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February 26, 2009
Paycheck Fairness Act Pending Before Congress

Among the many bills pending before Congress, The Paycheck Fairness Act is but one piece of legislation that has the potential to significantly impact employment related litigation.  This piece of legislation has passed the House of Representatives and is now sitting with the Senate.  If enacted, this bill would update the 1963 Equal Pay Act (“EPA”) and subject employers to new regulations and stricter penalties for violations.  Some of the more significant changes in the law, as currently written, include:

Affirmative Defense.  Currently, under the EPA, when an employer is found to be paying female employees less than male employees for equal work, the employer could defend itself by asserting an “affirmative defense” that the pay differential is based upon a factor other than gender – (i.e. the man had a higher level of education than the woman).

The Paycheck Fairness Act would restrict this affirmative defense so that employers may only excuse unequal pay when it is based upon a bona fide factor other than sex.  Meaning, an affirmative defense is only available to employers who can show that the differential is truly caused by factors related to performance or responsibility (i.e. a higher education may not be a bona fide factor if the position is a stockroom clerk).

Further, this narrowed defense will not apply where the affected employee can demonstrate that an alternative employment practice exists that would serve the same business purpose without producing such differential and that the employer has refused to adopt such alternative practice.

Penalties.  Under the EPA, an employer’s exposure for a violation is for fixed amounts, such as differentials for back pay.  Under the PFA, however, employees could sue for and get punitive and compensatory damages even if the disparity is unintentional.

Confidential Wage Information.  The Paycheck Fairness Act would also modify the EPA by barring employers from handing out discipline for disclosure of wage information, even if that information is classified as confidential by the employer.

Wage Comparison.  Under the EPA, in order to determine that there is wage discrimination, the wage comparison must be made between employees working at the same “establishment.”  The Paycheck Fairness Act does away with the “establishment” requirement and allows for comparison of salaries for employees with the same level of responsibility and who would be considered equals regardless of location.

Record Keeping.  The Paycheck Fairness Act would require all employers to keep records of the methods they use to set employee wages, as well as require employers to provide yearly reports to the Equal Employment Opportunity Commission that describe the company’s workforce by position and salary, as well as by gender, race, and ethnicity.

Labor & Employment