THE PAYCHECK FAIRNESS ACT

Rae Chornenky

NFRW President

The United States Senate, in January of 2009, brought forward the Paycheck Fairness Act which,  ultimately, did not pass the Senate.  The Act would have amended the Fair Labor Standards Act of 1938, also known as the Equal Pay Act, by revising remedies for enforcement of, and exceptions to, gender discrimination in the payment of wages. (Official Summary, Senate Bill 182, IIIth Congress, 2009-2010) Of great significance is the fact that the Act would, in the midst of the huge deficit crisis we were facing, make monetary grants available for entities that train women and girls in negotiation skills.

In just a few weeks, Senate Democrats are going to once again introduce the Paycheck Fairness Act.  With women earning only 77 cents for every dollar men earn under the Obama Administration, the measure will expand remedies available to alleged victims of gender-based wage discrimination and require employers to prove that wage discrepancies are based on business or job-related factors rather than on gender.

Pursuant to the legislation, employers accused of engaging in gender discrimination in the payment of wages would be required to demonstrate that pay discrepancies occurred due to "bona fide factors."   Once an employee makes a "prima facie" complaint of sex discrimination in compensation, the burden of proof shifts to the employer to prove that the wage difference is the result of a factor other than gender.  (Heritage Foundation, Web Memo, February 22, 2011)                                                                  

Employees who successfully challenge an employer will be able to collect unlimited punitive damages as well as compensatory damages because the Act removes from the Equal Pay Act all limits on damages. Pursuant to the proposed Paycheck Fairness Act, not only could employers be sued by an aggrieved worker, but such worker-brought actions could be brought in the form of large class actions against which a single employer would have to defend his or her business practices.  Since there are no limits on punitive and compensatory damages, the Act will not only facilitate lawsuits and cost jobs but it will expose employers to paying out unlimited damages.

The new Act also provides that if an aggrieved employee can find an alternative business practice that does not result in pay disparity, employers must adopt that practice.   Thus, under the Act, government and the courts will dictate employers' practices.

Opponents of the Paycheck Fairness Act point out that, pursuant to its dictates, companies will have very little flexibility in addressing new hires' different salary histories, addressing different salary demands of existing employees, and addressing the size of pay raises and/or bonuses.  (Forbes, July 7, 2010).

The Heritage Foundation asks of the new legislation, for example, how courts will decide if experience constitutes a "bona fide factor" under the new legislation.  How will the courts decide whether a woman earning less than an experienced man can demand her employer  send her to training and then pay them the same wage?  Clearly, with the government and the courts micromanaging businesses, we will witness reduction of business competitiveness and the loss of jobs.