January 23, 2009

Congress has hit the ground running in 2009 and is working hard to push forward an aggressive agenda. During its first week back in session, the U.S. House of Representatives rushed through two pieces of pay equity legislation: the Lilly Ledbetter Fair Pay Act of 2009 (H.R. 11) and the Paycheck Fairness Act (H.R. 12). The House passed similar measures during its previous session, but the proposed legislation lacked sufficient support in the Senate. Now, with better odds of clearing the Senate — and no threat of a Presidential veto — the bills are poised to become law in 2009. Both reform measures would make it easier for plaintiffs to prevail in pay discrimination claims against employers.

Lilly Ledbetter Fair Pay Act

The Lilly Ledbetter Fair Pay Act, passed by a House vote of 247 to 171 on January 9, 2009, would overturn the Supreme Court’s 5-4 decision in Ledbetter v. Goodyear Tire & Rubber Co., No. 05-1074. In the controversial Ledbetter case, the Supreme Court held that the time limits for filing pay discrimination claims with the Equal Employment Opportunity Commission is measured from the date of the first allegedly discriminatory pay decision. The proposed law would amend Title VII of the Civil Rights Act of 1964 to provide that the charge-filing periods (300 days in most states and 180 days in states that do not have a fair employment agency) would commence when the employee is affected by an application of a discriminatory compensation decision or practice (including each time wages, benefits or other compensation is paid). This also would apply to claims of pay discrimination under the Americans with Disabilities Act of 1990, the Rehabilitation Act of 1973 and the Age Discrimination in Employment Act of 1967.

After passing the House in 2007, Senate Republicans blocked consideration of the measure, with President George W. Bush promising a veto. In 2009, however, there may be enough support for the bill to make it past the Senate. Moreover, President Barack Obama, for whom Lilly Ledbetter campaigned and appeared in a television commercial, would no doubt sign the bill into law.

The Ledbetter Fair Pay Act would often strip employers of a statute of limitations defense and breathe new life into old claims at a time when many businesses are struggling financially. Without the protection of a reasonable time limit for bringing pay discrimination claims, employers would have a difficult time in defending suits, as evidence of past pay determinations may no longer exist, and witnesses — if they can even be located — may not recall the underlying facts.

Paycheck Fairness Act

The House also passed the Paycheck Fairness Act on January 9, 2009, by a vote of 256 to 163. If enacted, the legislation would alter key provisions of the Equal Pay Act of 1963. The EPA amended the Fair Labor Standards Act to prohibit employers from paying women less than men for performing the same or substantially equal work in the same establishment, with some exceptions.

The Paycheck Fairness Act calls for stricter enforcement provisions than those available under the EPA, as well as heightened government involvement in remedying pay inequality. Among other things, the legislation would:

• Make it more difficult for employers to prevail on the EPA's "any factor other than sex" defense. Under the proposed legislation, employers would have to demonstrate that any pay differential is based on a "bona fide factor other than sex, such as education, training or experience" and, among other requirements, is "consistent with business necessity."
  
• Make punitive and compensatory damages available without requiring proof of discriminatory intent. Whereas the EPA provides for equitable relief, such as back pay awards, employers could be faced with punitive damages without any showing of intentional discrimination under the proposed amendments.
  
• Make it easier for plaintiffs to bring class action lawsuits. The Paycheck Fairness Act would allow opt-out class actions under Rule 23 of the Federal Rules of Civil Procedure. The EPA, on the other hand, is governed by the FLSA's procedural rules, which require plaintiffs to opt-in to a class action by giving consent in writing. The distinction between the two provisions is important, as class size is likely to be much larger with an opt-out certification where employees need not affirmatively decide to join the case to be included.
  
• Expand the definition of "same establishment." The proposed legislation would define establishment to mean "workplaces located in the same county or similar political subdivision of a state."
  
• Impose additional obligations on the EEOC and Department of Labor for monitoring and remedying pay inequality. The bill would direct the EEOC to collect pay information from employers and impose obligations on the Office of Federal Contract Compliance Programs for performing compensation discrimination analyses.

Like the Ledbetter Act, the Paycheck Fairness Act previously passed in the House, but not the Senate.

The House’s swift action in passing the Lilly Ledbetter Fair Pay Act and the Paycheck Fairness Act shed light on the 111th Congress’ agenda and may serve as a harbinger of other legislative initiatives. We will keep you apprised as these and other measures, such as the Employee Free Choice Act, make their way through the new Congress.

© 2007 Jackson Lewis LLP. Reprinted with permission. Originally published at www.jacksonlewis.com. Jackson Lewis LLP is a national workplace law firm with offices nationwide.