The Senate Health, Education, Labor, and Pensions (HELP) Committee heard extensive testimony this morning on the Paycheck Fairness Act (S. 182; H.R. 11), a bill that proposes numerous changes to the Equal Pay Act of 1963. Among the witnesses present were Representative Rosa DeLauro, who is one of the sponsors of the Act, and Commissioner Stuart Ishimaru, the acting chairman of the Equal Employment Opportunity Commission (EEOC).
During his testimony, Chairman Ishimaru focused on the importance of the Act’s pay data provisions, noting that the EEOC currently has no way of knowing about private-sector pay information because employees keep that information private and are often told not to talk about it. He noted that the Paycheck Fairness Act would give the EEOC better tools to help employees, while also providing data standards that would assist employers. (For a written statement from Chairman Ishimaru, visit http://www.eeoc.gov/eeoc/events/ishimaru_paycheck_fairness.cfm)
Senator Johnny Isakson (R-Georgia) expressed concern over the Act’s provisions allowing prevailing plaintiffs to recover compensatory and punitive damages. (The Equal Pay Act currently provides only back-pay awards and liquidated damages.) Senator Isakson questioned whether the bill could have the unintended consequence of actually lessening pay for performance by forcing employers to operate their businesses more defensively in anticipation of possibly baseless litigation.
Jane McFetridge, a partner with the Chicago, Illinois, firm Jackson Lewis LLP, delivered the sole opposing testimony. She elaborated further on Senator Isakson’s concerns, arguing that the Paycheck Fairness Act would negatively affect businesses and the women who work for them. McFetridge noted that the Act’s proposed regulatory scheme is similar to that of California, a state that, in her professional experience, many employers have made affirmative decisions to avoid because of the high cost of doing business and extensive legal liability there.
McFetridge specifically expressed concerns over the Act’s failure to include damages caps, which would protect small businesses from potentially crippling penalties. She also noted that small businesses would be adversely affected by the Act’s tightening of the employer affirmative defense (specifically requiring employers to show that a pay differential is caused by a bona fide factor other than sex, is related to job performance, and is consistent with business necessity). She argued that these employers may not have an HR professional, let alone in-house counsel, available to demonstrate a basis for every wage decision made in a company, even though the decisions may have been made for legitimate nondiscriminatory reasons.
The hearing suggests that the Act, which passed the U.S. House in July 2008, will now see further activity in the Senate. We’ll keep you posted on its progress.
HR Guide to Employment Law: A practical compliance reference manual covering 14 topics, including discrimination