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WASHINGTONA bill that would essentially reverse a U.S. Supreme Court decision limiting the time workers have to file claims for pay discrimination would greatly increase employers' exposure to bias suits, employer groups and attorneys warn.
The House of Representatives last week passed the measure, the Lilly Ledbetter Fair Pay Act of 2007, on a largely party-line vote of 225-199. Although a companion bill has been introduced in the Senate by a bipartisan group of senators, observers say it is too soon to project the likelihood of the legislation's enactment (see story, page 39). The current measure does face a key obstacle, though, as it is opposed by the White House.
The bill, H.R. 2831, was introduced in response to the Supreme Court's May 29 decision in Lilly Ledbetter vs. Goodyear Tire & Rubber Co. (BI, June 4). The measure would remove time limits on filing claims for discriminatory compensation.
Under Title VII of the Civil Rights Act of 1964, a charge of unlawful employment practice must be filed with the U.S. Equal Employment Opportunity Commission within 180 days, or 300 days if the "complainant has first instituted proceedings with a state or local agency," the ruling says.
The plaintiff argued that Goodyear made a series of intentionally discriminatory pay decisions, some of which went back 19 years, and that those decisions affected her later earnings.
The U.S. Supreme Court affirmed the 180-day limitation that applied to Ms. Ledbetter in its 5-4 ruling, saying: "A new violation does not occur, and a new charging period does not commence, upon the occurrence of subsequent nondiscriminatory acts that entail adverse effects resulting from the past discrimination."
Opponents of the bill contend that the measure, as currently written, could have far-reaching consequences, including having a potentially devastating impact on employers' pension plans. They also say that by eliminating the time limitations to file claims, years or even decades could elapse between the original discriminatory act and the complaint, which could make it difficult for employers to find the witnesses and documents to adequately defend charges.
Richard I. Greenberg, an attorney with Jackson Lewis L.L.P. in New York, said if the Supreme Court decision is undone by the legislation, it "could open the door for litigation of pay decisions made years ago."
"If employees are able to file lawsuits years after the alleged discriminatory activity, it's going to make it very difficult for employers to be able to successfully defend those lawsuits, because evidence and eyewitnesses may no longer be available to them," said Richard Gisonny, a principal with Towers Perrin in Valhalla, N.Y.
"Class action lawyers are using the Ledbetter decision and trying to argue the rule also applies to a class action context in cases involving hundreds of thousands of employees," said Gerald L. Maatman Jr., an attorney with Seyfarth Shaw L.L.P. in Chicago.
"For me, it's a very high stakes issue that Congress is debating," and the legislation's ultimate outcome "could significantly impact ongoing and future class action litigation," he said.
Supporters of the bill say the legislation only restores the situation that existed before the Ledbetter decision.
"It's a very narrow fix," said Jocelyn Frye, general counsel for the National Partnership for Women & Families in Washington. "It brings the law back to where it was before the Ledbetter decision" and "doesn't do any more than that."
But Debra S. Friedman, an attorney with Cozen O'Connor in Philadelphia, said the bill goes beyond the Supreme Court's decision. Unlike the Ledbetter decision, which just addressed salary, the bill applies to all types of compensation, including bonuses, vacations, pensions and perhaps even medical and life insurance benefits, she said.
Furthermore, while the Ledbetter case was brought under Title VII of the Civil Rights Act of 1964, the bill also applies to the Age Discrimination in Employment Act, the Americans with Disabilities Act and the Rehabilitation Act, Ms. Friedman said.
"What they're doing effectively here is eliminating the statute of limitations for any compensation and discrimination claim," said Ms. Friedman. "It could be a serious headache for employers if it's passed."
Anne Waidmann, Washington-based director in Pricewaterhouse-Cooper's Human Resource Services division, said there is concern in the benefits community as to how the legislation may affect pensions.
If an employee files a lawsuit over an alleged wage discrimination that occurred 30 years ago that results in an award of back pay, "then does the pension plan have to refigure the benefits that it owes you?" she asked. And if so, how does that impact the plan's funding? With compounding of interest, "It could bankrupt the company," said Ms. Waidmann.