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Ledbetter fair pay law hasn't flooded courts

Year-old bias law still has changed rules; litigation may rise

Ledbetter fair pay law hasn't flooded courts

The Lilly Ledbetter Fair Pay Act of 2009 has kept lawsuits alive that otherwise would have been dismissed and revived others, but it has not generated the significant increase in litigation that some observers had feared.

Furthermore, federal courts generally have been conservative in interpreting the law, observers say.

However, the legislation has generated concern about the adequacy of employers' document retention policies (see story, page 11).

President Barack Obama signed the law on Jan. 27, 2009, with great fanfare as one of his first acts in office. The law says every paycheck resulting from a previous discriminatory pay decision constitutes a violation of Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act of 1967, the Americans with Disabilities Act of 1990 and the Rehabilitation Act of 1973 (see box, page 10).

The fair pay law reversed the U.S. Supreme Court's 2007 ruling in Lilly Ledbetter vs. Goodyear Tire & Rubber Co. Inc.

While the law had been expected to be the first of much employee-oriented legislation, that has not materialized so far but still could be on the horizon, observers say (see story, page 11).

Concerns that the law would result in a flood of litigation proved unfounded, observers say.

“The sky hasn't fallen,” said Martha J. Zackin, of counsel with law firm Mintz Levin Cohn Ferris Glovsky & Popeo P.C. in Boston.

“Some people got more excited” than the situation justified, said Thomas H. Christopher, a partner with law firm Kilpatrick Stockton L.L.P. in Atlanta. The legislation “applies only to a very limited situation and those kind of situations come up sometimes in the courts, but not as much as I think some people would think.”

C.R. Wright, a partner with Fisher & Phillips L.L.P. in Atlanta, said the provision that plaintiffs can recover only two years of back pay if they prevail may have had a dampening effect.

“I think that the limited remedy, in terms of damages, has been one reason there hasn't been a flood of new cases. While a person can go back more years than that to point to what they allege to have been the discriminatory conduct, they still can only recover back pay for a two-year period under the statute,” Mr. Wright said.

The law, however, has kept some cases alive and revived others.

“The courts are following correctly the language of the statute for the most part, but that is opening the door for a lot of plaintiffs who would not have been allowed to go forward because their claims are time-barred,” said Christina L. Lewis, an associate with law firm Hinckley, Allen & Snyder L.L.P. in Boston.

She was referring to the Supreme Court's ruling in Ledbetter which limited plaintiffs to filing a complaint within 180 days of an alleged discriminatory act. The Ledbetter law gives plaintiffs up to 300 days to file a complaint, depending on their state, from the time each paycheck that is based on a discriminatory decision is issued.

Since the law's enactment, subsequent rulings on the issue have included the September 2009 ruling in Mary Lou Mikula vs. Allegheny County of Pennsylvania, in which the 3rd U.S. Circuit Court of Appeals in Philadelphia reversed its own previous decision and held that the plaintiff could proceed with her claim on the basis of the Ledbetter law (BI, Sept. 20, 2009).

Reviving a case does not necessarily mean the plaintiff will prevail, “but it means (plaintiffs) now have a shot at it, which certainly adds a cost both financial and managerial to the employer who now has to go back and try to figure out what happened” many years earlier, Mintz Levin's Ms. Zackin said.

There also have been ongoing cases in which the allegation has been added, where defense attorneys are “suddenly faced with a supplementary brief to address the (Ledbetter) Fair Pay Act,” said Philip K. Miles III, an associate with State College, Pa.-based McQuaide Blasko Attorneys at Law.

“It's one more defense that falls by the wayside for defendants' counsel and one more issue that has to be dealt with in a lot of these cases,” said Mark W. Batten, a partner with law firm Proskauer Rose L.L.P. in Boston, who has studied the 47 federal court rulings interpreting the law.

“The pattern that we're seeing is that the courts are applying the act as it was written, but no more broadly; so where there is a compensation claim or a claim that is closely tied to a compensation claim, like denial of tenure, or a denial for promotion, the courts are holding that the passage of time is not a bar to those cases,” Mr. Batten said. “But the fears of some that the act might be applied more broadly, either to statutes other than those listed in the act or, more importantly...might be applied to discrimination claims that are not closely connected with compensation, has not materialized.”

Mr. Miles said courts have proceeded cautiously in interpreting the law. “It seems like the courts aren't in a hurry to sort of use this as a way to...bring every claim possible in,” he said.

Ms. Zackin agreed the act's applicability “has been somewhat limited by the courts in the last year.”

For instance, “It's been clear that the act doesn't apply to pension benefits.” If a worker has retired, he cannot claim he is receiving a lower pension because of a promotion denied during his active career, Ms. Zackin said.

Still, she warned, there is always the possibility of “outlier” decisions that expand employers' potential liabilities. “You never now what the courts are going to do, unfortunately for employers.”

The legislation remains a source of concern for employers, Mr. Miles said. It is difficult to “support your side of the story when you may not have the people or the documentation to support your side of the argument.

“I would definitely say it's still an issue for employers and it's really going to be an ongoing issue....It's something they're really going to have to continuously prepare for by creating and maintaining documentation,” Mr. Miles said.