On January 29, 2009, President Obama signed the Lilly Ledbetter Fair Pay Act of 2009 (the “Act”) into law. The Act overrules a 2007 United States Supreme Court decision (Ledbetter v. Goodyear Tire & Rubber Co., Inc., 550 U.S. 618 2007)), which held an employee must file a claim alleging wage discrimination within 180 days of the employer’s initial decision regarding wages or lose the right to file the claim forever. Essentially the Ledbetter Court had held that a new cause of action does not occur with each allegedly discriminatory payment of wages.
Under the Act, however, a discriminatory compensation decision occurs with each paycheck and permits an employee to recover back pay for up to two years from his/her filing of the charge or complaint of discrimination.
Significantly important to employers is that the Act is retroactive to May 28, 2007. Accordingly, employers should immediately review their pay policies through 2007 to ensure that no protected class is paid disproportionately to another for the same or comparable work.