Human Resource Management – modifications to 2009 Fair Pay Act

Lilly Ledbetter Fair Pay Act of 2009

The Lilly Ledbetter Fair Pay Act of 2009 is the first law signed by President Obama. The fair pay act overturns a 2007 U.S. Supreme Court decision, Ledbetter v. Good Year Tire & Rubber Co., which banned pay discrimination lawsuits filed more than 180 days after the first discriminatory paycheck was issued. The new law states that the statute of limitations resets as each discriminatory paycheck is issued.

Key Policy amendments include:

1. Changes statute of limitations - The Ledbetter Act makes the issuance of a paycheck a potential discriminatory action. The time clock is re-started each time an employee receives a paycheck and individuals are allowed to bring discrimination claims many years after an alleged act of discrimination occurred.
2. Expands the potential field of plaintiffs - The Ledbetter Act allows an employee who was discriminated against and other individuals who were “affected” by an act of pay discrimination, including spouses, children, close family members, to file suits over an employee’s pay.
3. Amends other civil rights statutes - The Ledbetter Act will extend the statute of limitations for filing claims for all protected classes of employment law, including gender, age, color, disability, race, religion and national origin.
4. Retroactive effective date - The Ledbetter Act takes effect as if enacted on May 28, 2007and applies to all pay discrimination claims pending on or after that date.

HR Policy Initiative

1. Improve Record Keeping - HR needs to immediately turn its attention to its recordkeeping not only for pay decisions but performance appraisals that affect pay and job classification decisions. Proper documentation is critical on a go-forward basis. A well-documented communication compensation philosophy should be defined, whether it is based on performance, length of service or cost-of-living adjustments. If the organization doesn’t have a compensation philosophy, they should consider adopting one now to decrease liability for future issues.
2. Audit the Past - If there are concerns about potential past compensation decisions, an audit of past actions regarding pay can be beneficial to deal with problems before they result in litigation.
3. Monitor Pay Policies - HR managers should continue to monitor pay policies and all performance management processes to decrease future problems. In addition, employers should not give any single person discretion to make decisions regarding compensation.
4. Review Record Retention Policies - Under the new law, a company could be sued at virtually any point regardless of how far in the past the action took place. It is wise to develop a solid record retention policy.
5. Train Managers - Ensure managers understand how to conduct fair and objective pay and performance evaluation with proper documentation. Continuing training that stresses the risks of poor pay-related decisions will help keep the issues at the front of manager’s minds.