The Obama administration is just a week old, but already we are seeing changes for employers. Over the coming weeks, we will be sending short summaries of the legislation being considered by Congress. Our goal is to provide you with practical steps that your business can take to mitigate the additional liability that might otherwise arise from these changes.
This Week: Expanding Pay Discrimination Laws
Next Week: The Employee Free Choice Act
Our first legislative update focuses on two bills: the Lilly Ledbetter Fair Pay Act and the Paycheck Fairness Act. Each statute on its own makes it easier for plaintiffs to claim pay discrimination. Together, these two statutes have the potential to drastically increase the number of pay discrimination claims being filed - and to increase the cost of these claims. The Lilly Ledbetter Fair Pay Act was signed into law by President Obama on January 29, 2009. The Paycheck Fairness Act passed the House of Representatives and is currently working its way through the Senate, where it is likely to meet with resistance from Republican lawmakers.
The Lilly Ledbetter Fair Pay Act: The Lilly Ledbetter Fair Pay Act, which President Obama signed into law this morning, expands the time during which someone may file a claim regarding unequal pay. Under this reversal of a pro-employer Supreme Court decision, discrimination is deemed to occur (and the statute of limitations renews) each time an individual is affected by a decision relating to compensation, including every time wages, benefits, or other compensation is paid. Thus, a female employee who claims that her current pay is lower because she was given a smaller raise than a man 15 years ago would be able to file a discrimination claim relying on her most recent paycheck as the date from which the statute of limitations is measured. Likewise, a retired employee who claims to have suffered a discriminatory pay determination 30 years ago that resulted in smaller contributions to a company pension, could file a claim of discrimination because each pension payment she receives would renew the statute of limitations.
The Paycheck Fairness Act (PFA): The Equal Pay Act (EPA) is unique among discrimination statutes because it only requires proof that pay discrimination occurred - an EPA plaintiff need not establish that the employer intended to discriminate. The PFA expands the EPA - and makes it more "plaintiff-friendly" - in four ways:
If the PFA's plaintiff-friendly procedural and damages provisions become law, we expect to see a rise in EPA cases brought by plaintiffs (and plaintiffs attorneys) who would welcome class action status and compensatory and punitive damages, without the need to prove discriminatory intent.
If you would like more information regarding either of these statutes, or any of the upcoming or expected labor and employment legislation, please contact Laura Friedel (312-476-7510) or any member of Levenfeld Pearlstein's Labor & Employment Service Group.