Lilly Ledbetter Fair Pay Act Retroactively Applied

Contributed by Allison Chaplick

In March 2011, the Seventh Circuit Court of Appeals allowed three white police officers to pursue claims of race discrimination under Title VII, even though it was determined that the lower court had properly ruled against allowing the claims to be pursued. How did the district court get something right, yet still be reversed? The answer is simple, yet complex: the law changed twice in the middle of a case.

Here’s how it all played out:

In Groesch v. City of Springfield, the district court initially decided for the officers, saying that each paycheck that the white officers received that was less than that of a similarly situated African American police officer amounted to “a separate and distinct discriminatory act” from which the plaintiffs could bring separate pay discrimination claims.

Then, in May 2007, the U.S. Supreme Court decided Ledbetter v. Goodyear Tire & Rubber Co. In Ledbetter, the Supreme Court rejected the “paycheck accrual” rule, concluding that the statute of limitations begins to run in pay discrimination cases when the discriminatory practice is adopted, and not each time an individual receives a paycheck. Based upon Ledbetter, the city filed another motion, and this time, the district court dismissed the officers’ claims based upon the Supreme Court’s rejection of the “paycheck accrual” rule. The police officers appealed, and while the case was pending before the Seventh Circuit Court of Appeals, the law was changed again.

Congress strongly disagreed with the Ledbetter decision, and enacted the Lilly Ledbetter Fair Pay Act of 2009. The Act even expressly provided that it should be applied retroactively to all claims pending on May 28, 2007–the day of the Supreme Court’s decision–or after. Because the police officers’ appeal had not yet been decided by the Seventh Circuit, the Ledbetter Act, and not the Ledbetter case, applied. After this legal “flip-flop,” the Seventh Circuit concluded that the police officers’ Title VII pay discrimination claims were covered by the Ledbetter Act because they alleged a “discriminatory compensation decision” that was made in 2000, and that their claims were based upon discriminatory payment of wages resulting from that decision.

The Ledbetter Act amends Title VII of the Civil Rights Act of 1964 by providing that the statute of limitations for filing a charge of discrimination begins with each paycheck affected by a discriminatory decision. Under the Ledbetter Act, Title VII now says that “unlawful discrimination” occurs when “(1) a discriminatory compensation decision or other practice is adopted; (2) an individual becomes subject to a discriminatory compensation decision or other practice; or (3) 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.” 42 U.S.C. §200-e5(e)(3)(A)(emphasis provided).

The scope of Title VII discrimination claims brought under the Lilly Ledbetter Fair Pay Act of 2009 is now very broad and the Seventh Circuit has interpreted this legislation to give it full force and effect. Employers must carefully evaluate their compensation and benefit policies and decisions.