The Lily Ledbetter Fair Pay Act of 2009 was signed into law by President Obama on January 29.
After some reading and research over the past few days, here's my quick summary and initial thoughts on what this new law means for HR and reward professionals.
The Act overturns the Supreme Court's ruling in Ledbetter vs. Goodyear Tire & Rubber, which held that employees must file a discrimination claim within 6 months of the act of discrimination. The new law's main purpose is to extend that statute of limitations so that the clock doesn't begin ticking, in effect, until 180 days (300 days*) after an employee receives either a final paycheck or a final benefit payment (e.g., pension check) that can be traced back to a discriminatory decision or practice. The net impact of the new law is to effectively remove any time limits on pay discrimination claims - a claim can now be brought years, even many years, after the discriminatory action allegedly took place.
What does this mean for HR and reward professionals?
To state the obvious, our first step should be to ensure that there are no problems to begin with. All pay-related decisions - and this includes but is not limited to job evaluation, performance appraisal, merit and other salary increases, market salary adjustments, promotions, etc. - must be made based on clear and objective guidelines which are consistently applied. Job titling, definition and documentation must be accurate and up-to-date. Supervisors and managers must be trained and held accountable for the important role they play in all these regards, and for clear and meticulous communication with employees.
These are the things that should have been happening all along, of course. What changes now is our responsibility for documentation and recordkeeping. With the possibility of a lookback for discrimination claims that could go back years - even decades - we must assume that neither the HR or reward professional nor the decision making manager involved will be around to rely on for personal recollection or documents if a pay related decision is challenged. Instead, it will be imperative to establish formal and comprehensive recordkeeping practices, as far backward as can be managed and certainly going forward from today.
*If the discrimination charge is filed in a state with its own equal employment opportunity agency.
Postscript: Here is a link to a CNNMoney article highlighting, in particular, what the Ledbetter Fair Pay Act means to small businesses, who may not have or be in a position to afford the access to legal and human resource talent that big businesses have to help them with compliance. The list of recommended steps near the end are particularly good. Hat tip to Laurie Ruettimann for the link.