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January 30, 2009

President Obama Signs Fair Pay Legislation

President Obama signed the Lilly Ledbetter Fair Pay Act, which overturned a decision from the United States Supreme Court that had restricted the ability of employees to sue over alleged unequal pay on the basis of gender. In 2007, the Supreme Court held in Ledbetter v. Goodyear Tire & Rubber that the statute of limitations to sue an employer for discrimination ran from the time that the employer first adopted the discriminatory pay system, regardless of whether the employee experienced the effects of the alleged discriminatory practice in each paycheck issued thereafter. Ledbetter had sued Goodyear claiming that the pay system adopted by her employer almost 20 years earlier had been discriminatory against women.

The new law clarifies that the time to sue commences each time an employee receives a paycheck that allegedly reflects a discriminatory pay practice. Although Ms. Ledbetter’s case only alleged gender discrimination, the law applies to all forms of discrimination protected by Title VII, the Age Discrimination in Employment Act, the Americans with Disabilities Act and the Rehabilitation Act. The Ledbetter Act also expands the scope of alleged discriminatory actions beyond pay practices to all “compensation-implicated personnel actions,” as well as “other practices” that affect compensation. As such, the Act impacts any and all compensation decisions including wages, benefits and employee classifications and promotions that may impact compensation.

The Act is retroactive to May 28, 2007, the day before the Supreme Court issued its decision. Although an employee may sue over the effects of an alleged discriminatory decision made years earlier, he/she may only recover damages for the two-year period preceding the filing of his/her EEOC charge.

We remain available to review your Company’s pay practices for compliance with the new law and to answer questions regarding the Ledbetter Act.