The Senate voted by a margin of 72 to 23 today to effectively limit all debate on the Lilly Ledbetter Fair Pay Act of 2009 (S. 181), virtually guaranteeing its passage. A bill with identical terms easily cleared the House without amendment by a vote of 247-171 last Friday. The House measure had been combined with H.R. 12, the Paycheck Fairness Act, which had also received House approval on Jan. 9 by a vote of 256-163. This week the Senate decided to consider the two bills separately, most likely to ensure that at least one employee-friendly bill gets signed when President-elect Obama takes office next week.

The Lilly Ledbetter Fair Pay Act would amend Title VII of the Civil Rights Act and the Age Discrimination in Employment Act, and modify the operation of the Americans with Disabilities Act and the Rehabilitation Act to enable plaintiffs to sue for wage discrimination potentially years after a discriminatory act that generated that pay decision occurs. In essence, the Ledbetter Act resets the statute of limitations for filing a wage discrimination claim each time that individual receives a paycheck or pension benefit, a concept that was expressly rejected by the Supreme Court in Ledbetter v. Goodyear Tire & Rubber Co., 550 U.S. 618 (2007). Moreover, the Act would expand the class of potential plaintiffs to those who are “affected by” the application of a discriminatory compensation decision or other practice, not merely those who are directly subject to such decisions or practices.

The expected result of this Act is a dramatic increase in pay discrimination lawsuits, and the corresponding difficulty that employers face in defending against alleged discriminatory actions that may have occurred years before the lawsuit was initiated and/or under different corporate leadership. As a practical matter, new employers and managers should be prepared to inherit potential lawsuits for actions committed by their predecessors or other decision makers who are no longer employed by the company. In addition, allowing suits by those who are merely “affected” by discrimination is a nebulous concept at best. In theory, a spouse or other beneficiary of a former employee’s pension payments would be entitled to bring suit for past acts of discrimination not directed at the recipient of those payments.

To mitigate against this seemingly endless potential for lawsuits, Sen. Kay Bailey Hutchinson (R-Tex) sought to offer an alternative bill that would delay the start of the statute of limitations period for filing an employment discrimination claim until such a time as the aggrieved person had, or should have had sufficient information to support a reasonable suspicion that discrimination had taken place. The Title VII Fairness Act (S. 166) would serve as a compromise measure, instituting a “known or should have known” standard for starting the limitations clock running. This measure was referred to the Senate Committee on Health, Education, Labor and Pensions. Given the swift treatment of the Lilly Ledbetter Fair Pay Act, however, S. 166 is not expected to make it out of Committee.