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Joanna L. Grossman

The Lilly Ledbetter Fair Pay Act of 2009:
President Obama's First Signed Bill Restores Essential Protection Against Pay Discrimination


Friday, Feb. 13, 2009

Using a different pen for each letter of his name (to maximize the number of souvenir pens available for those involved in the bill's passage), President Barack Obama signed the Lilly Ledbetter Fair Pay Act into law on January 29. (It became Public Law No. 111-2, 123 Stat. 5 (2009)).

That the nation's first African-American president was signing his first bill into law marked an important civil rights moment, but the bill itself marked another. Former President Bush had preemptively refused to sign such a law when it was first proposed almost two years ago, just as he had with a variety of other pieces of anti-discrimination legislation. (I have written in a previous column about Bush's preemptive strike against the Employment Non-Discrimination Act, for example, which would have banned employment discrimination on the basis of sexual orientation.)

President Obama's decision to proudly sign the Ledbetter Act thus signals not only more robust protection against pay discrimination, but also the potential for further improvements and expansion to our nation's civil rights laws. As Obama declared in his speech at the Ledbetter signing, the bill sends "a clear message that making our economy work means making sure it works for everybody."

The Supreme Court Decision That Made the Ledbetter Act Necessary

In May 2007, the Supreme Court issued its decision in Ledbetter v. Goodyear Tire and Rubber Co. The 5-4 ruling undercut the ability of employees to seek redress for pay discrimination under Title VII, the main federal anti-employment-discrimination statute.

The case began when Lilly Ledbetter -- now a sort of folk hero, but then a production supervisor at a Goodyear plant in Alabama -- took early retirement in 1998, after being involuntarily transferred to a less-desirable job on the production floor. Six months earlier, she had filed a charge of discrimination with the Equal Employment Opportunity Commission (EEOC), alleging various forms of sex discrimination. When her case eventually went to trial, a jury concluded she had indeed suffered illegal pay discrimination on the basis of sex. (Her salary was as much as 40 percent lower than that of the lowest-paid male supervisor.) A $3 million award from the jury was reduced to $300,000 in accordance with Title VII's damages cap. However, this award was taken away on appeal.

On appeal, Goodyear successfully argued that Ledbetter's claims were time-barred because the discriminatory decisions relating to pay had been made more than 180 days (the limitations period under Title VII) prior to the date she filed her charge with the EEOC. The U.S. Supreme Court ultimately sided with Goodyear.

The Issue Ledbetter Presented, the Court's Precedent, and the Ruling's Effect

The issue presented by the Ledbetter case is when pay discrimination claims must be brought in order to be timely. Title VII provides an incredibly short statute of limitations – 180 days (or 300, in some states with an agency that shares work with the EEOC). Goodyear argued that the 180 days runs from the date of a pay decision setting a discriminatory wage, while Ledbetter argued that it also runs from the date of any paycheck that contains an amount affected by a prior discriminatory pay decision (the so-called "paycheck accrual" rule).

The Supreme Court opted for the former approach, thereby limiting employees' ability to challenge pay discrimination unless they both learn about it and challenge it very quickly. The majority in Ledbetter declined to consider whether a "discovery" rule might be used to extend the statute of limitations for discrimination that is unknown to the employee. (A "discovery" rule holds that the statute of limitations does not begin to run until the employee discovers the violation at issue.)

Before the Court's decision in Ledbetter, most federal courts and the EEOC had followed the paycheck accrual rule, based on an earlier Supreme Court decision, Bazemore v. Friday that had seemed to countenance it. All members of the Court joined Justice Brennan's separate opinion in that case, in which he wrote: "[e]ach week's paycheck that delivers less to a black than to a similarly situated white is a wrong actionable under Title VII."

The majority in Ledbetter was focused, however, on a more recent ruling, Amtrak v. Morgan, in which the Court had held that "discrete acts" of discrimination must be challenged within 180 days of their occurrence. Amtrak rejected the "continuing violations" doctrine, under which some courts had permitted plaintiffs to challenge a series of related acts of discrimination, as long as at least one had occurred within the 180 days prior the filing of an EEOC charge.

Doctrinally, what Ledbetter did was apply Amtrak to pay discrimination claims – ruling that pay decisions would start the clock ticking immediately as it would with discriminatory firings. In a prior column written with Deborah Brake, I explain how the Court misapplied its prior precedents to reach this conclusion.

The effect of this ruling was made clear by Justice Ginsburg's dissent: "Any annual pay decision not contested immediately (within 180 days) . . . becomes grandfathered, a fait accompli beyond the province of Title VII ever to repair." In other words, an employer could pay a woman less than her male counterparts for her entire career, and openly admit that the reason for doing so is because she is female, as long as the decision to set the discriminatory wage happened at least six months earlier. This rule placed untenable burdens on employees and circumvented Title VII's substantive protection against pay discrimination.

At the close of a dissent she read from the bench (as Justices do when they feel especially strongly about a case's holding), Justice Ginsburg exhorted that "[o]nce again, the ball is in Congress' court." She was clearly referring to the Civil Rights Act of 1991, which had overturned a spate of Supreme Court decisions adopting stingy readings and narrow interpretations of Title VII and other civil rights statutes.

Congress Heeds Justice Ginsburg's Call: The Ledbetter Fair Pay Act of 2009

Although Ledbetter dealt with a rather technical rule, it promised significant adverse effects for victims of pay discrimination. In order to prevail on a pay discrimination claim after Ledbetter, a victim had to quickly perceive that she has suffered discrimination and promptly report it. But that is a rare occurrence in the typical case, and surely discrimination law should address the typical cases where real-life plaintiffs suffer discrimination, not just the rare ones. As Deborah Brake and I have written in an earlier column, there are many obstacles to bona fide victims' perceiving discrimination generally, and pay discrimination in particular. The Court's rule thus effectively immunized employers from Title VII liability for pay discrimination in many cases.

Within just a few weeks of the Ledbetter decision's issuance, the House Education and Labor Committee convened a hearing as a first step toward considering whether to take corrective legislative action to correct the Court's interpretation. Congress ultimately considered two versions of a bill to restore the paycheck accrual rule – the Lilly Ledbetter Fair Pay Act, and the Fair Pay Restoration Act. However, a Statement of Administration Policy from the Bush Administration promised a veto of any such bill. Congressional efforts thus stalled through the end of that administration, despite strong support for such a bill in Congress.

A new version of the bill, the Lilly Ledbetter Fair Pay Act of 2009, was introduced in the Senate on January 8, 2009. It passed 61-36, after supporters successfully fought off hostile Republican amendments. It then passed the House, five days later, by a vote of 250 to 177. President Obama signed the bill into law two days later.

How the Ledbetter Fair Pay Act Changes the Law – And Affects Age Discrimination and Disability Discrimination Victims as Well

The Ledbetter Act is narrowly focused on undoing the damage wrought by the Supreme Court's decision. Among Congress' findings was that the Ledbetter ruling "significantly impairs statutory protections against discrimination in compensation that Congress established and that have been bedrock principles of American law for decades."

The new law adds a provision to Title VII, which provides:

"unlawful employment practice occurs, with respect to discrimination in compensation in violation of this title, when a discriminatory compensation decision or other practice is adopted, when an individual becomes subject to a discriminatory compensation decision or other practice, or when an individual is affected by application of a discriminatory compensation decision or other practice, including each time wages, benefits, or other compensation is paid, resulting in whole or in part from such a decision or other practice."

The amendments also apply to other anti-discrimination laws like the Age Discrimination in Employment Act and the Americans with Disabilities Act, which borrow Title VII's limitations period. The Act is made retroactive to May 28, 2007, the day before the Court issued its ruling in Ledbetter.

In effect, the Act takes a broad view of the employment practices that trigger the limitations period under Title VII. There will certainly be litigation over the meaning of "other practices", but the law's application to straightforward pay discrimination claims is clear. Employees will still face obstacles to enforcing their substantive rights against pay discrimination – lack of knowledge of disparate pay or its causes, cognitive obstacles to the quick perception of discrimination, as well as fear of -- and insufficient protection from – retaliation. But the Ledbetter Act makes sure that employees are not additionally hampered by the Court's crabbed interpretation of Title VII's already-short limitations period.

The Ledbetter Act may also affect another case currently pending in the Supreme Court – AT&T v. Hulteen. In that case, argued in December, plaintiffs have challenged AT&T's system for setting pensions when workers have taken leave. The plaintiffs are employees who took pregnancy-related disability leave before the enactment of the Pregnancy Discrimination Act in 1978. They received less seniority credit than workers who took leave for other temporary disabilities, which means that when they retire, they will receive lower pensions than will those other workers, despite similar work histories. Like Ledbetter, this case involves the proper treatment of employment practices that result in discriminatory compensation levels. Arguably, the Ledbetter Act makes the later pension-setting decision a new act of discrimination – one that can therefore be timely challenged today. At this juncture, in light of the new law, the Supreme Court should remand the case for analysis of the effect of the Ledbetter Act.

A Victory for Working Women – Though Not for Lily Ledbetter Herself

In sum, while the Lilly Ledbetter Fair Pay Act is not a panacea for all that ails federal anti-discrimination law, it is an essential step in the right direction – toward the promise of equal work opportunity for all. As President Obama noted in his signing speech, the bill honors women like Lilly Ledbetter who have worked hard, have been treated unfairly, and have stood up for the principle of equality. Sadly, and ironically, Ledbetter herself will receive no compensation at all as a result of the law passed in her name. Her jury verdict remains vacated, and the ultimate judgment in Goodyear's favor remains final and unappealable. Yet Ledbetter can know, at least, that her fight will make the world just a little bit better for the working women who follow in her footsteps.

Joanna Grossman, a FindLaw columnist, is a professor of law at Hofstra University and is currently a visiting professor of law at Vanderbilt University. She co-wrote an amicus brief in the Ledbetter case with Deborah Brake, Professor of Law at the University of Pittsburgh. She also attended the Presidential bill signing of the Lilly Ledbetter Fair Pay Act. Her columns on family law, trusts and estates, and discrimination, including sex discrimination and sexual harassment, may be found in the archive of her columns on this site.

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