Preparing for Fair Pay Legislation - Part 4

This morning, at 10:20, in the East Room of the White House, President Obama signed the Lilly Ledbetter Fair Pay Act of 2009. Unlike some pundits and legislators, who naively proclaimed the bill would secure fair pay for all, the President's signing statement emphasized that this was "an important step -- a simple fix to ensure fundamental fairness for American workers" but that it was "only the beginning."

As I have explained, the bill changes how the statute of limitations operates when an employee alleged compensation discrimination. It doesn't change the statute of limitations as such. It changes how we have (under the Ledbetter decision) counted when the statute of limitations starts. So, any federal compensation discrimination claim must still (at least in Tennessee) be filed within 300 days of the "unlawful employment practice" (the words Title VII, the ADEA and ADA use). This bill redefines what constitutes the unlawful employment practice for pay discrimination claims. Whereas under Ledbetter, in a Title VII claim, the pay setting decision was the only unlawful employment practice, under this bill, the violation re-occurs with every check that includes a discriminatory payment.

That has long been how the statute of limitations worked under the Equal Pay Act ("EPA"), a statute I discussed in a post a vew days ago. Nothing in Ledbetter changed how the statute of limitations worked under the EPA nor does this bill. Employees can and do sue under the EPA and Title VII in the same suit.

So what will be the effect? If you, as I, believe heightened attention to an issue tends to generate lawsuits (the "lawyers are vultures" theory), then we will see an increase in compensation discrimination claims. And with the way the news media is focused on the economy right now, this bill may not generate any new litigation at all (I am being somewhat facetious).

As a practical matter, the statute of limitations for Title VII will roughly cover the same period of time already covered by the EPA statute of limitations. ("Roughly" is about the right word, too.) The ADEA and ADA changes, of course, are more pronounced but I can count on one hand the number of compensation discrimination claims I have read that are based upon age and disability.

As I previously mentioned, in Tennessee we have (and have had since 2006) a potentially unending statute of limitations for compensation discrimination claims. That hasn't seemed, so far as I have noticed, to lead to a flood of new discrimination lawsuits alleging pay disparites. So if Tennessee is a microcosm of the country, I lean toward being skeptical about the practical effect of this bill.

Of course, it won't hurt to be prepared. More on that later.

New Year’s Resolutions for Employers

If you are the sort of person that makes New Year's resolutions, perhaps you might want some hints as to some of the ways you, as a Tennessee employer, can help make 2009 less risky, from an employment litigation perspective.

Everyone's New Year's wish would be to avoid being sued but in today's climate, that is unrealistic. It takes very little money ($350.00, currently) to file a federal court lawsuit - much less in most Tennessee courts - and there are a good number of attorneys who will front that cost for an employee. In some instances, the only thing between you and a lawsuit is the retainer many attorneys charge before filing a suit. Pretty much any adverse employment action can be the basis for some kind of discrimination or retaliation claim even if it is not ultimately meritorious. It isn't as if there is some magical screening device to make sure only potentially valid suits get filed.

Now that I have your attention, what I tell folks is that while you can't always prevent a lawsuit, there are things that can be done to help increase the likelihood of getting the lawsuit dismissed early in the litigation process. Best of all, most of these things won't cost you anything (and if they do it is money well spent). So, here are a few resolution suggestions with links to several "best practices" my partners and I put together to give employers some things to think about. I am not going into important details here because that is supplied on the linked pages.

Have an employee handbook that accurately reflects your employment practices. Employees should acknowledge receipt of the handbook in writing and this page should include a statement where the employee acknowledges employment is "at will" and that the handbook is not a contract of employment for a definite term.

Have a policy (in your handbook) prohibiting harassment of any kind. Train all your employees about your harassment policies.

If you receive a complaint about sexual harassment or other illegal harassment, investigate it immediately.

If you get sued or if you receive a charge from the EEOC or THRC, place a "litigation hold" on your relevant documentation and electronic information.

Have sound hiring practices which rely upon accurate job descriptions, train you hiring managers, use structured interviews and document the reason for every decision (including for employees who are not hired).

Establish and follow a written compensation policy that addresses all the factors that go into a pay increase (or decrease) decision, which compares (and only compares) employees in similar or the same jobs, and includes a contractually imposed limitations period.

Have an Employee Technology Use policy that addresses all devices, tells employees you have the right to monitor use, forbid illegal activity, and ensure employees observe confidentiality requirements of customers.

Properly manage employee absenteeism and tardiness. Have a sound policy, keep careful notes, know which laws you must observe (i.e., based upon employee numbers) and retain all correspondence from employees and physicians relating to absences.

Take simple steps to avoid entanglement with Employee Benefit (ERISA) problems.

As I said, following these resolutions won't necessarily keep you out of court or avoid the EEOC altogether but if followed, they will help ease the financial pain such an encounter normally causes.

And finally, have a Happy New Year.