New pay bias legislation gets mixed reaction

The first law signed by President Barack Obama, which overturned a U.S. Supreme Court ruling and gave employees more time to file unequal pay-bias claims, is being hailed by proponents as a way to ensure equality in the workplace.

But employment defense attorneys say that the statute could open the door to more litigation and heightened penalties at a time when companies can least afford it.

Even worse, they say that crucial details of the law remain unsettled, meaning companies have no true idea of how bad things can get.

“There is more than a bit of ambiguity in this law,” said David J. Garraux, of Fox Rothschild in Philadelphia. Garraux sent out a client alert warning employers of what he sees are potential
pitfalls in the law.

The Lilly Ledbetter Fair Pay Act overturns a 2007 Supreme Court decision, Ledbetter v. Goodyear Tire and Rubber Co., which held that a tire plant manager’s unequal pay claim was time-barred because she did not file it within 180 days of the alleged discriminatory decision to pay her less.

The new law restarts the statute of limitations with each unequal paycheck allegedly based on bias, and is retroactive to May 28, 2007, the day before the Ledbetter decision was handed down.

Obama and the proponents of the new law, which include the American Association for Justice and the ACLU, argued that this is not only a basic issue of fairness, but a necessary means of protecting workers during the current economic crisis.

“In this economy, when so many folks are already working for less and struggling to get ahead, the last thing they can afford is losing part of their paycheck to simple discrimination,” Obama said at the bill signing.

Unanswered questions

Proponents brush aside the argument that the law will lead to a flood of litigation, because damages are limited to losses suffered for no more than the two years before the complaint was filed

But opponents say the breadth of the law will hurt businesses already struggling to survive the recession.

Among the problems Garraux sees with the law is language not only allowing employees to sue, but also others “affected” by alleged discriminatory pay rates.

“Who is ‘affected’?” he asked. “The spouse? The children? Does it extend to others? We don’t know, because the language is silent on that.”

And because the statute of limitations is restarted not only with every paycheck, but also
with every payment based on that pay scale, Garraux said that retirement and pension benefits can also restart the time to file suit.

“The window to file suit will extend well into retirement, based on decisions that were made, literally, decades before,” he cautioned.

As soon as the legislation was signed into law, employment defense attorneys began issuing alerts warning their clients to revise their record-keeping policies to avoid being hit with litigation down the road.

Some firms have formed new employment sub-practice areas, while others have launched blogs in an effort to keep their clients informed of new developments under the law.
Louis P. Britt, a partner in the Memphis office of Ford & Harrison who represents employers, said the new law deals “a double whammy” to businesses.

“You will see the door open for more litigation, and it comes at time when companies don’t have the resources to spend on educating supervisors and training them,” Britt said.
“Employers need to have the ability to train supervisors, and they don’t have the money to do that right now. Their dollars are being stretched as they are simply trying to survive.”
But plaintiffs’ attorneys say there’s no reason to panic, as long as employers aren’t making biased pay decisions.

“I don’t see any reason to expect a deluge of new claims, because the law [simply] reinstates the law that existed up until the date of the Ledbetter decision,” said Jocelyn Samuels, vice president for education and employment at the National Women’s Law Center, based in Washington.

“I don’t think there is any reason to expect the explosion of litigation that opponents of the law hypothesize would occur,” she said.

Samuels also pointed out that the current economic crisis can’t justify allowing biased pay scales to continue.

“I would be surprised if there was an employer who would make the case that they should be allowed to let discrimination continue because the economic situation is rough,” she said. “There is no economic defense to discrimination.”