Cleveland partner Todd Lebowitz and Los Angeles partner Margaret Rosenthal were quoted in a February 3 California Executive article, "Fair Pay Act Puts Employers on Notice for Past Discrimination."
The focus of the article is the first bill signed by President Obama, the Lilly Ledbetter Fair Pay Act, which expands workers' rights to sue, relaxing the statute of limitations. According to the article, under the new law, a two-year statute of limitations does not start tolling until the last paycheck from the offending employer. And in some cases it’s longer, for example, if someone is collecting a pension from the employer. By the same token, a person that's been with a company for 20 or even 30 years can still sue for an alleged instance of discrimination that took place decades ago.
"It's going to be hard for companies to defend these old decisions," said Lebowitz. "The bottom line here is that this is a well-intentioned act, but the indefinite expansion of the statute of limitations is unfair to employers and will create awards that are not warranted." The law is retroactive to May 28, 2007, and keeps the business-size thresholds in place. But the recovery period remains two years, so plaintiffs will have to prove that their salary from the past two years was adversely impacted by a discriminatory decision made earlier, according to Lebowitz. In addition to compensatory damages, plaintiffs also may claim punitive damages, emotional distress or injunctive relief (promotion to a position originally denied for discriminatory reasons, for example), Lebowitz said.
Going forward, employers will want better documentation of why someone in a protected class is being paid less than someone else. Objective reasons for pay disparities–education level, seniority, etc.–are always easier to document than the more subjective reasons for what a manager chooses to pay a given employee, according to the article. Lebowitz said this could present a difficult balancing act. "You want to keep good records and document your reasons. But if you start documenting subjective reasons for every decision you make that affects pay decisions, some plaintiff will point to those documents and say decisions were made subjectively and somehow nefariously," said Lebowitz.
Rosenthal said she understands the intent of the act, and that perhaps the Supreme Court's holding in the original case [of the original statute of limitations] was too narrow, but called this statute way too broad. Rosenthal expects the law to tighten in time, as its scope is challenged in court. For now, though, she said, it opens the litigation floodgates wide. "This goes even beyond employees," Rosenthal said. "If you're a retiree and you think your pension check should be higher because you believe your pay was discriminatory, [then you can file a claim]."