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Top Ten Developments in Employment Law for HR Professionals in Virginia — #1

Published by on January 20, 2010

The top ten developments in employment law for HR professionals in Virginia for 2009 continues, in no particular order.  Number 1:  Lilly Ledbetter Fair Pay Act of 2009.  More after the break. President Obama signed the Lilly Ledbetter Fair Pay Act into law in January 2009, his first act of legislation as President.  The Act’s effective date […]

The top ten developments in employment law for HR professionals in Virginia for 2009 continues, in no particular order.  Number 1:  Lilly Ledbetter Fair Pay Act of 2009.  More after the break.

President Obama signed the Lilly Ledbetter Fair Pay Act into law in January 2009, his first act of legislation as President.  The Act’s effective date is retroactive to claims pending as of May 28, 2007.  The Act specifically overturns a U.S. Supreme Court decision that held that for purposes of the statute of limitations, a Title VII violation occurs upon institution of the discriminatory compensation policy rather than each time an employee is paid.  Now, under the Act, an unlawful employment practice occurs with respect to discrimination in compensation not only when the policy is adopted, but also when an employee is affected by application of the discriminatory compensation decision, “including each time wages, benefits, or other compensation is paid, resulting in whole or in part from such a decision.”  The Act not only applies to Title VII of the Civil Rights Act of 1964, but also to the Age Discrimination in Employment Act, the Americans with Disabilities Act, and the Rehabilitation Act of 1973.  

For discrimination in compensation based on a protected class under Title VII (such as gender, race, national origin, etc.), the Act allows recovery of up to two years’ back pay in addition to other remedies available under Title VII, such as compensatory and punitive damages.

It will remain to be seen exactly how the courts will interpret and apply the Act’s provisions.  Due to the Act’s broad language and intent, however, it is likely that courts will opt in favor of a broad interpretation.  At least one circuit has already given a broad interpretation to the term “compensation decision.”  In Mikula v. Allegheny, the Third Circuit determined that an employer’s failure to respond to an employee’s request for a raise was a “compensation decision” because it was equivalent to a denial of such a request.  The court found that the employee was adversely affected by that decision each time she received a paycheck, and thus her claim was timely as to each paycheck she received within 300 days of the filing of her EEOC charge. 

In addition, since the Act refers to “benefits” as well as wages, the Act could be interpreted to apply to employee benefits other than wages (for example pension benefits), so long as they are tied to the discriminatory compensation scheme.  The U.S. Supreme Court has also recently granted review in a Seventh Circuit case that will determine whether the Act applies to disparate impact claims. 

The potential far reach of the Act has obvious implications for employers, who may now be liable for policies that were enacted years before an employee’s claim is brought.  Employers are well-advised to review their compensation policies to ensure that they are neutral on their face as well as in application.  Compensation decisions should be documented as well.

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