The Lilly Ledbetter Fair Pay Act & the Fight for Pay Equity

Lilly Ledbetter, a former Goodyear employee who became the face of the pay equity movement, died last month at age 86. 

Here’s a look at her story, legacy and the fair pay legislation named in her honor.

First things first: The Lilly Ledbetter Fair Pay Act is a significant piece of legislation because it greatly expanded the window during which employees can sue for pay discrimination.

Because of the law, more employees can obtain relief for compensation-related employment discrimination. The rule set by the law also applies to federal claims of disability and age discrimination.

What is the Lilly Ledbetter Fair Pay Act?

The Lilly Ledbetter Fair Pay Act is a federal law that broadened the ability of employees to sue for discriminatory pay practices. It also applies to federal claims of disability discrimination under the Americans with Disabilities Act and Rehabilitation Act, as well as federal claims of age discrimination under the Age Discrimination in Employment Act.

Lilly Ledbetter Fair Pay Act Statute of Limitations

Under the act, each paycheck that includes discriminatory compensation is considered a separate violation of the law. This is significant because it means that the time period to sue, known as a limitations period, begins anew with each discriminatory paycheck. This rule gives employees more time to seek relief from pay discrimination.

Equal Pay Act vs. the Lilly Ledbetter Fair Pay Act

The Equal Pay Act of 1963

The Equal Pay Act of 1963 amended the Fair Labor Standards Act, which was passed in 1938 and sets rules about minimum wage, overtime pay, recordkeeping and child labor standards.

It requires covered employers to provide equal pay to men and women who work equally in the same workplace. The jobs don’t have to be identical. As long as they are substantially equal, equal pay is required.

It’s important to remember that the Equal Pay Act covers more than just salary. It applies to all forms of pay, including things like overtime, bonuses, stock options and profit-sharing. The law also bans retaliation against those who complain about discrimination, file a discrimination charge, or participate in a discrimination lawsuit or investigation.

The Equal Pay Act bans unequal pay for equal work based on sex. This ban also exists under Title VII of the Civil Rights Act. These laws create a substantive rule: Don’t discriminate concerning pay based on sex. They represent essential protections against pay discrimination.

The Lilly Ledbetter Fair Pay Act of 2009

The Lilly Ledbetter Fair Pay Act came decades later. While it is also related to equal pay, it’s very different from the Equal Pay Act and Title VII. Whereas the Equal Pay Act and Title VII spell out what is prohibited, the Lilly Ledbetter Fair Pay Act addresses when a claim of unequal pay based on sex can be filed, as opposed to what type of claim can be brought.

Under the act, an unlawful employment practice occurs when:

• A discriminatory compensation decision or practice is adopted
• An individual becomes subject to such a decision or practice, or
• An individual is affected by the application of the decision or practice, including by getting paid.

This means that under the Lilly Ledbetter Fair Pay Act, the clock to file a claim of discriminatory pay, which is usually 180 days (and sometimes 300), restarts each time an employee is paid – and not just once when an initial discriminatory pay decision is made.

Let’s look at an example of how this rule greatly expands the ability of employees to sue for sex-based pay discrimination.

Suppose an employer pays a female employee less than a male employee to do the same work – and does so based only on sex. Years later, the female decides to challenge the continuing disparity as discriminatory. If the clock to file a claim began to run just once with the initial discriminatory decision, it would be too late for her to file a claim of discriminatory pay. But the Lilly Ledbetter Fair Pay Act makes each paycheck a fresh act of discrimination that starts the clock again. This means the female employee can go ahead and seek relief.

While the act greatly expanded the ability of employees to file discrimination claims, it has two important limitations.

First, it applies to compensation-related claims only. It doesn’t save late claims that don’t involve compensation issues.

Second, it permits recovery only for two years preceding the charge filing. Thus, for example, it doesn’t enable an employee who has been subjected to discriminatory pay practices for decades to gain a recovery representing that entire time period.

Lilly’s Story

Lilly Ledbetter began working at an Alabama Goodyear Tire and Rubber Co. plant in 1979. She was the only woman in her position as an overnight supervisor.

At first, Ledbetter and males in the same position received equal pay. But that changed over time, and the males began to be paid more. By the end of her career, all males in her position earned more money than she did.

More specifically, at the end of 1997, Ledbetter was paid $3,727 per month as an area manager. She was the only woman who held that position. Her 15 male counterparts received between $4,286 and $5,236 per month.

Ledbetter didn’t find out about the wage gap until just before she retired in 1998 when someone put a note in her mailbox that listed the salaries of the men who did equal work but were paid more.

After she found out about the pay difference, Ledbetter filed an administrative complaint of unlawful sex discrimination with the Equal Employment Opportunity Commission in July 1998. After she did so, Goodyear gave her different job duties, including lifting heavy tires.

Four months after Ledbetter filed her administrative complaint, she took early retirement.

Lilly’s Fight for Equal Pay

Ledbetter later sued Goodyear in court, alleging unlawful pay discrimination under both the Equal Pay Act and Title VII.

A jury found in her favor on her Title VII pay discrimination claim, and it awarded her more than $3.5 million in back pay and damages. The trial court judge reduced that award to $360,000.

But even that smaller victory was short-lived.

A federal appeals court negated it completely, accepting Goodyear’s argument that Ledbetter’s administrative complaint applied only to pay decisions that affected Ledbetter’s pay within the prior 180 days. And since there was no showing that Goodyear discriminated during that time, it decided Ledbetter should get nothing.

The case then reached the U.S. Supreme Court for further review.

Ledbetter v. Goodyear Tire & Rubber Co.

The Supreme Court issued its Ledbetter decision in May of 2007.

By a vote of 5-4, it issued a decision in favor of Goodyear.

The Court’s majority ruling reasoned that the 180-day statute of limitations for filing a charge in Title VII discrimination cases “begins when the discriminatory act occurs.” And it said that “a pay-setting decision is a discrete act that occurs at a particular point in time.”

The charging period begins “when a discrete unlawful act takes place,” the majority advised, and no new violation occurs based on subsequent “adverse effects.”

Applying that reasoning, the majority decision concluded that Ledbetter’s claim was filed too late.

Ledbetter argued to the Court that each paycheck issued to her was a separate act of discrimination, but the Court’s majority decision rejected that position.

It said that Ledbetter’s suggested “paycheck accrual rule” was not supported by the statutory regimes of the Equal Pay Act, the Fair Labor Standards Act or the National Labor Relations Act.

The majority’s decision also pointed out that Ledbetter didn’t assert that any intentionally discriminatory conduct took place during the charging period, and it said that “current effects alone cannot breathe life into prior, uncharged discrimination.”

The majority’s reasoning limited the amount of time employees have to file claims of unfair pay discrimination.

A strong dissent written by Justice Ruth Bader Ginsberg argued that a discriminatory pay practice took place each time that Ledbetter was paid. Each paycheck was a new harm, it said. Viewing the limitations period this way is “more in tune with the realities of the workplace,” it added.

Who Signed the Lilly Ledbetter Fair Pay Act?

Congress acted quickly. Less than two years after the Court’s Ledbetter ruling, both houses of Congress had passed the Lilly Ledbetter Fair Pay Act.

It was the first piece of legislation signed into law by President Barack Obama.

What Did the Lilly Ledbetter Fair Pay Act Do?

The law overturned the Ledbetter decision and bolstered workplace protections by expanding the time frame for filing compensation-related complaints of employment discrimination.

President Barack Obama signs into law the Lilly Ledbetter Fair Pay Act, with Ledbetter witnessing the moment.

The Lilly Ledbetter Fair Pay Act’s Impact

The Lilly Ledbetter Fair Pay Act boosted workplace protections for workers who are subjected to unfair wage discrimination. As a result of the law, women and others can raise a challenge to unfair pay at any point during their tenure of employment. The act didn’t by itself directly change wages for employees, but it provides workers with more opportunities to seek relief from unfair pay practices.

Prudent employers reacted to the Lilly Ledbetter Fair Pay Act by carefully retaining records regarding pay-related decisions. These records can be used to defend past decisions regarding employee pay.

In addition, employers were well-advised to take a close look at their policies relating to decisions regarding starting pay, merit increases and promotions. Many also renewed their training of managers and supervisors on the requirements of equal pay laws.

The act changed the way the law approaches wage discrimination by providing more opportunities for employees to challenge discriminatory pay practices.

After the act was passed, some feared that it would lead to a substantial rise in the number of wage discrimination claims filed and increased costs for businesses. But in the years immediately following the passage of the law, charge statistics indicated that fear wasn’t realized.

The Lilly Ledbetter Fair Pay Act didn’t create a new ban on discrimination concerning the payment of wages. However, it strengthened the existing prohibition of wage discrimination by making it easier for victims of discrimination to pursue a remedy for violations.

Big Step Forward in the Fight for Equal Pay

In summary, the Lilly Ledbetter Fair Pay Act was a big step forward in the fight for equal pay, especially for women. It broadened the time period during which aggrieved employees can challenge allegedly discriminatory pay-related decisions.

The primary effect of the act is that it bolstered workplace protections for victims of wage discrimination.

The act also showed that although the Supreme Court often has the final word with respect to legal issues, the federal Congress has the power to effectively override the High Court’s decisions via legislative action.