Lilly Ledbetter Fair Pay Act: Definition, History, Impact

What Is the Lilly Ledbetter Fair Pay Act?

The Lilly Ledbetter Fair Pay Act of 2009 is a law enacted by Congress to bolster worker protections against pay discrimination. The Act allows individuals facing pay discrimination to seek rectification under federal anti-discrimination laws.

The law clarifies that discrimination based on age, religion, national origin, race, sex, and disability will “accrue” every time the employee receives a paycheck that is deemed discriminatory. It was the first bill President Barack Obama signed into law and is one of a number of federal laws designed to protect the rights of workers.

Understanding the Lilly Ledbetter Fair Pay Act

The Lilly Ledbetter Fair Pay Act reinstated the protection against pay discrimination that had been removed by the Supreme Court in Ledbetter v. Goodyear Tire & Rubber Co. in 2007. It restored previous protections regarding the equal treatment of employees, most notably Title VII of the Civil Rights Act of 1964. The 2009 statute clarified that any inequitable payment is unlawful, even if it is the result of a pay decision made in the past.

The act is named in honor of Lilly Ledbetter, a former manager at a Goodyear Tire & Rubber Co. plant in Alabama. After Ledbetter discovered that her male peers were receiving substantially higher pay for similar roles, she filed a complaint with the Equal Employment Opportunity Commission (EEOC).

In 1998, Ledbetter filed an equal-pay lawsuit, alleging pay discrimination on the basis of sex under Title VII of the Civil Rights Act of 1964. The trial jury awarded her back pay and more than $3.3 million in compensatory and punitive damages.

However, the Supreme Court upheld a lower court ruling that said claims like Ledbetter’s had to be filed within 180 days of an employer’s decision to pay a worker less, even if the worker didn’t learn about the unfair pay until much later. As a result, Ledbetter never collected any kind of settlement from Goodyear.

The ruling, and a dissenting opinion by Justice Ruth Bader Ginsburg, in which she wrote, "once again, the ball is in Congress's court," ignited activist groups, who saw the court's decision as a setback for women and civil rights.

This led to the creation of a bill that bore Ledbetter's name and gives employees the right to file suit 180 days after the last pay violation and not only 180 days after the initial pay disparity. In effect, each paycheck restarts the 180-day countdown to file a claim.

Special Considerations

One documented area of pay discrimination is the pay gap between men and women. In 2021, women’s annual earnings were 83.7% of men’s, according to data published by the U.S. Census Bureau.

In addition, many experts believe that the practice of prospective employers asking job candidates about salary history furthers discrimination and the pay gap. In recent years, a growing number of states and municipalities have addressed this issue.

As of February 2022, 21 states (as well as Washington, D.C., and Puerto Rico) have adopted measures that prohibit some employers from asking about salary history.

Prohibiting employers from asking about salary history seems to work. According to a study authored by economists at the Boston University School of Law, women's pay rises 8% to 9% under salary history bans, while the pay of Black workers increases 13% to 16%.

The Bottom Line

The Lily Ledbetter Fair Pay Act is just one of the many advances made for women in the gender pay gap, but there is still a ways to go. The gender pay gap still exists. The Lily Ledbetter Fair Pay Act serves as one of the protections that those who are discriminated against can rely on to help even out their pay.