the job and actual performance.
February 18th, 2009 at 2:29 pm
I also think that really good communication and documentation during reviews & when giving raises, demotions, terminations, can stop lawsuits in their tracks. Once lawyers sees that there is little hope of winning a case, the better ones will not continue. The ambulance chasers might go after it, but only in hopes of a settlement of which they’d get part, or if they have a client who has the $$$ to pay up front retainers.
By really good communications, I mean open conversations backed up by documentation that gets signed by both employer & employee. Only once have I ever had an employee refuse to sign a warning notice, and he quit, knowing his offensive conduct was not going to continue being tolerated.
Of course what was done or not done in the past may more easily now bring issues home to roost, but the self audit would at least prepare us for the possibilities. Now to find the time! I guess I could stop writing these comments to save some time for audits.
February 18th, 2009 at 2:46 pm
I thought the Constitution forbid “ex post facto” laws!
February 18th, 2009 at 3:01 pm
How will my company prepare? Well maybe after I am done filing my EEOC complaint they might actually take the new law seriously!
February 18th, 2009 at 3:13 pm
Wish there could be better balance here. I understand some employees might not be immediately aware of discrimination if it occured, but on the flip side, apparently employers now have to retain documentation forever to be able to defend themselves in court. In the case that goes back to 1990 – employer was able to show business reasons for the demotions. That is impressive given they had to have documentation or recollection of the situation going back 18 years! Employers better make sure they revisit their retention schedules, and being very thorough as they may have to pull it back out decades after the fact.
February 18th, 2009 at 3:32 pm
Does this law apply to bonuses that are not commission based?
February 18th, 2009 at 3:40 pm
The problem which arose for Lilly Ledbetter (and numerous others) would never have occurred if their HR depts. had been doing their job correctly. Let’s not forget that risk-management is a huge part of what we do in HR. I’ve had plenty of meeting over the years where I’ve had to tell a VP or company President that the steps they’ve proposed to follow will only end badly and that my guidance is only designed to protect the company long-term.
February 18th, 2009 at 6:48 pm
JLOL…..did you ever think of APPROACHING your company before filing an EEOC charge? One thing that the EEOC will inevitably ask is ‘have you gone to HR or MGT about this” If you’ve answered no, they might ask you too. I guess you could always lie and tell them you have….but you know that you’re giving a sworn statement to the EEOC.
Why run to a gov’t agency that is understaffed before going to your boss/HR.
February 19th, 2009 at 6:02 pm
It’s obvious that the way to prevent these lawsuits is not to discriminate in the first place — fair and equal pay for equal work. Treat your employees fairly and they will not sue you. It just seems so simple…
February 21st, 2009 at 2:15 pm
As for *preventing* these lawsuits by treating employees fairly and making employment decisions based on a person’s performance… well… as you can see it does in fact NOT prevent lawsuits. People are going to view this new legislation as opportunity to sue. It will invite more suits. Yes, employers should always treat ees fairly, do the right thing and make sound employment decisions for the right reasons. But this legislation will only cause those employers more hassle and more expense in defending themselves.
February 23rd, 2009 at 7:19 am
“But this legislation will only cause those employers more hassle and more expense in defending themselves.”
It’s about time someone is DEFENDING employees for a change. Employers have been laid back and sipping hot coffee while employees were subject to “scare tactics” involving At-Will Laws, asking for pay raises and promotions, equal pay, and sick leave. Now that the tables have turned, the HR industry can’t handle the pressure.
February 23rd, 2009 at 9:41 am
As with any new legislation there will be those that will ‘try’ their luck in a suit. So what. That happens with any and all things. A new rule is put in place and some ee will test it. A new speed limit is put in place and people will test it. Insurance regulations, civil rights issues, church rule, family rule, local law, state law, federal law, you name it and the same dynamic will exist.
The whole point is as a society we cannot simply remain motionless about any discrimination including pay because a segment of our society does not want the change for no other reason than the equalizing factor. Businesses have been in the position, deliberate or not, to discriminate against ees with pay. I did not hear any outcry as long as it was the ee’s taking the hit. Now businesses have to honest, nondiscriminatory and make an EFFORT to be certain that is so and all of the sudden there is this audible groan that ee’s will stick it too employers. I am zero sympathy for that. It is time we did our jobs correctly. That is advocating employment law as a protection for our companies not advocating our companies in spite of employment law.
February 25th, 2009 at 3:31 pm
Some of the comments on this link make no sense. How is any employee going to know that they are underpaid unless we publish everyone’s rate of pay to everyone else? That will work out great. Then we employers will get sued because we communicated but, oops, we gave out confidential information about an employee. You can’t when this fight. Lets face it, soon we are headed toward a type of socialism in which everyone gets paid the same no matter what. If we pay everyone the same (let’s say supervisors) then we cannot get sued. To heck with whether anyone really is contributing more. Once someone is paid differently than someone else then the can is opened. My question is; What if everyone just files a law suit against their employer; virtually all of us now can. With all the legal expense that would be cool; all of our employers are out of business and all of us are out of a job. Ohhh, maybe I should not have brought that up…
February 26th, 2009 at 9:59 am
Your post reflects a lack of understanding about pay and similarly situated employees. There obviously will not be a private business that will publish all salaries but public agencies under the FOA have to reveal any and all pay of public employees. That has been the case for a number of years. There has been no dam broken to file suits in that case. So your unwarranted fear of being sued because a person knows another’s pay is a bit much. The easy answer is pay fairly, gain knowledge of what the legal term is for similarly situated employees means concerning pay, keep good records, and you won’t be sued.
Secondarily your true motive is revealed. I just love it when people basically complain that they have to follow a law that was adjudicated basically because prior laws were not being followed, effectually the employer benefiting from the inequity against the employee. Now because employers were not following the law concerning equity in pay the legislators reinforced the law making pay fair. So now that the law benefits employees (or at least levels the playing field) there is this out cry of socialism because fairness, once again, had to be by decree. What seems to be missed is that all of this from the 1963 Equal Pay Act until the Ledbetter Amendment was brought about by the ill will of employers toward employees. We are the ones that created this mess, not the employee, by having to have court decrees to make us treat our employees fairly. The sad thing is that even this legislation is not teaching employers a thing. Guess what, look for more.