The first piece of legislation that Obama signed into law was a bill named after Ledbetter that would make it easier for workers to sue for pay discrimination.
Obama called the bill “a simple fix to ensure fundamental fairness for American workers.” He said that women are “losing thousands of dollars in salary income and retirement savings” because of pay inequities.
“In this economy, when so many folks are already working harder for less and struggling to get by, the last thing they can afford is losing part of each month’s paycheck to simple and plain discrimination,” Obama said.
Ledbetter, a former supervisor at a Goodyear Tire & Rubber plant in Alabama, entered the ornate hall alongside Obama to applause from a large audience that included more than two dozen bipartisan members of Congress.
Under the Lilly Ledbetter Fair Pay Act, the statute of limitations would run 180 days from each paycheck that is diminished by discrimination. Two years ago, in a case involving Ledbetter, the Supreme Court ruled that a plaintiff must file a suit within 180 days of the original discriminatory act.
Now each pay stub will be considered a separate violation. Workers could collect two years of back pay from the time a suit was filed.
Opponents say the new law eviscerates the statute of limitations, potentially subjecting businesses to costly lawsuits over decades-old compensation decisions involving people who may no longer work at the company. In addition, pensions based on unfair pay may come into question.
“These are the kind of disputes you have to solve quite promptly, otherwise the employer’s ability to defend will dissipate very quickly,” said Neal Mollen, a partner with Paul Hastings in Washington.
Supporters say the bill reverses a controversial 5-4 Supreme Court decision in 2007. Ledbetter alleged that she was paid less than male counterparts for 20 years. She said she didn’t realize the pay discrepancy existed until a colleague placed an anonymous note in her mailbox many years later. She filed her claim in 1998.
Stuart Ishimaru, the chairman of the Equal Employment Opportunity Commission, said the Ledbetter bill simply reinstates the statute of limitations in pay disputes that had been in place before the Supreme Court ruling. The agency receives 5,000 wage dispute filings annually. Ishimaru was appointed chairman by Obama.
“The [Ledbetter law] is a victory for working women and all workers across the country who are shortchanged by receiving unequal pay for performing equal work,” Ishimaru said in a statement. “The EEOC intends to enhance enforcement in this area, in addition to increasing public outreach and education.”
The House passed the Ledbetter bill in 2007, but it was killed by a Senate filibuster in 2008. This year, a larger Democratic majority ensured Senate approval on January 22. The House originally passed the Ledbetter bill on January 9 and had to approve it again January 27 for procedural reasons.
For Obama, the Alabama grandmother is a touchstone for equality. She campaigned with Obama last fall at events designed to highlight women’s issues.
“There are no second-class citizens in our workplaces,” Obama said. “Ultimately, equal pay isn’t just an economic issue for millions of Americans … it’s a question of who we are—and whether we’re truly living up to our ideals.”
But experts say the law could sharply increase litigation and compliance costs for companies. In the latter area, a premium will be placed on keeping track of pay decision details.
“In an ideal world, an employer would figure out how to keep those records forever,” said Andy Tanick, a partner at Ford & Harrison in Minneapolis. “In the real world, they’ll have to do the best they can to keep records as long as they reasonably can.”
In criticizing the law, one employment lawyer says that it could reassure HR departments that they will be in demand even in a declining economy.
“This will put an enormous burden on HR professionals,” said Mollen. Executives are “going to look to HR managers to reconstruct why employee A got [a] 4 percent [raise] and employee B got 3 percent.”
Those calculations won’t apply to Ledbetter, who will not be able to recover back pay or damages from Goodyear. But she will be immortalized by the eponymous legislation.
And she can take back to Alabama one of several pens Obama used to make it a law.
“To watch him sign a bill that bears my name, a bill that will help women and others fight pay discrimination in the workplace is truly overwhelming,” Ledbetter said at a White House reception, according to a press pool report.