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LEDBETTER FAIR PAY ACT PRESENTS CHALLENGES TO HAWAII EMPLOYERS
LEDBETTER FAIR PAY ACT PRESENTS CHALLENGES TO HAWAII EMPLOYERS
On Jan. 29, 2009, President Obama signed the Lilly Ledbetter Fair Pay Act (the “Act”). The Act amends Title VII, the Age Discrimination in Employment Act and the ADA and affects compensation-related lawsuits under those statutes.
The Act was named after the plaintiff in the lawsuit Ledbetter v. Goodyear Tire and Rubber Co., Inc., a case in which the U.S. Supreme Court held by a 5-4 vote that Lilly Ledbetter’s charge of pay discrimination under Title VII of the Civil Rights Act came too late after she failed to complain to the EEOC within 180 days, as required by Title VII of the Civil Rights Act (in Hawaii a complainant would have 300 days to file such complaint with the EEOC as Hawaii is a “dual-charge” state).
In response to the Ledbetter decision, the Act adopts the so-called “paycheck accrual” rule. Under the rule each paycheck alleged to be part of a compensation-related claim triggers a new agency charge period during which the complainant may properly challenge any prior discriminatory conduct that affected the amount of that paycheck. Specifically, the Act states:
For purposes of this section, an unlawful employment practice occurs, with respect to discrimination in compensation in violation of this title, when a discriminatory compensation decision or other practice is adopted, when an individual becomes subject to a discriminatory compensation decision or other practice, or when an individual is affected by application of a discriminatory compensation decision or other practice, including each time wages, benefits, or other compensation is paid, resulting in whole or in part from such a decision or other practice.
The EEOC recently issued interpretive guidance on the Act and has opined that the Ledbetter Act applies to “a discriminatory compensation decision” or “other discriminatory practice affecting compensation.” This means in the EEOC’s view that an employee hired eight years ago could have a cause of action from the date of hire to the extent s/he argues their starting pay was set in a discriminatory manner.
Such argument, and the EEOC’s position, was accepted in Bush v. Orange County Corrections Dept., No. 6:07-cv-588-Orl, 2009 WL 248230, M.D. Fla., 2009, a case in which plaintiffs filed EEOC charges 16 years after they had been allegedly discriminatorily demoted. The Court ruled that the employees stated a claim for discrimination from their demotion 16 years earlier and that the claims are timely under the new law. However, the Court dismissed the case on other grounds.
The case should alert Hawaii employers of the potential open-ended risks of compensation-related lawsuits. To reduce potential liability, Hawaii employers should take a more proactive approach on their compensation reviews and policies, including regularly reviewing pay-related records and, with the help of IT, determine whether record-retention policies require revisions.
Further, Hawaii employers should carefully deliberate both starting pay and step-pay increases for every individual employee, and consider whether a completely new compensation scheme that completely eliminates step-increases and instead incorporates performance-based annual bonuses is appropriate for their company.
Roman Amaguin, Esq.; romanamaguin@yahoo.com; www.amaguinlaw.com
About the Author
Roman Amaguin, Esq. is a Hawaii attorney specializing in employment law, labor law, and civil litigation. He has been practicing law in Hawaii since 1995. He was an attorney, director and shareholder for a large Honolulu law firm through 2006. From 2007 through 2008 he was an Of Counsel Attorney for another large Honolulu law firm, before opening his own office.
His philosophy is to provide practical solutions to both complex and common workplace, employer/employee, and civil disputes. As a Hawaii attorney, Mr. Amaguin regularly appears before all federal and state courts in Hawaii, as well as state and federal administrative agencies such as the U.S. EEOC and Hawaii Civil Rights Commission. He understands now is the time for the legal profession to reconsider the manner in which it provides services to the community. Accordingly, flat rate projects and other alternative fee arrangements are always explored with his clients.
Mr. Amaguin litigates a wide range of civil cases involving common law and statutory claims.
US Public Law 111-2 Lilly Ledbetter Fair Pay Act: Amend Civil Rights Act, Age Discrimination
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