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LABOR & EMPLOYMENT LAW — 01/16/09

House passes Lilly Ledbetter Fair Pay Act, Paycheck Fairness Act

Wasting no time moving forward with its comprehensive labor and employment law legislative agenda, the Democratic-led 111th House of Representatives passed two fair pay bills, the Lilly Ledbetter Fair Pay Act (H.R. 11) and the Paycheck Fairness Act (H.R. 12) on January 9, 2009. The Lilly Ledbetter Fair Pay Act passed by a vote of 247-171 and the Paycheck Fairness Act passed by a vote of 256-163.

Media reports indicate that the Senate could take up the Ledbetter bill as early as the week of January 12, 2009. Last year, the 110th Congress fell four votes short of the 60 required to invoke cloture and proceed to floor debate and a vote on final passage of the Ledbetter bill. Meanwhile, on January 8, Hillary Clinton (D-NY), in one of her last acts as a senator while she awaits confirmation as secretary of state, reintroduced the Paycheck Fairness Act (S. 182) in the Senate. Though placed on the legislative calendar, S. 182, which has 23 cosponsors, has not yet been set for floor debate.

Lilly Ledbetter Fair Pay Act. Reintroduced by House Committee on Labor and Education Chair George Miller (D-Cal) on January 6, the Lilly Ledbetter Fair Pay Act would amend Title VII, the Age Discrimination In Employment Act (ADEA), the Americans with Disabilities Act (ADA) and the Rehabilitation (Rehab) Act to impose a "paycheck accrual" rule specifying that discriminatory pay decisions or other discriminatory practices that start the 180-day time period (or a 300-day period if the charge is also covered by a state or local antidiscrimination law) for filing a charge of discrimination with the Equal Employment Opportunity Commission occur each time a discriminatory paycheck is issued. Accordingly, the bill would clarify that every paycheck or other compensation resulting, in whole or in part, from an earlier discriminatory pay decision constitutes a violation of Title VII, the ADEA, ADA or Rehab Act. As long as employees file their charges within 180 days of a discriminatory paycheck, their charges would be considered timely. Therefore, once an employee files a charge, he or she need not file new charges with each new paycheck. The Lilly Ledbetter Fair Pay Act would apply to employees who file claims of discrimination on the basis of race, sex, color, national origin, religion, age or disability.

In addition, employees who are victims of discrimination would be entitled to up to two years of back pay, as already provided by the various Acts. The bill can be found at: http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=111_cong_bills&docid=f:h11ih.txt.pdf.

The legislation was introduced in direct response to the controversial US Supreme Court's May 29 decision in Ledbetter v Goodyear Tire & Rubber Co, Inc (89 EPD ¶42,827), where the Court, in a 5-4 split, held that employees cannot bring Title VII disparate pay claims that allege discrimination occurring outside the 180-day time period, even when a paycheck is received during that same period. "Treating pay discrimination as a discrete act, limited to each particular pay-setting decision," the Supreme Court explained that the unlawful employment action at issue is the employer's decision regarding the pay differential, not the subsequent issuance of paychecks reflecting that differential. In its holding, the Court emphasized the distinction between past acts of disparate pay (which occur when employers make adverse pay decisions) and the present effects of those acts (which are found in employees' paychecks), when concluding that the Petitioner, Lilly Ledbetter, should have challenged Goodyear's alleged intentionally discriminatory pay decision within 180 days of the decision itself. Title VII disparate pay actions are discrete acts "limited to each particular pay-setting decision," explained the Court. They begin to run when an employer makes its decision on the pay differential. There is no new violation each time a later paycheck reflecting that differential is issued, ruled the High Court, rejecting any kind of "paycheck accrual" rule.

"The Supreme Court's misguided decision is already having very harmful consequences far beyond Ms. Ledbetter's case and must not stand, said Miller. "This issue is about basic fairness for our nation's workers. Americans shouldn't be treated differently based on the color of their skin, gender, disability or faith."

Paycheck Fairness Act. Reintroduced by Representative Rosa DeLauro (D-Conn) on January 6, the Paycheck Fairness Act would amend the Equal Pay Act of 1963 (EPA) by imposing stiffer penalties against employers who violate the EPA, prohibit employers from retaliating against employees who share salary information with their coworkers and require employers who make legitimate employment decisions based on "factors other than sex" to prove those factors are "job-related" and "consistent with business necessity."

The EPA, which was passed in 1963 as an amendment to the Fair Labor Standards Act, and which is administered and enforced by the EEOC, prohibits wage differentials because of sex. The law requires that men and women be given equal pay for equal work on jobs requiring equal skill, effort and responsibility, which are performed under similar working conditions in the same establishment. The EPA applies only to employees, not job applicants.

In particular, the Paycheck Fairness Act would allow prevailing plaintiffs to recover compensatory and punitive damages under the EPA, which currently only provides for liquidated damages (fixed and limited) and back pay awards. To recover punitive damages, however, a plaintiff must show intent (i.e., malice or reckless indifference). In addition, the bill would allow EPA lawsuits to proceed as class actions, as governed by the Federal Rules of Civil Procedure. The bill also modifies the EPA's requirement that men and women be given equal pay for equal work in the "same establishment." It clarifies that employees will be deemed to work in the "same establishment" if they work for the same employer at workplaces located in the "same county or similar political subdivision of a state."

The bill would also prohibit employers from retaliating against employees who have "inquired about, discussed or disclosed the wages of the employee or another employee." However, the retaliation provision does not apply to instances where an employee who has "access to the wage information of other employees as a part of that employee's essential job functions" discloses those wages to individuals who do not otherwise have access to such information (i.e., HR professionals). Disclosures can be made in response to a complaint or charge or in furtherance of an investigation. The bill would also clarify when employers may assert as an affirmative defense that a pay differential (unequal pay for equal work) is based on "factors other than sex." Employers asserting the affirmative defense must prove those factors are "job-related" and "consistent with business necessity."

The bill would also mandate that the EEOC and Department of Labor's (DOL) Office of Federal Contract Compliance Programs engage in training to commission/department employees and affected individuals and entities on matters involving wage discrimination. Within 18 months of the bill's enactment, the EEOC must complete a survey about pay information and issue regulations providing for the collection of pay information data from employers as described by the sex, race and national origin of employees. In addition, the bill would require the DOL to make competitive grants available that would help provide "effective negotiation skills training" for girls and women. In addition, the bill expressly prohibits grant programs created by the EPA from being used for Congressional earmarks. Further, nothing in the Paycheck Fairness Act would affect the obligation of employers and employees to fully comply with all the nation's immigration laws.

The Paycheck Fairness Act, which can be found at http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=111_cong_bills&docid=f:h12ih.txt.pdf, would take effect six months after the date it is enacted.

"In this economy, families are struggling to make ends meet. Not one of them deserves to be shortchanged, but because women still earn 78 cents for every dollar men earn, many unfortunately are. But this does not need to be," said DeLauro. "Today, by passing the Paycheck Fairness Act, we send a strong message that gender discrimination is unacceptable and women will have the tools they need to combat it. We are standing up for working women and their families. It is our moment to fight for economic freedom and eliminate the systemic discrimination faced by women workers. With this legislation, we begin the change, make history, and change lives."

For more information on this and other topics, consult CCH Employment Practices Guide or CCH Labor Relations.

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