While Title VII of the Civil Rights Act already prohibits gender-based discrimination, including pay discrimination, there was an unfortunate problem created by a court interpretation back in 2007. Namely, the courts decided that the original pay decision was what started the statute of limitations to bring a claim—not the ongoing unfair pay. This all came about from a decision in the case of Ledbetter v. Goodyear Tire and Rubber Co. Let’s take a look at that case and how the Lily Ledbetter Fair Pay Act remedied the problem.
 |
Lily Ledbetter Fair Pay Act: A Brief History
Ledbetter v. Goodyear Tire and Rubber Co. was a case between Lily Ledbetter and her employer, Goodyear Tire. While working for Goodyear, Ledbetter not only faced ongoing sexual harassment but also discovered she was paid significantly less than her male counterparts who held the same role. She worked with the Equal Employment Opportunity Commission (EEOC) to file a case.
At trial, the jury sided with Ledbetter, and she was awarded over $3 million in back pay and punitive damages due to how extreme the case facts were.
However, this is where the case took an unfortunate turn. Upon appeal in the 11th Circuit Court, the verdict was reversed because the case was brought many years after the original discriminatory pay decision. Essentially, even though Ledbetter was receiving discriminatory pay throughout her time at Goodyear Tire, the court deemed it was too late—marking a starkly different interpretation of the timing limitations of Title VII than any other prior court decision.
This was a shocking new precedent—requiring a claim to be made within 180 days of the original discriminatory pay decision, rather than 180 days after such a practice is discovered or shown to have caused harm. Unfortunately for Lily Ledbetter and for victims of discrimination nationwide, the Supreme Court upheld the appeals court decision in that case.
Looking at it from the outside, it was a clear situation where the “letter of the law” (as determined by the court’s new interpretation) did not follow the “spirit of the law,” and yet it was the new precedent. One of the primary purposes of the antidiscrimination regulations in Title VII is to prevent discrimination just like this, and this decision meant it was suddenly doing no such thing.
Another goal of such laws is to encourage voluntary compliance by employers, and this decision also did no such thing. In fact, the circumstances described above create a situation in which employers essentially had an incentive to hide problematic practices and wait out the statute of limitations rather than correct them. If an employer made a discriminatory pay decision, it simply had to hide it long enough to get past the statute of limitations before it was discovered—and then the employer could continue it without fear of legal recourse because it was too late to bring a case.
This new interpretation also created poor incentives for employees. If an employee even had a suspicion of unfair or discriminatory practices, the incentive created here was to immediately file a lawsuit—even before investigating further—since taking the time to investigate might jeopardize the timing and thus lose the ability to file a claim at all. Thus, this interpretation would likely result in more claims, not fewer—and would result in many more unfounded claims since there is no incentive to resolve them outside of court.
This situation was especially problematic because it often isn’t brought to light that a pay decision is unequal until much later. Even though the unfair—and possibly discriminatory—pay was still occurring, the courts had deemed the law to be interpreted such that the statute of limitations clock started when the pay decision was made, regardless of whether the unequal pay was still being implemented. It was clearly an interpretation that was not in alignment with the intent of the law.
The Resolution: The Lily Ledbetter Fair Pay Act of 2009
The Lily Ledbetter Fair Pay Act rectifies this situation. It does this by noting that every instance of discrimination—or instance where the individual is affected by a discriminatory practice—is considered the basis for the claim, not just the original discriminatory decision. In other words, it essentially works by allowing the statute of limitations to reset at every instance of unequal pay—every paycheck in this case. So an employer will be liable for unfair pay or other discriminatory practices indefinitely, as long as the practice continues or the individual is still negatively affected by it. This puts the law back in line with the way it was interpreted by all courts before the Ledbetter v. Goodyear Tire and Rubber Co. decision at the appeal.
This has the added benefit of allowing someone who thinks they have a claim to adequately research the entire situation before actually filing a lawsuit. This is beneficial for both employees and employers because it reduces the urgency to immediately file a lawsuit if none is necessary.
It allows employees to keep their rights of nondiscrimination and encourages employers to voluntarily comply with the regulations because they will be continually liable for noncompliance. This Act takes into account the reality that an unfair practice may not be immediately known to everyone it affects. While it is titled a “Fair Pay” act, it could be applied to other related discriminatory practices, such as employment classifications or other practices that have a negative impact.
*This article does not constitute legal advice. Always consult legal counsel with specific questions.
About Bridget Miller:
Bridget Miller is a business consultant with a specialized MBA in International Economics and Management, which provides a unique perspective on business challenges. She’s been working in the corporate world for over 15 years, with experience across multiple diverse departments including HR, sales, marketing, IT, commercial development, and training.