New Act Amends Federal Regulations and Increases Possibility of Pay Discrimination Claims
The Lilly Ledbetter Fair Pay Act, which extends the time period allowed for employees to seek compensation for unequal pay practices was signed into law by President Barack Obama on January 29, 2009. The act is retroactive to May 28, 2007, and applies to all claims of pay discrimination on or after that date.
Lilly Ledbetter sued her employer after discovering male colleagues in similar positions were paid nearly 40% more than she was paid during her nearly twenty year tenure with the company. The act, which is named after her, amends several existing employment laws including Title VII of the Civil Rights Act, the Age Discrimination in Employment Act, the Americans with Disabilities Act, and the Rehabilitation Act. Although gender-based pay was already prohibited by the Equal Pay Act of 1963, the Ledbetter act re-starts the statute of limitations for filing a claim of pay discrimination - currently 180 days - each time wages, benefits, or other compensation is paid. This makes it possible for each paycheck to be a violation of the law and would allow a worker many years to bring a lawsuit against an employer for pay discrimination.
Employers are advised to take several measures to ensure that employees are not discriminated against when it comes to compensation, such as:
- Continuously evaluate compensation packages for all employees, including upon hiring, issuing merit increases, and providing overall benefits packages. Employees with the same job responsibilities with similar qualifications should be paid equally.
- Make sure performance evaluations are completed in a timely manner. Performance evaluations can give valuable insight during an investigation as to why an employee may not have received an equal increase in pay, bonuses, and/or a promotion.
- Inform employees about decisions that have a negative effect on their compensation packages. For example, when employees do not receive a full merit increase or bonus, thoroughly explain the decision, as they may be less likely to file charges of discrimination, or even wait years to do so if they fully understand your reasoning.
- Indefinitely retain copies of all payroll records and performance evaluations. When necessary, auditors and investigators will want this information to be easily accessible for review.
- Update employee handbooks and policy manuals informing employees that discriminatory compensation practices are not tolerated within the organization.
- Thoroughly investigate any claims of compensation discrimination and openly discuss the outcome of the investigation with the charging employees, while monitoring the status of their well-being to ensure that there is no retaliation.
- Document, document, document. Any discussions with employees and decisions made by management regarding compensation should be well-documented and demonstrate sound business reasoning for any disparities in compensation.
With the new Congress and Administration in place, we can expect increasing employment law changes and increased enforcement. Accordingly, now is the time for employers to actively take steps to ensure compliance. If you haven't already done so, consider developing a good working relationship with a qualified HR consultant and/or employment attorney licensed to practice in your state to help you conduct audits of your employment practices. Even if your company has not afforded these relationships in the past, it is necessary to invest in these relationships to protect the company from future financial liability.
For a list of attorneys who regularly represent AGC chapters and members on labor and employment matters, visit www.agc.org/lelc and click on the LELC Roster link.
For a full copy of the Lilly Ledbetter Fair Pay Act, click here.
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