“Zombie Pay Claims” and What Your HR Department Should Know About the Lilly Ledbetter Fair Pay Act.

Is it ever too late for an employee to sue their company for acts of payment discrimination?

The rule of “you snooze, you lose” is largely true. One of the most important deadlines in a lawyer’s mind is the Statute of Limitations, otherwise known as the last possible day one can file their lawsuit before it is time-barred and the claims effectively die. When one of my clients is threatened with a lawsuit, one of the first questions I ask is “When did this event happen to the plaintiff?” because there is often a good chance that the plaintiff has waited too long to bring a lawsuit, their claim is already “dead-in-the-water,” and the client doesn’t have to incur unnecessary legal fees to defend or negotiate this claim.

When will the time run out for an Equal Pay claim? According to the Civil Rights Act of 1964, an employee must bring their equal-pay claim regarding payment discrimination (employee receives unequal pay for equal work, because of their gender or race) within 180 days of the discriminatory event/act. Statutes of limitation are important because they bring a sense of finality and permanent closure to a matter. A person’s right to sue doesn’t live on forever, and if they failed to bring their equal-pay claim within 180 days of the discriminatory event, then the claim passed away.

President Obama changed this concept with the first bill he signed into law on January 29, 2009. From an employer’s perspective, the Lilly Ledbetter Fair Pay Act created a “zombie” claim for employees that can repeatedly rise from the grave and continually haunt the company for years.

Why is it considered a “Zombie” Claim? Because the Lilly Ledbetter Fair Pay Act allows a current employee’s Equal Pay claim to be repeatedly resurrected from the dead — no matter how long ago the discrimination actually took place — every time they receive a paycheck.

For example: Eleanor Employee has worked at ACME Inc. for several years as a plant manager. On March 1, 2000, Eleanor learns that the ACME executives granted only the male managers a pay raise, but did not grant any raises for the female managers. Eleanor continued to work for ACME, but over the years she became increasingly frustrated by the fact her male peers have been earning so much more than her (for doing the same job) and she decided to file an Equal-Pay claim against ACME on December 1, 2005 alleging pay discrimination.

Before Lilly Ledbetter: Eleanor can NOT bring her claim against ACME; she waited more than 180 days from the date of the discriminatory event, and her claim against ACME had been dead for more than 5 years.

After Lilly Ledbetter: Eleanor can bring her claim against ACME, because she brought her claim within 180 days from the date of her last paycheck.

What this means: Every time the current employee receives a paycheck, the clock “resets” and the 180-day timeline to bring an Equal-Pay claim begins anew – regardless of when the employer’s discriminatory act took place!

Practical Concerns:

1. Old Claims (May) Never Die. The Lilly Ledbetter Fair Pay Act is retroactively applicable, so even though it was officially enacted in 2009, it can apply to discriminatory acts that occurred before January 29, 2009 to your current employees.

2. Company Ghosts from the Past can haunt the Current Executives. There are concerns that a retiring employee could bring a claim against a company now led by executives who had nothing to do with the past discrimination. Even if the “bad” individual who was responsible for the discriminatory acts is no longer with the company, the affected employees who are still around may still be able to bring a claim against the company.

3. Does Anyone Remember What Actually Happened? A company’s ability to defend against these claims can be greatly compromised by lack of evidence. Memories can fade, and the facts surrounding a situation can disappear if not properly recorded.

What Can My Company Do? Companies should keep detailed employee records for as long as the employee works for the company, and specifically outline the criteria required for pay increase eligibility. Regularly scheduled employee reviews are recommended, and Employers should clearly inform the employee about the evaluation process (e.g. Has the employee met their goals? Are they performing below the stated expectations?), explain whether the employee is eligible for a pay increase or not, summarize this process in writing, and have the employee sign and acknowledge the points addressed in their employee review session. And of course, the Company must enforce these policies consistently and evenly among the entire workforce, without regard to the employee’s race or gender. *

*This is by no means a complete list of recommended steps, and is not intended as specific legal advice. Nothing in this article constitutes legal advice, and no attorney-client relationship, or other professional relationship, can be formed through the use of this article. It is best to seek the advice of an attorney to discuss the specific details of your company’s current practices and future preventive needs.

Article Submitted by Nicole Dickey, Attorney at Law (NC) with Byrne, Davis & Hicks, P.C.

Best regards
und viele Grüße aus Charlotte
Reinhard von Hennigs