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The Lily Ledbetter Fair Pay Act recently caused two courts to reverse themselves and allow employees to proceed with discrimination claims that the courts previously dismissed as untimely. The Ledbetter Act permits employees to file claims based on an earlier compensation decision if the decision adversely affects the employee within the applicable period for filing a charge with the EEOC. In these cases, the courts concluded an employer's failure to answer a request for a pay increase, and another employer's conversion of its defined benefit pension plan to a cash balance pension plan, each constituted allegedly discriminatory compensation decision that adversely impacted the employees' "wages, benefits or other compensation" each time the employee was paid, thereby rending the employee's respective EEOC charges timely.

Failure to Answer a Request for a Raise

The first case, Mikula v. Allegheny County, 2009 WL2889742 (3d Cir. Sept. 10, 2009), demonstrates that employers should beware when ignoring or denying requests for increased compensation, particularly when made in conjunction with claims of illegal discrimination. In 2001, the county hired Mikula as a grants coordinator. By 2004, Mikula discovered she was earning approximately $7,000 less than a male manager. In 2005, Mikula requested a salary increase so that she would be paid the same or more than the male manager, to which the county never responded. In 2006, Mikula filed a complaint with the county, asserting that her lower pay was due to gender and age discrimination. The county responded with a letter in August 2006, stating that Mikula's discriminations claims were unfounded. In April 2007, Mikula filed a charge of discrimination with the EEOC.

Before the Ledbetter Act was passed, the district court dismissed Mikula's claim on the grounds that her 2007 EEOC charge was untimely. The court reasoned that Mikula's requests for a raise occurred more than 300 days before she filed her EEOC charge and the county's 2006 letter was not a pay "decision or other practice" because it merely provided the results of the county's investigation. The court of appeals affirmed the decision shortly after the Ledbetter Act was passed.

Nonetheless, the court of appeals later granted Mikula's request for reconsideration based on the Ledbetter Act. The court ultimately reversed its earlier decision and concluded that: (1) the county's failure to answer Mikula's request for a raise constituted a compensation "decision," (2) the decision adversely affected Mikula each time she received a paycheck, and (3) under the Ledbetter Act, Mikula's EEOC charge was timely as to each paycheck she received after June 26, 2006 (300 days before she filed her EEOC charge). The court made clear, however, that the county's 2006 letter did not constitute a "compensation decision or other practice" because the court did not want to discourage employers from responding to such complaints. Rather, it was the county's earlier failure to respond to Mikula's requests for increased compensation that amounted to a compensation decision that adversely affected Mikula each time she was paid and made her EEOC charge timely.  

Changing the Rate of Accrual for Pension Benefits

The second case, Tomlinson v. El Paso Corp., 2009 WL 2766718 (D. Colo. Aug. 28, 2009), demonstrates the Ledbetter Act's impact on compensation other than wages. In this case, the employer converted its defined benefit pension plan into a cash balance pension plan in 1997, and included a five-year transition period. Tomlinson filed a charge with the EEOC in 2004, claiming that the manner in which his pension benefits accrued under the cash balance plan discriminated against him because of his age.  

The court dismissed Tomlinson's claim on the grounds that his 2004 EEOC age discrimination charge was untimely. Nonetheless, after the Ledbetter Act was passed, the court reconsidered its earlier decision and determined that Tomlinson's EEOC charge was timely.  

The court initially ruled that because Tomlinson had not yet retired when he filed his EEOC charge, the case was not controlled by a Supreme Court decision holding that claims relating to pension payments arise with the date of the first payment. Instead, the court ruled that the case involved a change in the rate at which Tomlinson's retirement benefits were earned. Viewed in this context, the court concluded that Tomlinson was adversely affected by the decision to change his benefit accrual rate each time he received a credit toward his pension benefit. Therefore, the court held that since Tomlinson filed his EEOC charge within 300 days of receiving an allegedly discriminatory credit toward his pension benefit, his claim was timely under the Ledbetter Act.

Significance of Mikula and Tomlinson

These cases are significant because: (1) they show that employer decisions (which can include a failure to act) that occurred years earlier can make an EEOC charge timely if the decisions continue to adversely affect an employee's "wages, benefits or other compensation," and (2) the Ledbetter Act can apply to decisions that affect the rate at which pension benefits accrue.