Lilly Ledbetter Fair Pay Act

Transcription

1 Labor and Employment Group Webinar April 2, :00 to 1:00 p.m. Jeffrey A. Van Doren, Esq. Elizabeth M. Ebanks, Esq.

2 Today s attorneys and some notes... Elizabeth Ebanks Richmond Jeffrey Van Doren Roanoke Welcome. With the high number of attendees, please note all lines have been muted for the event. Q&A can be posted at the right of your screen, but any questions (time permitting) will be addressed at the end of the event. If using Q&A please send to both the host and the presenter. You can send direct questions (including request for copy of slides) to seminars@leclairryan.com with Lilly Ledbetter Webinar in the subject for reply after the event.

3 Important for HRCI Credits You must be logged in individually both via computer and via the teleconference for the duration of the event in order to qualify for the credits. (Sometimes two attendees will share an office and watch together that will only allow credit for the person who logged in. If you are not, please login now individually to appear on the attendance report. At the end of the seminar, send an to if you need the HRCI certificate. It will be sent the following day after confirmation of attendance.

4 Usage This webinar slide show provides general information and is not legal advice and should not be used or taken as legal advice for specific situations. You should consult legal counsel before taking any action or making any decisions concerning the matters in this show. This communication does not create an attorney-client relationship between LeClairRyan, A Professional Corporation, and the recipient. Copyright 2009 LeClairRyan, A Professional Corporation. All rights reserved.

5 Became Effective on January 29, 2009.

6 Summary Amends Title VII of the Civil Rights Act of 1964, Age Discrimination Act in Employment Act of 1967 Americans with Disabilities Act of 1990 Rehabilitation Act of 1973

7 Summary Clarifies that a discriminatory compensation decision that is unlawful under such Acts occurs each time compensation is paid pursuant to the discriminatory compensation decision or other practice.

8 Agenda Supreme Court case Legislative history Review of legal changes What it means for employers Recommendations

9 Genesis: Lilly Ledbetter v. Goodyear Tire Facts: Production supervisor at Alabama Goodyear plant after 19 years took early retirement in 1998 after being involuntarily transferred to a less-desirable job on production floor. Salary was determined annually based on performance reviews by supervisors. Her reviews placed her near bottom of rankings with coworker so she received small salary increases.

10 Genesis: Lilly Ledbetter v. Goodyear Tire Facts: By end of 1997, Ledbetter was only woman working as area manager. Pay discrepancy was stark. Ledbetter was paid $3727/month; lowest paid male area manager was paid $4,286/month; highest was paid $5,236/month. First filed charge with EEOC 6 mos. prior to retirement.

11 Lilly Ledbetter v. Goodyear Tire (2007) Verdict: Jury agreed Ledbetter discriminated against and paid an unequal salary because of her sex. Awarded Ledbetter $223,776 back pay plus $3 million in punitive damages. Judge later reduced to $360,000 per Title VII damages cap.

12 Lilly Ledbetter v. Goodyear Tire (2007) Argument on Appeal: Goodyear argued Ledbetter s claim timebarred, because alleged discriminatory decisions made more than 180 days from the date she filed an EEOC Charge. Ledbetter argued that 180 days runs from date of any paycheck affected by decision ( paycheck accrual rule).

13 Lilly Ledbetter v. Goodyear Tire (2007) Supreme Court Analysis: Bazemore v. Friday (1986) most federal courts & EEOC followed paycheck accrual rule. versus Amtrak v. Morgan (2002) rejected continuing violation rule and found that each discrete act of discrimination must be challenged within 180 days of occurrence.

14 Lilly Ledbetter v. Goodyear Tire (2007) Supreme Court Holding (5-4 ruling): Applied Amtrak statute of limitations on pay discrimination claims runs from the date of discriminatory decision, not date on which the employee received checks. Majority declined to consider discovery rule wherein statute of limitations runs on date of discovery or date should have been discovered.

15 Lilly Ledbetter v. Goodyear Tire (2007) Ginsberg Dissent: the Court does not comprehend, or is indifferent to, the insidious way in which women can be victims of pay discrimination. The majority immunized forever discriminatory pay differentials unchallenged within 180 days of their adoption.

16 Lilly Ledbetter v. Goodyear Tire (2007) Ginsberg Dissent: Once again, the ball is in Congress court.

17 Legislative Path Introduced in the House on July 31, Passed in House in Stalled based on veto threat from President Bush. New version passed in Senate and House in January 2009, within 5 days of introduction. 2 days later, January 29, 2009, became law.

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19 Adds provision to Title VII, which provides: unlawful employment practice occurs, with respect to discrimination in compensation in violation of this title, when a discriminatory compensation decision or other practice is adopted, when an individual is affected by application of a discriminatory compensation decision or other practice, including, each time wages, benefits, or other compensation is paid, resulting in whole or in part from such a decision or other practice. Applies to ADEA, ADA and the Rehab Act.

20 EEOC Notice Concerning Act The Act restores the pre-ledbetter position of the EEOC that each paycheck that delivers discriminatory compensation is a wrong actionable under the federal EEO statutes, regardless of when the discrimination began.

21 EEOC Notice Concerning Act Thus, an individual can file charge under Title VII, the ADEA or the ADA within 180 (or 300) days from any of the following: when a discriminatory compensation decision is adopted, or when individual becomes subject to such a decision, or when individual s compensation is affected by the decision (meaning each time the employee receives payment of wages or benefits, 180 or 300 day period restarts).

22 Retroactive Application The Act applies retroactively back to May 28, 2007, the day before the Supreme Court s decision in Ledbetter v. Goodyear Tire. The Act applies to all suits pending on that date and all discrimination suits brought after that date. Does limit recovery of back pay to up to two years preceding filing of charge.

23 The New Definition of Compensation The definition of discriminatory compensation decision or other practice will be heavily litigated and could be stretched to cover almost any employment decision (e.g., transfers, failure-to-promote, or demotion decision). The Act conceivably applies to any employment decision that tangentially involves or impacts any type of compensation (e.g. pensions, bonuses, severance pay).

24 Broad Definition of Coverage A person affected by the decision is not defined and the broad language could include charges filed by non-employees, such as spouses of deceased workers. In fact, House expressly rejected amendment restricting application to employees only

25 What it means for employers... Will encourage lawsuits and employees could delay filing claims to reap bigger verdicts. Expose employers to liability for alleged discriminatory acts that occurred many years earlier by long gone managers. Makes it easier for plaintiffs to litigate stale discrimination claims, including those who refrained from filing in last 20 months since Ledbetter decision and those dismissed on limitations grounds.

26 Recommendations Audit Current Payroll Practices and Packages Conduct self-audit of current compensation practices Conduct self-audit of all current compensation packages across gender, race, and ethnic categories to determine pay differentials and if sufficient documentation exists supporting past decisions Self-audit compensation packages data periodically

27 Recommendations Evaluate Employee Manual and Policies Determine if company has expressed specific criteria with which managers are to make compensation decisions uniformly If not, develop objective, measurable guidelines for each department or position and apply consistently Train supervisor and managers on new criteria and the impact of the Act Develop and train employees on internal complaint procedure to address alleged pay disparities

28 Recommendations Adopt Review System for Compensation Decisions Title VII has compelled all employers to closely review all hiring, promotion, discipline and termination decisions and to refrain from giving one supervisor unfettered discretion Compensation decisions will now have to be reviewed in the same manner Companies should consider adopting a review system to evaluate compensation decisions with same scrutiny as any adverse actions (i.e., possible two-tiered review)

29 Recommendations Exceed Recordkeeping Compliance Determine how long documentation on compensation decisions are currently retained If no policy in place, create one similar to other employment decisions, but will have to retain significantly longer based on effect of Act Consider electronic archiving system, will be less costly long-term

30 On the Horizon Paycheck Fairness Act Amends Equal Pay Act of 1963 to allow recovery for unlimited compensatory and punitive damages, and expert fees instead of just back pay and liquidated damages Prohibits employer retaliation against employees for sharing compensation information with co-workers

31 On the Horizon Recent Court Decisions

32 If you would like a copy of the powerpoint or need a certificate of attendance for HRCI credit, please send an to seminars@leclairryan.com. Any questions not posted during the webinar can also be ed to this address. Thank you.

33 Questions

34 Questions whose burden of proof? doesn't the employee have to do more than simply allege D? The burden of proof will be the same as it is in other Title VII discrimination cases applying the burden shifting analysis developed in McDonnell-Douglas. That is, the plaintiff will have to make out a prima facie case of pay discrimination, at which time the burden shifts to the employer to articulate a "legitimate, non-discriminatory reason" for its decision. Once the defendant does so, the burden return to the plaintiff to show that the employer's proffered reason is a pretext and that discrimination is the real reason. The ultimate burden of proof, however, will remain on the employee. Is geographical location a valid criteria to differentiate pay differences? Yes. We advise employers to develop objective, measurable criteria to justify any pay differences. The fact that Employee A works in New York while Employee B works in Virginia is an objective reason for a pay differential. You need to ensure, however, that within the geographic location that any pay discrepancies can be adequately explained and documented.

35 Questions So, pay for performance,if defined specifically is valid reason for differentiated pay? Yes, but again you must be very careful to have objective, measurable criteria for the employees' performance. In the Ledbetter case, Goodyear attempted to justify the pay differential, in part, by showing that Ledbetter was rated lower than her male comparators. The jury did not accept that explanation. So while pay for performance is certainly valid, it places a much higher burden on supervisors to honestly, accurately and objectively measure their employees' performance. What about the hiring process when folks enter the company at different rates in same job or negotiate differently. This too is a valid reason for pay differential, but you need to be very careful that in making these initial pay decision that sex or some other protected characteristic is not a factor. I believe juries will be skeptical of such claims that you had to pay one employee more than another to get them in the door. As with all compensation decision, if you have objective, measurable criteria that you can point to, you will have a valid defense.

36 Next month s webinar Look for an on our next webinar on May 7 th on Electronic Discovery (or E-Discovery) and how capturing your company s electronic information is playing a greater role in lawsuits and claims.