Nunc Pro Tunc: Retroactivity of the Lilly Ledbetter Fair Pay Act
At the signing ceremony for the Lilly Ledbetter Fair Pay Restoration Act, President Obama said that the amendment to Title VII (and other antidiscrimination laws) would be “too late” for Ms. Ledbetter herself (transcript of remarks here). But what about others in the shoes of Lilly Ledbetter, individuals who have been discriminatorily underpaid for years? Can they now sue or is the statute of use only for victims of discrimination from now on? In other words, is the statute retrospective or prospective only?
Answering this question involves both statutory and constitutional analyses. On the former question, the text is simply declaratory: “an unlawful employment practice occurs, with respect to discrimination in compensation in violation of this title, when a discriminatory compensation decision or other practice is adopted, when an individual becomes subject to a discriminatory compensation decision or other practice, or when an individual is affected by application of a discriminatory compensation decision or other practice, including each time wages, benefits, or other compensation is paid, resulting in whole or in part from such a decision or other practice.”
This would seem to mean that anyone who receives a paycheck that is lower than it would have been had a raise or promotion not been discriminatorily denied ten or even twenty years ago can file a timely charge. Admittedly, backpay recovery is capped at two years before the charge filing, but the suit itself seems permissible.
Another provision of the Fair Pay Act confirms that congressional intent: “This Act, and the amendments made by this Act, take effect as if enacted on May 28, 2007,” which is the day before the Supreme Court handed down Ledbetter. The statute, then, attempts to eradicate Ledbetter root and branch – as if it were never the law. And to confirm that view, the statute also provides that it shall “apply to all claims of discrimination in compensation . . . that are pending on or after that date.” Any lingering doubt about the congressional intent is laid to rest by the Senate’s rejection of a proposed amendment of Senator Isakson (R-Ga.) which would “limit the application of the Act to claims resulting from discriminatory compensation decisions, that are adopted on or after the date of enactment of the Act.”
That means the only question is the constitutional one: can Congress revive a dead claim by a retroactive enactment? The question arises because, to use the words of United Air Lines, Inc., v. Evans, 431 U.S. 553, 558 (1977) (upon which Justice Alito heavily relied in Ledbetter), “A discriminatory act which is not made the basis for a timely charge is the legal equivalent of a discriminatory act which occurred before the statute was passed. It may constitute relevant background evidence in a proceeding in which the status of a current practice is at issue, but separately considered, it is merely an unfortunate event in history which has no present legal consequences.” Thus, the Fair Pay Act purports to revive claims which, by virtue of Title VII’s limitations were dead under Ledbetter.
Can Congress do that? Yes. Employment discrimination types tend to think of Landgraf v. USI Film Prods., 511 U.S. 244, 272 (1994), as the source of retroactivity wisdom, but that decision focused on whether Congress intended the 1991 Civil Rights Act to be retroactive (answer: mostly, no). For our purposes, much more in point is Plaut v. Spendthrift Farm, 514 U.S. 211 (1995), which involved very analogous facts. In that case, Congress legislatively overruled the Supreme Court’s holding as to the limitations period for 10b-5 claims and even tried to revive “dismissed causes of action.” The Plaut Court held that separation of powers principles prevented Congress from resurrecting a federal suit in which a final judgment had been entered (which would mean that President Obama was correct that the new law could not revive Ms. Ledbetter’s own claims even though that would be permissible under its language).
However, the Plaut Court was receptive to Congress changing the law for pending cases, stating that any bar on prescribing rules of decision for the judiciary in pending cases “does not take hold when Congress "’amend[s] applicable law.’" The clear message is that Congress’s extension of the new limitations period to cases that are “pending on or after” May 28, 2007 is permissible. Plaut, however, explicitly avoided deciding when retroactive legislation would violate the due process clause, so we can anticipate such a challenge to the first efforts to apply the new law to a case that would have been barred by the Ledbetter decision. Given both that only a limitations period (not a law governing primary human conduct) is at stake and the near-unanimity of the lower courts on the “paycheck” rule pre-Ledbetter, it will be hard for most defendants to plausibly argue that their “settled expectations” were disrupted by the Fair Pay Act.
The consequences of the new statute, therefore, could be huge. This is especially true in the present environment of massive job loss. Current employees are notoriously reluctant to file charges over relatively minor acts of discrimination, but where a employee has been terminated, the desire not to make waves typically evaporates. Further, the claim question will be immediate for any individual offered a severance package coupled with general release. Attorneys representing employees in these situations would be well advised to explore pay history with their clients. They might encourage their clients to seek compensation information from their co-workers (many of whom will also have been laid off).
Hat tip to Ed Hartnett of Seton Hall who put me on to Plaut.