On January 29, 2009, President Barack Obama signed the Lilly Ledbetter Fair Pay Restoration Act (Act). The Act overturns the U.S. Supreme Court's 2007 decision in Ledbetter v. Goodyear Tire & Rubber Co. and makes it easier for employees to recover on claims for historical discriminatory disparities in pay and benefits. Under the Act, the charge-filing periods of 300/180 days will be triggered each time compensation is paid pursuant to a discriminatory compensation or practice.

In Ledbetter, a female supervisor at Goodyear Tire & Rubber Company claimed that she had been paid less than similarly situated males during the 19 years that she worked for the company. Ledbetter didn't discover the pay discrepancies until the end of her tenure at the company.

The Supreme Court ruled that Ledbetter's pay claim was untimely because she did not file a charge of discrimination with the Equal Employment Opportunity Commission within the statutory time period. The court held that charge-filing period started when the employer made the discriminatory decision regarding her pay. Based on this starting point, the court ruled that Ledbetter filed her charge of discrimination years after the deadline had passed.

The Act restarts the time frame for filing a charge (300 or 180 days) each time an individual receives a discriminatory paycheck. Specifically, the Act amends several federal civil rights laws (including Title VII, the ADEA, the ADA and the Rehabilitation Act) to now provide that an unlawful employment practice occurs when a discriminatory compensation decision or other practice is adopted; when a person becomes subject to the decision or practice; or when a person is affected by an application of the decision or practice, including each time wages, benefits or other compensation is paid.

The act is retroactive to May 28, 2007, and applies to all claims of pay discrimination pending on or after that date.

Accordingly, under the Act, compensation decisions made in the past will now be challengeable, so long as their effect continues to be reflected in a pay check or benefits payment that is delivered within the applicable charge-filing period. Therefore, employers should document their wage payment and benefit decisions and be prepared to defend these decisions for years after they are implemented.