New law, new scrutiny on pay practices.

Employers have yet another reason to audit their pay, benefits and recordkeeping practices as a new law widens the time period for an employee to file a federal charge alleging pay discrimination on the basis of gender, race, national origin, age or disability.

The Lilly Ledbetter Fair Pay Act of 2009 (Public Law 111-2) overturns the 2007 Supreme Court decision Ledbetter v. Goodyear Tire & Rubber Co., 550 U.S. 618 (2007), in which the Court narrowly interpreted the statute of limitations for a pay discrimination claim to the 180- or 300-day period after the first allegedly discriminatory act of compensation occurred. Under the Court's approach, employees who failed to file a claim within that time period could not make a claim for pay discrimination in future years.

Rejecting this limitation, the Ledbetter Act requires that the period for filing a charge starts with each allegedly discriminatory act of compensation. For instance, an employee who claims pay discrimination on the basis of gender now starts a new time clock for filing a charge of discrimination each time the employee receives an allegedly discriminatory paycheck.

Because compensation decisions may now be challenged many years after the decision was actually made, it is important that employers create appropriate documentation of the nondiscriminatory business reasons for decisions that affect or may affect compensation, especially when such decisions may result in one employee being paid more than another. Of course, employers should review their pay and benefit practices, and any current pay or benefit disparities between employees holding the same job, to verify that decisions are based on appropriate factors such as educational requirements, years of service or other criteria.

The Lilly Ledbetter Fair Pay Act of 2009 applies retroactively to May 28, 2007. The amount of back pay available, however, is limited to two years.

Supreme Court prohibits retaliation against employees who participate in internal investigations.

Employers understand that taking prompt and appropriate action, including conducting investigations, is an essential component of addressing allegations of discrimination under state and federal laws. A recent Supreme Court decision emphasizes the need for employers to carefully review and document any employment actions involving employees who have participated in such an investigation.

In Crawford v. Metropolitan Government of Nashville and Davidson County, Tennessee, 555 U.S. ____, 2009, the Supreme Court clarified that employees who speak out about discrimination as part of an internal investigation, whether of their own initiative or in answering questions during the investigation, can be protected under the antiretaliation provision of Title VII of the Civil Rights Act of 1964. While employers may have generally assumed some protections for such employees, the Court definitively stated that an employee can "oppose" a discriminatory act, and thus invoke the antiretaliation protections of Title VII, by describing inappropriate behavior in response to a question, and that the employee need not himself or herself have initiated the discussion or come forward actively with a complaint.

Following this decision, employers should not shy away from conducting internal investigations into allegations of discrimination, as a prompt and appropriate investigation can provide the employer with an affirmative defense in response to a later claim. Employers should, however, be cognizant of the broad reach of Title VII's antiretaliation protections and review their applicable policies, employment actions and documentation of the reasons for the employment actions, in light of this expansive coverage.