October 20, 2009
Previously published on October 2009
To accommodate the Lilly Ledbetter Fair Pay Act (“the Act”), the Equal Employment Opportunity Commission (“EEOC”) has revised its Compliance Manual.
Passed in January 2009, the Act overturned the Supreme Court’s decision in Ledbetter v. Goodyear Tire & Rubber Co. (2007), which held that a charge alleging compensation discrimination under Title VII of the Civil Rights Act of 1964 must be filed within 180 days of an affected paycheck in states without a state fair employment practice agency, or within 300 days of an affected paycheck in states with a state fair employment practice agency. In Ledbetter v. Goodyear, succeeding “discriminatory” wage payments did not restart the prior filing period under the “continuing violation” theory. The Act significantly inflates the relevant statute of limitation and is retroactive to May 28, 2007, the day before the Supreme Court’s decision.
The revised Manual provides the following example of an actionable claim:
“After working for the Respondent for nearly 10 years as a production supervisor, CP learns she is being paid less than the other four production supervisors in her department, who are all men. Immediately after learning about the pay discrepancy, CP files an EEOC charge alleging sex-based wage discrimination in violation of Title VII. The investigation shows that CP generally received lower pay raises than her male counterparts as the result of lower performance ratings, which CP alleges to have been discriminatory. Although these performance ratings and related pay raises all occurred more than 300 days before CP filed her charge, they affected her pay within the filing period. Therefore, CP’s pay discrimination charge is timely.”
What Employers Should Do
The expanded statute of limitation for wage discrimination could increase litigation. This is an appropriate time for employers to review various business practices in order to minimize risks of liability. Keep the following points in mind:
- Auditing – preserve current attorney/client privilege pay practices; identify and develop strategies to resolve potential pay conflicts;
- Decision-making – develop written and price criteria for objective compensation decisions;
- Document retention – create or revise document retention practices to ensure access to documentation of compensation decisions;
- Training – provide proper training for managers and supervisors to support criteria for compensation decisions (referenced above);
- Statistical analysis – conducting intermittent statistical analysis of compensation data to detect potential concerns.
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