The Lilly Ledbetter Fair Pay Act of 2009 extends the time period in which employees can pursue disparate pay claims against their employers. Recognizing that discrimination in compensation may not be detectable until long after a pay decision is made, the law clarifies that each new discriminatory paycheck is considered a separate act of discrimination.

This broadened statute of limitations is likely to fuel an increase in litigation. To minimize the risks of liability, the law firm of Jackson Lewis advises employers to do the following:

• Audit current pay documentation practices. Audit compensation practices to determine whether there is sufficient documentation supporting compensation decisions. Performance-based specifics underlying such decisions will be essential to defending a wage disparity claim.
• Develop specific criteria for compensation decisions. Create objective, measurable guidelines for compensation decisions to be applied consistently and uniformly with job classification, work group, department or business unit.
• Review compensation decisions. Create a process to ensure that managers and supervisors do not have unfettered discretion when making compensation decisions. Consider adopting a review system so that compensation decisions are subjected to the same rigorous scrutiny that terminations, discipline, or other adverse actions typically receive.
• Revise document retention practices. Review document retention policies to determine how long documentation regarding compensation decisions is maintained. In the post-Ledbetter world, employers likely will need to retain such information for significantly longer than they may have in the past. Consider electronic archiving given the voluminous nature of pay-related records.
• Train supervisors and managers. Train all supervisors and managers regarding any post-Ledbetter policy modifications to ensure that they understand those policies and, most importantly, the need to support objectively all compensation decisions.
• Conduct periodic statistical analysis of compensation data. Analyze compensation data to determine if any statistical disparities exist across gender, race and ethnic lines. Once identified, make appropriate adjustments to eliminate any unexplained disparities.

Source: Legal Update: Lilly Ledbetter Fair Pay Act of 2009 Becomes Law, issued January 29, 2009; Jackson Lewis, telephone: 1-800-648-2551.