Paycheck Rule of Fair Pay Act Doesn’t Apply to Pension Payments

January 31, 2011 ( - The Equal Employment Opportunity Commission ruled for the first time that the Ledbetter Act’s paycheck rule does not apply to pension payments.

The paycheck rule of the Lilly Ledbetter Fair Pay Act of 2009 provides that the period for filing a charge begins anew each time an employee receives a wage payment based in part on the challenged compensation decision, regardless of when it was made. According to a Buck Consultants fyi, in a November ruling, the EEOC differentiated between wage-based claims and claims based on pension payments.   

The EEOC relied on Section 2(4) of the Ledbetter Act which provides that “[n]othing in this Act is intended to change current law treatment of when pension distributions are considered paid,” as well as the legislative history of the Act in deciding that “while a series of payments of discriminatory wages may constitute a continuing violation, a series of payments of discriminatory pension benefits usually does not.”  In addition, the EEOC noted that its own Compliance Manual recognizes that courts might decide that “pension benefits are considered paid upon entering retirement and not upon issuance of each annuity check.”   

According to the Buck report, in Brakeall v. EPA (EEOC, Appeal No. 0120093805, 11/30/10), the EEOC considered whether the Environmental Protection Agency (EPA) had erred in dismissing as untimely the claims of a former employee that she was discriminated against under Title VII and the Equal Pay Act with respect to her pay and retirement benefits. Specifically, Carol Brakeall claimed she was paid less than her male counterparts during her last three years with the EPA, which impacted her retirement pay. Thus, she claimed, each pension check she received and will continue to receive is less than she was entitled to receive.  

In May 2009, Brakeall first contacted an EEO Counselor at the EPA, and in June 2009 filed a formal discrimination complaint with that agency. In August 2009, the EPA dismissed her complaint as untimely because she had failed to contact an EEO Counselor within 45 days of the allegedly discriminatory conduct as required under the EEOC’s federal sector complaint processing regulations. She appealed the dismissal to the EEOC.