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LABOR & EMPLOYMENT LAW — 8/4/08

House passes Paycheck Fairness Act

The US House of Representatives approved legislation late July 31, 2008, that would amend the Equal Pay Act of 1963 (EPA). The proposed Paycheck Fairness Act (H.R. 1338), which passed the House by a vote of 247 to 178, imposes stiffer penalties against employers who violate the EPA, prohibits employers from retaliating against employees who share salary information with their coworkers and requires that employers who make legitimate employment decisions based on “factors other than sex” prove those factors are “job-related” and “consistent with business necessity.”

The EPA, which was passed in 1963 as an amendment to the FLSA, and which is administered and enforced by the EEOC, prohibits wage differentials because of sex. The law requires that men and women be given equal pay for equal work on jobs requiring equal skill, effort and responsibility, which are performed under similar working conditions in the same establishment.

Provisions. First introduced by Representative Rosa DeLauro (D-Conn) in March 2007, the House Education and Labor Committee marked up and reported out a substitute version of the legislation from Representative George Miller, chairman of the committee, on July 24. “Women and men should be paid the same when doing the same work,” said DeLauro. However, Representative Howard “Buck” McKeon (R-Cal) warned that the bill would make it easier for trial lawyers to “cash in under the Equal Pay Act” and would make it more difficult for employers to make legitimate employment decisions based on factors other than sex.

Among its provisions, H.R. 1338 would allow prevailing plaintiffs to recover compensatory and punitive damages under the EPA, which currently only provides for liquidated damages (fixed and limited) and back pay awards. In addition, the bill would allow EPA lawsuits to proceed as class actions, as governed by the Federal Rules of Civil Procedure. The bill also modifies the EPA’s requirement that men and women be given equal pay for equal work in the “same establishment.” It clarifies that employees will be deemed to work in the “same establishment” if they work for the same employer at workplaces located in the “same county or similar political subdivision of a state.”

The bill also prohibits employers from retaliating against employees who have “inquired about, discussed or disclosed the wages of the employee or another employee.” However, the retaliation provision does not apply to instances where an employee who has “access to the wage information of other employees as a part of that employee’s essential job functions” discloses those wages to individuals who do not otherwise have access to such information (i.e., HR professionals). Disclosures can be made in response to a complaint or charge or in furtherance of an investigation. The bill also clarifies when employers may assert as an affirmative defense that a pay differential (unequal pay for equal work) is based on “factors other than sex.” Employers asserting the affirmative defense must prove those factors are “job-related” and “consistent with business necessity.”

The bill also mandates that the EEOC and Department of Labor’s (DOL) Office of Federal Contract Compliance Programs engage in training to commission/department employees and affected individuals and entities on matters involving wage discrimination. Within 18 months of the bill’s enactment, the EEOC must complete a survey about pay information and issue regulations providing for the collection of pay information data from employers as described by the sex, race and national origin of employees. In addition, the bill would require the DOL to make competitive grants available that would help provide “effective negotiation skills training” for girls and women. The bill can be found at http://www.rules.house.gov/110/text/110_hr1338.pdf. $15 million has been appropriated to carry out the provisions of the Act over the 2009-2013 period.

Amendments. The House passed the bill after approving five amendments, including one from Representative Jason Altmire (D-Pa) that would delay the effective date of the bill by six months in order for the DOL to educate small businesses about complying with the requirements of the bill. In addition, an amendment from Representative Gabrielle Giffords (D-Ariz) would clarify that a plaintiff must show intent (i.e., malice or reckless indifference) to recover punitive damages under the EPA. By voice vote, the House approved an amendment from Representative Melissa Bean (D-Ill) that strikes language in the bill that would have expanded coverage of the EPA to include job applicants as well as employees. The House also passed an amendment from Representative Donald Cazayouz (D-La) clarifying that nothing in the Paycheck Fairness Act would affect the obligation of employers and employees to fully comply with all the nation’s immigration laws. By voice vote, the House also passed an amendment offered by Representative Jeff Flake (R-Ariz) that would prohibit grant programs created by the Act from being used for Congressional earmarks.

Statement of Administration Policy. In a June 30 Statement of Administration Policy, the Bush Administration said that while it “is firmly committed to the principle of equal pay for equal work,” it would recommend that President Bush veto the Paycheck Fairness Act. “The bill would unjustifiably amend the Equal Pay Act (EPA) to allow for, among other things, unlimited compensatory and punitive damages, even when a disparity in pay was unintentional. “It also would encourage discrimination claims to be made based on factors unrelated to actual pay discrimination by allowing pay comparisons between potentially different labor markets,” said the Administration.

Senate. A companion bill (S. 766) was introduced by Senator Hillary Rodham Clinton (D-NY) in March 2007 and has been referred to the Senate Health, Education, Labor, and Pensions Committee.

For more information on this and other topics, consult CCH Employment Practices Guide or CCH Labor Relations.

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