Legal Definitions - Lilly Ledbetter

The term Lilly Ledbetter refers to both a pivotal individual in U.S. labor law and the landmark legislation named after her: the Lilly Ledbetter Fair Pay Act of 2009.

Lilly Ledbetter was a supervisor at a Goodyear Tire & Rubber Co. plant who, towards the end of her nearly two-decade career, discovered she had been paid significantly less than her male counterparts for years. She sued her employer, alleging gender-based pay discrimination under Title VII of the Civil Rights Act of 1964.

Her case eventually reached the U.S. Supreme Court (Ledbetter v. Goodyear Tire & Rubber Co., Inc.). In 2007, the Court ruled against Ledbetter, stating that a complaint for pay discrimination had to be filed with the Equal Employment Opportunity Commission (EEOC) within 180 days (or 300 days in some jurisdictions) of the initial discriminatory pay decision. The Court held that each subsequent discriminatory paycheck did not "restart the clock" for this filing deadline. Because Ledbetter had not filed her complaint within 180 days of the original discriminatory pay decisions that set her lower salary, her lawsuit was deemed untimely, even though the effects of that discrimination continued with every paycheck she received.

Recognizing that employees often do not discover pay discrimination until long after the initial discriminatory decision has occurred, Congress passed the Lilly Ledbetter Fair Pay Act of 2009. This legislation effectively overturned the Supreme Court's decision. The Act clarifies that for discriminatory compensation practices, the 180-day (or 300-day) statute of limitations "restarts" with each new paycheck or other compensation received that is affected by the discriminatory decision. This means that a discriminatory compensation claim can be filed as long as it is within 180 or 300 days of the most recent discriminatory paycheck.

It is important to note that the Act specifically applies to claims of discriminatory compensation and practices affecting compensation. It does not extend the time limit for filing claims related to other distinct discriminatory acts, such as discriminatory hiring, promotion denials, or termination decisions.

Here are some examples illustrating the application of the Lilly Ledbetter Fair Pay Act:

• Ongoing Wage Gap: Imagine Sarah, a marketing manager, worked at a company for 10 years. Five years into her tenure, she started receiving smaller annual raises than her male colleagues, despite equal performance. She only discovered this disparity in her tenth year when a new HR system revealed salary histories. Under the original Supreme Court ruling, her claim would have been time-barred for anything beyond the initial 180 days after the first discriminatory raise. However, thanks to the Lilly Ledbetter Fair Pay Act, each paycheck she received reflecting that lower raise "restarted the clock," allowing her to file a claim even years after the initial discriminatory decision was made, as long as she filed within 180 days of her last discriminatory paycheck.

• Discriminatory Retirement Contributions: David, an accountant, worked for a firm for 15 years. He later discovered that for the last eight years of his employment, his employer had been making significantly lower contributions to his 401(k) retirement plan compared to younger colleagues with similar roles and experience, based on an ageist policy. Even though the discriminatory policy began eight years prior, each paycheck that reflected the lower retirement contribution (a form of compensation) would restart the statute of limitations under the Lilly Ledbetter Fair Pay Act. This allows David to pursue a claim for the ongoing impact of the discriminatory compensation practice.

• Limitation - Discriminatory Hiring: Maria applied for a job as a senior engineer five years ago and was rejected, she believes, due to her ethnicity. She recently found compelling evidence that the company systematically discriminated against minority applicants at that time. While this was a discriminatory act, the Lilly Ledbetter Fair Pay Act would not extend the time limit for Maria to file a claim for discriminatory hiring. The Act specifically addresses ongoing discriminatory compensation practices, not discrete acts like a one-time hiring decision, even if that decision had long-term financial implications.