Ledbetter Fair Pay Act Signed into Law

January, 2009

On January 29, 2009, President Obama signed into law the Ledbetter Fair Pay Act which amends federal wage discrimination laws and clarifies that each time an employee is paid discriminatory wages it is a separate act of discrimination.  This Act overturns a 2007 United States Supreme Court decision which held an employee must file a wage discrimination claim with the Equal Employment Opportunity Commission generally within 180 days of receipt of the discriminatory pay.  Under the Ledbetter Fair Pay Act, the statute of limitations extends another 180 days each time discriminatory compensation is paid.

This Act creates an incentive for employers to regularly review their compensation practices to prevent wage discrimination.  Employers who lack structured compensation programs are at the greatest risk for these types of claims.  The lack of structure often leads to arbitrary determination of wages and can result in discrimination, even if unintentional.  Developing a formal program will help to ensure wages are uniformly competitive and equitable, and will limit the possibility of guesswork and subjectivity commonly associated with pay program administration.  Formalization will also help to minimize inequities and inconsistencies that can result in legal challenges and/or poor morale.  Even with a formal plan in place, employers should be proactive and regularly analyze pay data for discriminatory impact.

A formal compensation structure is designed to align with your organization’s competitive market objectives, will support equitable pay internally, and will ultimately be a more cost-effective approach to determining wages and salaries.  Once competitive wage and salary ranges have been established, the entire structure can easily be adjusted as needed to reflect the market, while maintaining internal equity among similar jobs and minimize the risk of a discrimination claim.

Please contact Cascade to find out how we can help you set up or better maintain a formal compensation program and minimize your legal risk.


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