On the eve of President-Elect Obama’s inauguration, the U.S. House of Representatives has passed legislation that would extend the time limit for employees to file wage discrimination claims against employers. Obama pushed for the legislation in his campaign for the presidency and has described it as part of his incoming administration’s effort to “update the social contract” and close the pay gap between men and women.

Passed by the House on January 9, the Lilly Ledbetter Fair Pay Act of 2009 would reverse the U.S. Supreme Court’s 2007 ruling in a lawsuit that the Act’s namesake filed against Goodyear for sex-based pay discrimination.

In the Ledbetter case, the U.S. Supreme Court did not deny that Lilly Ledbetter had suffered discrimination but ruled against her on grounds that her claim was not filed within the 180-day deadline for claims under Title VII. That deadline requires a Title VII plaintiff to file a discrimination claim within 180 days of the “alleged unlawful employment practice.”

The Supreme Court rejected Ledbetter’s argument that each paycheck was a new and separate “unlawful employment practice” for purposes of Title VII’s 180-day deadline. Instead, the Court decided that that Goodyear’s initial decision to pay Ledbetter less than men performing similar work was the “alleged unlawful employment practice” and denied Ledbetter’s claim for being filed more than 180 days after that initial decision. The Court reasoned that Title VII’s 180-day statute of limitations must be strictly interpreted to protect employers against “stale claims” and “tardy lawsuits.”

Since the Ledbetter decision, lower federal courts have cited the Supreme Court’s ruling as a reason for rejecting other lawsuits claiming discrimination based on race, sex, age and disability.

While a U.S. Senator, Obama was co-sponsor of a bill to overturn the Supreme Court’s ruling in the Ledbetter case. Lilly Ledbetter spoke at the Democratic National Convention and had a role in Obama’s campaign. In one of the presidential debates, Obama expressed his view that the Supreme Court’s ruling was unfair and said he would appoint judges who understood the struggles of “real-world folks” like Lilly Ledbetter.

If the Lilly Ledbetter Fair Pay Act of 2009 becomes law, it would amend Title VII and the Age Discrimination in Employment Act so that an “unlawful employment practice” occurs not only when a discriminatory compensation decision is initially made or a discriminatory pay practice is first implemented, but also when an employee becomes subject to the decision or practice and upon each additional application of the decision or practice, including each time an employee receives a paycheck resulting from “a discriminatory compensation decision.”

The U.S. Chamber of Commerce opposes the Fair Pay Act of 2009, saying it would result in an “explosion of litigation” against employers and make it possible for claims to be filed “decades after an alleged discriminatory act occurred.”

If the Senate approves the legislation, it is expected that President Obama will sign it into law. We will keep you updated on the progress of this proposed legislation.