Court Upholds Fair Pay Act’s Retroactive Application

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The Ledbetter Fair Pay Act was signed into law on January 24, 2009. The Act amends the Equal Pay Act of 1963 and Title VII of the Civil Rights Act of 1964, which makes unequal pay between employees who perform equal work unlawful.  Among other things, the Act overrules Ledbetter v. Goodyear Tire Co., decided by the U.S. Supreme Court on May 29, 2007.  Thus, the Act provides an effective date “as if enacted on May 28, 2007.”

The primary impact of the Fair Pay Act is the statute of limitations for unequal pay cases begins with the last paycheck received by the aggrieved employee, creating the potential for an unlimited and unforeseen amount of unequal pay disputes. 

On February 4, 2009 the District Court of New Jersey decided Gilmore v. Macy's Retail Holdings, believed to be the first case in the country to recognize the applicability of the Fair Pay Act in unequal pay cases under Title VII.  In this case, the plaintiff filed a charge with the Equal Employment Opportunity Commission (EEOC) on July 7, 2005 on the basis of alleged race discrimination. The court held that the Fair Pay Act “takes effect as if enacted on May 28, 2007 and applies to all claims of discrimination under Title VII that are pending on or after that date.”

The Fair Pay Act has enormous implications for employers, as unequal pay cases can now be brought by any employee alleging pay discrimination from the first day of hire regardless of how far back that may be. Also, pending claims can be retroactively be amended to allege pay discrimination as if Ledbetter v. Goodyear Tire Co. never existed.