by John J. Steffenhagen, Esq.

On January 29, 2009, President Obama signed the first bill of his administration: the Ledbetter Fair Pay Act. Hailed by many as an enhancement to laws that govern equal pay, businesses are left to sort out whether and how the act truly affects employers who paid attention to existing laws in the first place.

In short, the law provides that an unlawful act occurs each time an employee receives a payroll check that reflects the intent to discriminate. There are no additional reporting requirements or hoops and mazes for employees to navigate.

The meaning of the act is best illustrated by Lilly Ledbetter's own story. Ms. Ledbetter worked at a Goodyear Tire plant for 19 years. She alleged (and apparently could make a case) that she was paid less than men who performed the same job. Ms. Ledbetter sued and argued that Goodyear discriminated each time it handed her a payroll check. Her employer countered that the discrimination, if any occurred at all, happened only when her pay was set — not when she received a check.

This conflict was important, since federal anti-discrimination laws require that an employee file a charge of discrimination within 180 days of a discriminatory act. Therefore, Goodyear argued that it could not be liable for even discriminatory pay, if the pay was set outside the 180 day window. The United States Supreme Court agreed, in a 5-4 vote, and the stage was set for Congress to address the issue. The Ledbetter Fair Pay Act was the result.

Therefore, employers who comply with laws already on the books face no additional regulations and should simply keep doing what they have done all along. However, employers who are found liable for discriminatory payroll practices now face increased and clear exposure, including a 2-year window for back pay.