Change is Coming - Is Your Business Ready?

This newsletter contains two important updates on federal legislation:

1. The American Recovery and Reinvestment Act, signed into law on February 17, 2009, amended COBRA rules; and
2. The Lilly Ledbetter Fair Pay Act, signed into law on January 29, 2009, restarts the statute of limitations on pay discrimination claims each time an employee receives wages, benefits, or other compensation tainted by the discriminatory decision.

Lilly Ledbetter Fair Pay Act

As one of his first acts in office, President Obama signed the Lilly Ledbetter Fair Pay Act on January 29, 2009. The Fair Pay Act changes the statute of limitations for pay discrimination claims brought under Title VII of the Civil Rights Act of 1964, the Age Discrimination Act of 1967, the Americans with Disabilities Act of 1990, and the Rehabilitation Act of 1973. Changes to When a Pay Discrimination Action May be Filed The Fair Pay Act was passed to overrule the U. S. Supreme Court’s decision in Ledbetter v. Goodyear Tire & Rubber Company, Inc., 550 U.S. 618 (2007). Congress believed the Court in Ledbetter, unduly restricted the time period for bringing pay discrimination claims. The new law restarts the statute of limitation each time an employee receives wages, benefits, or other compensation tainted by the discriminatory pay decision, regardless of when that decision was made. Under the new law, an unlawful employment practice occurs (1) when a discriminatory pay decision is made; (2) when “an individual” becomes subject to the discriminatory pay decision; or (3) when “an individual” is affected by the discriminatory compensation decision or other practice. The law is retroactive to May 28, 2007, the date of the Ledbetter decision, which means that it will apply to all claims of pay discrimination pending on or after that date. The law states that an unlawful employment practice occurs when “an individual” is affected by a discriminatory compensation decision or other practice. This language could be broadly interpreted to permit pay discrimination charges to be filed by individuals other than employees, so long as those individuals claim they have been affected by the discriminatory decision. In support of a broad reading, the House rejected proposed amendments that would have clarified that the law applies only to employees. In addition, the law is not limited to wage or salary payments, but includes benefit plans such as pensions. Thus, even a long-retired employee who receives pension benefits that he/she asserts are affected by a discriminatory decision years before could bring a claim. What can Employers do? As a result of the new law, employers should consider reviewing their compensation and benefits practices, under the direction of counsel, to ensure that these practices are implemented in a nondiscriminatory manner. In addition, employers should review the length of time they retain compensation and benefits records.

American Recovery and Reinvestment Act

On February 17, 2009, the American Recovery and Reinvestment Act of 2009 was enacted, which, in part, amended COBRA rules to create additional notice requirements and alter payroll tax administration in order to administer a temporary federal subsidy of COBRA premiums. These changes will affect every employer that sponsors a group health plan for employees and has terminated or laid off an employee on or after September 1, 2008. Employers will need to amend their current COBRA election notices temporarily to include general information about the availability of the premium subsidy and, if applicable, the option to enroll in different coverage. If you would like more information about this timely matter, please contact Thomas McChesney at Huddleston Bolen LLP to receive a supplemental article on the topic. Thomas can be reached at (304) 529-6181 or at tmcchesney@huddlestonbolen.com.