Implications of the Ledbetter Fair Pay Act

In this installment, I discuss the implications of the Ledbetter Fair Pay Act on compensation analysis. Specifically, I discuss the interpretation of "direct determinants" and "indirect determinants" on compensation, discussing potential "other factors" under the Fair Pay Act. The application of the Fair Pay Act to questions of disparate impact and disparate treatment are presented within the context of modeling the compensation decision-making process. The upshot of the Fair Pay Act is that compensation decisions can be challenged on "other factors", not just those factors directly related to compensation. Further, the Fair Pay Act expands the time horizon during which claims of compensation discrimination can be made. Together, this makes the modeling of compensation more difficult, requires better documentation and recordkeeping, and is likely to bring decisions not commonly thought of as compensation decisions into the fold when examining compensation discrimination.