CONGRESS AND WHITE HOUSE QUICKLY MOVE TO EXPAND PAY DISCRIMINATION LIABILITY
Thursday, February 19, 2009
Copyright 2009 Patrick Maher
On January 29, 2009, President Obama signed the Lilly Ledbetter Fair Pay Act (S.181). This Act, which is the first new law enacted by Congress and the Obama Administration, expands the statute of limitations period for filing pay discrimination claims. The Act also represents the first step in the Obama’s administration’s pledge to expand employment law rights.
Lilly Ledbetter Fair Pay Act
In 2007, the U.S. Supreme Court decided Ledbetter v. Goodyear Tire & Rubber Co., which held that the statute of limitations for pay discrimination claims begins when a discriminatory pay decision was initially made, rather than each time a paycheck is received pursuant to that decision. The Lilly Ledbetter Fair Pay Act overturns this decision and start a new statute of limitations each time a paycheck is received.
While there is a substantial fairness argument in favor of this Act, it nevertheless ignores the reasons statutes of limitations exist in the first place. A statute of limitations cuts off even meritorious claims after a specified period of time because of the risk that memories will fade, evidence be lost, and specious claims encouraged if they can be brought many years after the fact. The Lilly Ledbetter Fair Pay Act would, for example, allow a lawsuit to proceed based on decades old decisions for which there is no documentary evidence and critical witnesses deceased.
Paycheck Fairness Act
The Paycheck Fairness Act (H.R. 12) is the second bill passed by the House of Representatives this year. This Bill is a far more potent and dangerous legislation. The Equal Pay Act of 1963 (EPA) established a prima facie right for males and females to demand identical pay whenever they hold substantially equivalent positions at the same facility. Under the EPA, an employer had to prove as an affirmative defense that any such pay difference is based on legitimate factors other than gender, e.g. seniority, merit, production, education, experience, etc. The Paycheck Fairness Act would amend the EPA by raising that standard of proof to an almost impossible level. Any employer who paid a male and female employee a different salary for the same job at the same establishment would have to prove that the pay difference is not only legitimate and based on factors other than sex, but that there is a “business necessity” for such pay difference. In the past, courts have interpreted the business necessity defense in such a narrow fashion that employers rarely, if ever, can meet that standard. After all, how can an employer ever prove that a specific pay rate for one employee, e.g. $10/hour or $50,000/year, could not be a cent higher or lower without jeopardizing the very survival of a business? That, however, is precisely the burden of proof this bill seeks to impose upon employers. In addition, the Paycheck Fairness Act would add compensatory and punitive damages for pay discrimination claims based on gender.
It is not too late to express opposition to one or both of these bills by contacting your Senators.
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