The Ledbetter Fair Pay Act of 2009 was signed into law by President Obama as Public Law 111-2 on January 29, 2009.  The law amends various federal equal employment opportunity laws to clarify discrimination occurs every time a paycheck is issued following a discriminatory compensation decision.  In effect, a new 180-day period to file a discrimination claim would commence.


The topic of equal pay discrimination is a complicated one.  There are actually four federal laws in play, the Equal Pay Act (EPA,) Title VII of the Civil Rights Act, the Americans with Disabilities Act (ADA), and the Age Discrimination in Employment Act (ADEA).

On June 10, 1963, President John Kennedy signed into law the Equal Pay Act, making it illegal to pay women lower wages for the same job strictly on the basis of their gender. The law went into effect a year later on June 11, 1964.

Under the EPA, in order to prove discrimination an employee must show that different wages are paid to employees of the opposite sex, the employees perform substantially equal work on jobs requiring equal skill, effort and responsibility, and that the jobs are performed under similar working conditions.  Once the employee establishes his/her case, the employer may only avoid liability if the unequal pay is the result of a seniority system, merit system, a system that measures earnings by quantity or quality of production, or “a differential based on any other factors other than sex.”  Under the Equal Pay Act, an employee has three years to bring a charge against his or her employer.

Title VII, the ADEA, and the ADA prohibit compensation discrimination on the basis of race, color, religion, sex, national origin, age, or disability.  Unlike the EPA, there is no requirement under Title VII, the ADEA, or the ADA that the claimant's job be substantially equal to that of a higher paid person outside the claimant's protected class, nor do these statutes require the claimant to work in the same establishment as a comparator.

The coverage threshold for a business for Title VII and the ADA is fifteen or more employees and the ADEA threshold is twenty or more employees.  Most folks do not realize it, but the Equal Pay Act amended the Fair Labor Standards Act.  For the most part, almost all businesses that have an employee are covered by the FLSA and thus subject to the EPA.  There are some very limited exemptions for certain types of businesses. (e.g. A retail establishment with an annual dollar volume of sales of at less than $500,000 and no employees engaged in interstate commerce.)

This law has to do with claims under Title VII, the ADEA and the ADA; not under the EPA.  While the case that brought attention to the law was about pay discrimination based on sex, the proposed change is applicable to compensation decisions of race, color, religion, sex, national origin, age, or disability.

180 Day Rule

Title VII of the Civil Rights Act “prohibits discrimination by covered employers on the basis of race, color, religion, sex or national origin.”  The ADEA added the prohibitions against discrimination based on age and the ADA added prohibitions against discrimination based on disabilities.  Many of the procedural aspects of the three laws are the same.

Title VII originally mandated that an employee had 90 days to file a charge with the EEOC “after the unlawful employment practice occurred.”  That limit was extended to 180 days in 1972 under the Equal Employment Act, bringing it in line with the National Labor Relations Act, the federal law that regulates unions.  In the early 1990s, several attempts were made to increase the statute of limitations to two years to bring it in line with the time period for most civil lawsuits.

In order to file suit against an employer, an employee must first submit a claim to the EEOC within 180 days after the alleged discrimination occurs.  The EEOC then makes a determination as to whether or not probable cause exists to believe discrimination has occurred.  If the EEOC determines discrimination has occurred, it will either pursue reconciliation and/or prosecution of the claim itself or it will issue a "right to sue" letter to the complainant.

On May 29, 2007, the U.S. Supreme Court issued a major ruling on pay discrimination when it decided on the case of Ledbetter v. Goodyear Tire & Rubber Co., Inc.  In its 5-4 decision, the Court ruled against the plaintiff, Lilly Ledbetter, stating that she did not prove her employer, Goodyear, intentionally discriminated against her during the 180 days preceding her complaint.

Ledbetter worked for Goodyear from 1979 until 1998.  In March 1998, Ledbetter submitted a questionnaire to the EEOC alleging certain acts of sex discrimination, and filed an official charge in July of that year.  Following her early retirement in November 1998, Ledbetter filed suit against her former employer, alleging pay discrimination.  The original suit alleged sex discrimination under both the Equal Pay Act of 1963 and Title VII of the Civil Rights Act of 1964.

During her trial in the District Court, Ledbetter introduced evidence that during her time at Goodyear, she had been given poor evaluations because of her sex, resulting in lower pay than if she had been evaluated fairly.  These decisions had a negative impact on her throughout her time with Goodyear resulting in her receiving significantly less than her male colleagues.  Goodyear maintained that the evaluations were nondiscriminatory.  The District Court found in favor of Goodyear on the Equal Pay Act claim, due to the Act’s allowances for pay discrimination due to merit.  However, the court allowed the Title VII claim to proceed and the jury found for Ledbetter, awarding her back pay and damages worth over $3.5 million.  The judge reduced the award to $360,000, due to the congressional cap of $300,000 in damages (the $60,000 was for back pay).

Goodyear appealed the decision, saying that the claim was time barred with respect to all decisions before September 26, 1997, 180 days before her EEOC questionnaire.  They argued that no discrimination occurred after that date.  The Eleventh Circuit Court of Appeals reversed the District Court’s decision, agreeing with Goodyear that pay discrimination cannot be based on any pay decision before the 180 days and that there was insufficient evidence to prove that Goodyear acted with discriminatory intent in making the only two pay decisions within the 180 days--namely a decision in 1997 and 1998 denying Ledbetter a raise.

Ledbetter then filed a petition for a writ of certiorari asking the Supreme Court to review what circumstances a plaintiff may bring an action under Title VII of the Civil Rights Act of 1964 alleging illegal pay discrimination when the disparate pay is received during the statutory limitations period, but is the result of a decision outside the limitations period.

The plaintiff claimed that each paycheck she received following the discriminatory action of denying her a raise was a separate act of discrimination, and therefore all of her paychecks were unlawful, which would place the discriminatory act within the 180 days.  She also claimed that the 1998 decision denying her raise was unlawful because it carried forward intentionally discriminatory disparities from prior years. 

Majority Opinion

The majority opinion, issued by Justice Samuel Alito, found that Ledbetter did not argue that Goodyear acted with discriminatory intent when they issued her checks during the EEOC charging period or when they denied her raise in 1998.  Instead, her claim was that the paychecks were unlawful because they would have been larger if she had been evaluated in a nondiscriminatory manner prior to the 180 days.  The plaintiff also contended that the 1998 decision was unlawful because it “carried forward” the effects of prior, uncharged discrimination decisions. 

The court also reviewed Ledbetter’s argument that precedent for her case was set by the Supreme Court’s decision in Brazemore v. Friday.  In this case, employees of a firm were segregated into a “white branch” and a “Negro branch.”  The branches were merged in 1965, but the black employees were still paid at the disparate old dual pay schedule.  After Title VII was extended to public employees in 1972, the black employees filed suit, saying that “discriminatory difference in salaries should have been affirmatively eliminated.”  In its ruling, the Supreme Court found that when an employer adopts a facially discriminatory pay structure that puts employees on a lower scale because of race, the employer engages in intentional discrimination whenever it issues a check to one of the disfavored employees.

While Ledbetter argues that Brazemore found that every paycheck issued after a discriminatory action occurred is another actionable offense, the Supreme Court actually ruled that this is true only when the paychecks are issued using a discriminatory pay structure.  However, if the paychecks are issued pursuant to a system that is “facially nondiscriminatory and neutrally applied” then the paychecks do not trigger a new EEOC charging period.  The court found that Ledbetter did not provide evidence that Goodyear adopted its performance-based pay system in order to discriminate on the basis of sex or that it was applied to her with discriminatory animus.  Instead, she only alleges that Goodyear discriminated against her in the past and that that act of discrimination reduced the amount of later paychecks.


In a heated dissent read from the bench (a rare practice), Justice Ruth Ginsburg, joined by three of her colleagues stated that the 180 day statute of limitations for Title VII complaints was far too rigid and that the majority “does not comprehend, or is indifferent to, the insidious way in which women can be victims of pay discrimination.”  In the minority’s view, every paycheck should be considered a separate, discrete, and actionable act of discrimination.

Justice Ginsburg argued further that “pay disparities often occur, as they did in Ledbetter’s case, in small increments; only over time is there strong cause to suspect that discrimination is at work.”  The minority also asserted that it often takes more than 180 days after a pay raise decision is made to determine whether they have been unfairly paid.

At the conclusion of her dissent, Justice Ginsburg called on Congress to rectify the majority decision of her colleagues.  “Once again, the ball is in Congress’ court. As in 1991, the Legislature may act to correct this Court’s parsimonious reading of Title VII.”


In the 110th Congress, immediately following the Ledbetter v. Goodyear decision, Chairman of the Education and Labor Committee George Miller (D-CA), issued a release stating that his committee would immediately act to “clarify the law’s intention that the ongoing effects of discriminatory decisions are just as unacceptable as the decisions themselves.”  This was taken to mean that Congress would follow through on Justice Ginsburg’s plea to revisit this issue and amend the law so that each paycheck following a discriminatory pay decision would be considered a new actionable instance of discrimination. 

Two weeks later, Congressman Miller chaired a hearing on “Justice Denied?  The Implications of the Supreme Court’s Ledbetter v. Goodyear Employment Discrimination Decision.”  The hearing included testimony from the plaintiff, Lilly Ledbetter.

On June 22, 2007, Chairman Miller introduced H.R. 2831, the Ledbetter Fair Pay Act of 2007. The House quickly passed the bill but a cloture motion in the Senate failed to garner the 60 votes to allow debate and consideration to continue.

The legislation amends Title VII, the ADA and the ADEA to allow the filing of a claim many years after the original alleged discriminatory pay decision.  Specifically, it makes it an unlawful employment practice with respect to discrimination in compensation under those laws, when a discriminatory compensation decision or other practice is adopted, when an individual becomes subject to a discriminatory compensation decision or other practice, or when an individual is affected by application of a discriminatory compensation decision or other practice, including each time wages, benefits, or other compensation is paid, resulting in whole or in part from such a decision or other practice.


While there is a lot of passion regarding the issue of equal pay, it is important to understand what is really at stake.  Many in the media have contended, and will continue to contend, that the Supreme Court decision is a major blow for discrimination.  However, what the Supreme Court’s ruling and subsequent legislation are really about is whether or not there should be a statute of limitations regarding discriminatory acts. 

In the past, Congress has made clear that there needs to be a time limit on how far into the past an employee can go to file a discrimination suit against the employer.  With the new law, employers will face open-ended exposure for discrimination claims.  This is a heavy burden on businesses that will now be compelled to keep extensive documentation of these decisions. 

Proponents of the legislation asserted that businesses should be held liable for the results of any of their discriminatory acts, even if it means maintaining old documentation.  Every paycheck an employee receives as a result of a discriminatory decision is a discrete action that should be considered a new violation of Title VII and therefore actionable under the law.

Because of the coverage thresholds of Title VII, the ADA and ADEA, the number of small businesses potentially affected by the change is modest.  However, in a compensation discrimination case based on gender, a “larger” small business, subject to both the Title VII and the EPA, is more likely to be subject to a claim based on Title VII rather than EPA because of the evidentiary requirements of the EPA.  Finallyk, while the Ledbetter case was about compensation discrimination based on sex, the bill covers compensation based on race, color, religion, sex, national origin, age, or disability.  .