Documenting the reasons for pay decisions is the key to avoiding liability under the new Lilly Ledbetter Fair Pay Act, says attorney Leslie E. Silverman. And you’re going to need to keep those records longer.
The Ledbetter Act effectively extends the deadline for filing a pay-bias complaint under Title VII of the Civil Rights Act of 1964. Under the new law, the time limit for filing a pay-bias complaint with the EEOC restarts each time an employee receives a paycheck that reflects a past discriminatory pay decision or practice—which could have happened decades ago.
Silverman, a former Commissioner of the Equal Employment Opportunity Commission, and now a partner with the labor law firm Proskauer Rose LLP, offered her suggestions to employers at SHRM’s recent Employment Law & Legislative Conference in Washington, DC.
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What Should Employers Do About Ledbetter?
Silverman advised employers that they should first conduct an audit of their compensation-setting processes and their record-retention practices.
And then, she suggests, make one small change in your recordkeeping: “You probably should be keeping complete copies of all personnel files, particularly those relating to compensation—forever.”
Consider a Compensation Audit
Employers who are concerned about liability should consider an audit, Silverman advised. She has two suggestions.
First, do the audit under the supervision of counsel, to ensure confidentiality.
Second, don’t go ahead with an audit unless you are prepared to do something about the results. If the results of your audit do show an “imbalance” or apparent discrimination and you take no action, that’s going to give the impression that you willfully discriminated, and that doesn’t make for a successful defense.
Your audit should include a statistical analysis to see if past pay decisions suggest pay differentials between similarly situated employees, says Silverman.
In addition, it should also look at pay at hire, merit raises, and raises resulting from promotions or job changes.
Keep All Your Records
Because the Ledbetter Act allows employees to sue for pay discrimination years after discriminatory decisions were made, it’s unwise to destroy your records, says Silverman. Without them, it will obviously be difficult to defend against lawsuits.
In the original Ledbetter case, Lilly Ledbetter alleged that discrimination that took place decades before had caused her to be paid much less than male employees. Her plight made her a very sympathetic plaintiff, but even if she had not been, it would have been very difficult for the employer to put forth a defense, given the length of time involved, Silverman says.
And since discrimination cases generally involve comparing your treatment of many employees, “You may need the records of all individuals, not just someone who sues you,” she adds.
Ledbetter Effect?
How much will the new law affect employers? It gives employees and their lawyers additional weapons when they sue, and that is bound to create problems for employers. But the tone of Silverman’s presentation conveyed the impression that Ledbetter is not going to be an employment law game changer.
Nevertheless, Silverman advised employers to take the steps outlined above because the potential liabilities are large.
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Obama Effect
On the other hand, the “Obama effect,” is likely to have a substantial impact on the employment litigation scene. Silverman said that both the Equal Employment Opportunity Commission (EEOC) and the Office of Federal Contract Compliance Programs (OFCCP) are beginning to flex their regulatory and litigation muscles.
Finally, the new Democratic leadership is much more inclined to side with employees, and the agencies can count on support from the White House and the Congress.
In tomorrow’s Advisor, we’ll present Silverman’s “uniform process” guidelines, and take a look at a unique checklist-based HR audit system.
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