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Lilly Ledbetter Fair Pay Act Overturns Supreme Court Decision

February 16, 2009
Labor and Employment Blog Post

President Barack Obama, signing the first piece of legislation in his new administration, has fulfilled a campaign promise to American workers, including Lilly Ledbetter.

The Lilly Ledbetter Fair Pay Act (LLFPA) overturns the U.S. Supreme Court's decision in Ledbetter v. Goodyear Tire & Rubber, Inc., which drastically limited an employee's right to file claims challenging an employer's discriminatory wage decision. Employees in Michigan now have 300 days to file a federal wage discrimination claim from any of three separate "trigger" points: the date of a discriminatory pay decision; the date the employee becomes subject to the decision; or, from the receipt of a paycheck containing discriminatory wages.*

This last "trigger" point, in effect, creates a rolling 300-day period of limitations to bring a claim. The LLFPA applies to discriminatory pay decisions that violate Title VII, the Age Discrimination in Employment Act (ADEA), and the Americans with Disabilities Act (ADA).

Lilly Ledbetter was the only female supervisor at Goodyear's Gladsden, Alabama, plant. Ms. Ledbetter suspected that she was receiving less favorable raises and bonuses than her male counterparts but had no evidence to support her suspicion until a co-worker left some information on her desk. Ms. Ledbetter promptly filed her claim after learning of the discriminatory treatment, which had been occurring unbeknownst to her, for many years. A jury awarded Ms. Ledbetter $223,776 in backpay, and $3.0 million in punitive damages. The U.S. Supreme Court overturned the jury verdict holding that Ms. Ledbetter's claim was barred by the statute of limitations because she had not filed suit within two years of when the discriminatory wage decision had been made.

The harshness of the U.S. Supreme Court's decision is evidenced by the fact that Ms. Ledbetter could not have brought a claim within that time frame because she had no knowledge of the company's decision until years later. The Ledbetter decision was subsequently applied by the courts in many other civil rights contexts beyond Title VII, including the ADEA, the Fair Housing Act, and Title IX. Under the Fair Housing Act (FHA), for example, a disabled tenant sued his apartment complex for lack of wheelchair access within the FHA's two-year statute of limitations. His claim was dismissed, however, because he had not filed suit within two years of when the building had been built -which was eight years before the disabled tenant had even moved into his apartment! The spread of the Ledbetter decision to other areas of civil rights law alarmed civil rights advocates and legislation was introduced in the last Congress to reverse Ledbetter. Lilly Ledbetter's case also became a campaign issue in the last presidential campaign with then-Sen. Obama pledging swift action on the LLFPA, if elected. President Obama fulfilled his campaign promise on January 29, 2009.

The LLFPA will not greatly impact the employment law scene. Many lower federal courts had already accepted the "paycheck" statute of limitations concept, i.e., every new paycheck starts a new 300-day period (in Michigan) to bring a claim. The LLFPA also does not expand the scope of damages available to plaintiffs, which is a two-year period. Employers are advised to continue to document the reasons for their compensation decisions, as well as to ensure that those decisions are free of discrimination.

*Employees in other states have 180 days to bring a claim unless a work sharing agreement with the EEOC provides a longer period of time, as in Michigan.

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