New Developments Will Expand the Scope of Employee Lawsuits

January 30, 2009

Two recent actions, one by President Obama and one by the Supreme Court, will impact employers. Although unrelated, both actions will expand the scope of employee lawsuits.

NEW LAW INCREASES TIME PERIOD TO FILE PAY DISCRIMINATION CLAIMS

Yesterday, President Obama signed his first significant piece of employment legislation, the Lilly Ledbetter Fair Pay Act of 2009. The Act overturns a 2007 Supreme Court decision, Ledbetter v. Goodyear Tire & Rubber Co., which curtailed the time period (known as the statute of limitations) to bring pay discrimination claims. The Act re-starts the statute of limitations “clock” each time an employee receives “wages, benefits or other compensation” based in whole or in part on a discriminatory action. The new law applies to pay discrimination based on race, color, religion, sex, national origin, age, and disability.

How does this new law affect employers? Suppose Jill believes she has been paid less than Jack (because he is a male) for the last 10 years. Jill claims that her paychecks are the fruit of the original discriminatory decision made 10 years ago to pay Jack more than her. Jill can now file suit within 300 days (or 180 days if her state does not have a civil rights agency) from the date of her last paycheck. Jill’s employer will have to defend the decision made 10 years ago to pay Jill less than Jack.

Employers who commit pay discrimination are liable under federal law for up to two years of back pay, emotional distress damages, punitive damages, and attorneys’ fees. Additionally, the Act is retroactive, applying to all claims of pay discrimination made from May 28, 2007, forward.

Pay discrimination claims may become more prevalent. In light of this change in the law, employers should consider documenting the basis for pay decisions, similar to the way discharge decisions are documented. Without this documentation, the practical difficulty is that management (assuming the same decision-makers still work for your company) may not remember why Jack and Jill were paid differently so many years ago. As a result, the need for accurate and complete documentation increases. Furthermore, Plaintiff attorneys may begin requesting pay and compensation data beginning at the date of hire.

SUPREME COURT EXPANDS SCOPE OF RETALIATION CLAIMS

In the last few years, the Supreme Court repeatedly has expanded the law to protect employees who make complaints of discrimination, harassment, or other illegal activity. Earlier this week, the Supreme Court unanimously ruled that employees who voluntarily cooperate with an employer’s internal investigation of discrimination or harassment are protected, even if the employee did not initiate the investigation and had not filed a formal discrimination charge with the EEOC or a state agency.

In Crawford v. Metropolitan Government of Nashville and Davidson County, Vicky Crawford participated in her employer’s internal investigation of another employee’s sexual harassment complaint. During the investigation, Crawford volunteered that she also had been sexually harassed in the workplace by the targeted officer. Crawford was later terminated for embezzlement. Crawford, however, claimed she was terminated for reporting her harassment experience during the investigation.

Federal law makes it unlawful to retaliate against an employee who has opposed a discriminatory practice or filed a charge, testified, assisted, or participated in an investigation, proceeding, or hearing. In the Crawford case, the lower courts narrowly held that the anti-retaliation provision demanded “active, consistent” opposition activities. Crawford did not meet that requirement because she had not initiated any complaint prior to the investigation--she simply answered her employer’s questions.

The Supreme Court disagreed, ruling the federal anti-retaliation provision extended protection to employees who spoke out about discrimination, not just on their own initiative, but also in answering questions during an internal investigation. The Court reasoned the term “oppose” went beyond “active, consistent” behavior and applied to employees who merely disclosed discrimination without taking any further action. Thus, an employee can “oppose” discrimination by responding to someone else’s questions, as well as by initiating a complaint.

So now what? The number of employees protected by the federal anti-retaliation provision has dramatically increased. Therefore, when making adverse employment decisions, employers should be cognizant that potential retaliation claims could be brought by passive participants in discrimination or harassment investigations, as well as those employees whose complaints triggered the investigation or who filed a discrimination charge or lawsuit.

Please feel free to contact any member of the Frost Brown Todd Labor and Employment Department with questions. Additionally, the Labor and Employment Department will be hosting seminars at various locations to discuss these and other developments in the law. Please click here for further information.

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