Benefits & ERISA Law

Senate Passes Lilly Ledbetter Act Addressing Discriminatory Compensation

By Suzanne Wynn

The Senate has approved S. 181, the Lilly Ledbetter Fair Pay Act of 2009, by a vote of 61-36. This bill has already passed the House and now heads to President Obama for his signature.

This Act is interesting for retirement and pension plans because it addresses the U.S. Supreme Court’s decision in Ledbetter v. Goodyear Tire & Rubber Co., 550 U.S. 618 (2007) by amending Section 706(e) of the Civil Rights Act of 1964 to add the following:

“(3)(A) For purposes of this section, an unlawful employment practice occurs, with respect to discrimination in compensation in violation of this title, when a discriminatory compensation decision or other practice is adopted, when an individual becomes subject to a discriminatory compensation decision or other practice, or when an individual is affected by application of a discriminatory compensation decision or other practice, including each time wages, benefits, or other compensation is paid, resulting in whole or in part from such a decision or other practice.

`(B) In addition to any relief authorized by section 1977A of the Revised Statutes (42 U.S.C. 1981a), liability may accrue and an aggrieved person may obtain relief as provided in subsection (g)(1), including recovery of back pay for up to two years preceding the filing of the charge, where the unlawful employment practices that have occurred during the charge filing period are similar or related to unlawful employment practices with regard to discrimination in compensation that occurred outside the time for filing a charge.”

What this means when calculating allocations which are based on compensation is unclear. Because this Act is designed to address discrimination in compensation, and it doesn’t mention changes in allocations due to a change in the amount of compensation, some clarification from the IRS will be needed.

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Full post as published by Pension Protection Act Blog on January 22, 2009 (boomark / email).