Legislation passed by a House panel recently that would reverse a spring Supreme Court decision narrowing the time period employees have to file suit claiming discrimination based on their wages has “serious implications for employers and insurers,” according to a Philadelphia labor and employment lawyer.
And, it also has implications for pension plans, the American Benefits Council said in a letter to the Committee a day before the bill passed.
The legislation, H.R. 2831, the Lilly Ledbetter Fair Pay Act, would reverse a 5-4 Supreme Court’s decision, May 29th in Ledbetter, and establish a paycheck rule for filing wage discrimination cases under the Civil Rights Act.
The legislation would consider each paycheck to be a separate discriminatory act if the paycheck is less than it otherwise would have been due to the employee’s sex, race, color, religion, or national origin, according to Debra Friedman, a lawyer in the Philadelphia office of Cozen & O’Connor.
The bill was passed, 27-20, by the House Education and Labor Committee June 27th. It is unclear when it will be considered by the full House. But, a committee official said Sen. Edward Kennedy, D-Mass., chairman of the Senate Health, Education, Labor and Pensions Committee, plans to introduce similar legislation soon.
Ms. Friedman said the bill, if enacted, would establish a rule that considers each paycheck to be a separate discriminatory act if the paycheck is less than it otherwise would have been due to the employee’s sex, race, color, religion or national origin.
Accordingly, she said, employees could file a pay discrimination claim many years after a discriminatory pay decision was made.
Ms. Friedman also said the bill would extend this protection to employees filing pay discrimination claims under federal law on the basis of age or disability. She said that proponents of the legislation claim that it addresses the realities of pay discrimination by broadening the time period for filing a claim.
“If passed, the potential implications for employers and insurers are serious,” Ms. Friedman said. “The legislation essentially eliminates the statute of limitations for pay discrimination claims in many circumstances, thereby increasing the pool of potential claims that can be made.”
She explained that when those claims are filed, employers must defend stale claims. “Witnesses may be hard to locate in our mobile workforce, and given the passage of time, may have died,” Ms. Friedman said. “Likewise, employer records that may shed light on the reasons for old pay decisions may have been destroyed or lost.
“As a result, passage of this legislation may create a great boon for plaintiff’s attorneys, but most certainly would present challenges for employers and insurers,” Ms. Friedman added.