Vote on Paycheck Fairness Act Imminent

It is widely expected that a vote on the reintroduced Paycheck Fairness Act (S. 3772) could occur as early as this week. This legislation – which cleared the House of Representatives in January 2009 – would subject employers to potentially unlimited compensatory and punitive damages for violations of gender-based wage discrimination law, and would weaken the affirmative defense available to employers in such cases.

Specifically, the bill would amend the broad affirmative defense previously available to employers that a particular pay differential is caused by a “factor other than sex.” Under the new legislation, an employer would be required to show that any wage discrepancy is caused by a bona fide factor other than sex, such as education, training and experience, and that this factor is job-related and consistent with business necessity. An employee would be entitled to rebut this claim by showing that there exists an alternative employment practice that would serve the same business purpose without resulting in the pay disparity, and that the employer has refused to adopt this alternative practice. It is this portion of the affirmative defense that could result in significant litigation, pitting the viability of an alternative work practice against the employer’s sound business discretion.

Also potentially troublesome for employers is the expansion of damages under the Equal Pay Act of 1963 (EPA) to include potentially unlimited compensatory and punitive awards, and the elimination of the “establishment” requirement that employees must work in the same place of employment for wage comparison purposes. Under the terms of the Paycheck Fairness Act, an employer’s establishment would include workplaces located in the same county or similar political subdivision of a state.

In addition, the bill would make it unlawful to retaliate against an employee who makes a complaint, files a charge, testifies, or assists in an investigation or proceeding related to a wage-related complaint, or inquires about or discusses their pay or that of their coworkers. The measure would also reinstate the Equal Opportunity (EO) Survey, which would permit the Office of Federal Contract Compliance Programs (OFCCP) to obtain wage-related information from federal contractors and subcontractors, and facilitate class action lawsuits by requiring employees to “opt-out” of instead of “opt-in” to the class.

Information contained in this publication is intended for informational purposes only and does not constitute legal advice or opinion, nor is it a substitute for the professional judgment of an attorney.