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LABOR & EMPLOYMENT LAW — 7/28/08

House Education and Labor Committee passes Paycheck Fairness Act

On July 24, 2008, the House Education and Labor Committee marked up and reported out the Paycheck Fairness Act (H.R. 1338), legislation that would amend the Equal Pay Act of 1963 (EPA) to provide more effective remedies against sex-based wage discrimination. The House panel approved a substitute version of the bill introduced by Representative George Miller, chairman of the committee. “Loopholes created by courts and weak sanctions in the [EPA] have allowed many employers to avoid liability for engaging in gender-based pay discrimination,” said Miller. The bill, approved by the House panel in a 26-17 vote, was first introduced by Representative Rosa DeLauro in March 2007. A copy of the substitute can be found at: http://edlabor.house.gov/markups/pdfs/HR1338/H1338_SUB%204_xml%20(2).pdf".

“This is a historic day in the fight for equal rights for women. If we are serious about closing the gender pay gap, we must get serious about punishing those who would otherwise scoff at the weak sanctions under current law,” said Miller. “Any wage gap based on gender is unacceptable, especially during these tough economic times. By allowing wage discrimination to continue, we hold down women and their families while harming the American economy as a whole.”

Provisions. H.R. 1338 would allow prevailing plaintiffs to recover compensatory and punitive damages under the EPA, which currently only provides 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, and mandate that the US Equal Employment Opportunity Commission (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 authorizes the DOL to create a grant program for eligible entities that provides “effective negotiation skills training” for girls and women. The training would help women “strengthen their negotiation skills” to “obtain higher salaries and rates of compensation that are equal to those paid to similarly situated male employees,” according to the bill.

Miller’s substitute kept much of the provisions in DeLauro’s bill and instead focused on three issues: (1) when employers may assert an “affirmative defense” that a pay differential is based on “factors other than sex;” (2) the “same establishment” requirement; and (3) EPA’s retaliation provision. Employers asserting that the pay differential between male and female employees are “based on factors other than sex” must prove those factors are “job-related” and “consistent with business necessity,” according to language from the substitute. The DeLauro bill would have amended the affirmative defense to excuse a pay differential for men and women only where the employer can show that the differential is truly caused by something other than sex and is related to job performance.

The current EPA requires that men and women be given equal pay for equal work in the same establishment. The substitute modifies the “same establishment” requirement to clarify 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 substitute also prohibits employers from retaliating against employees who have “inquired about, discussed or disclosed the wages of the employee or another employee.” However, the provision does not apply to instances where an employee who has “access to the wage information of other employees as a part of such employee’s essential job functions” discloses the wages of those employees to individuals who do not otherwise have access to such information (i.e., HR professionals). However, such a disclosure would be allowed “in response to a complaint or charge or in furtherance of an investigation, proceeding, hearing, or action under the EPA.” The substitute also removes a provision in the DeLauro bill directing the DOL to develop guidance for employers seeking to enhance pay equity in their workplaces.

Republican amendments defeated. A series of Republican amendments to the substitute were defeated. Representative Howard McKeon (R-Cal), the committee’s ranking Republican, would have added high gas prices to the list of factors that exacerbate wage disparities, calling for a study of the impact of gas prices on working women. “This bill isn’t about paycheck fairness,” said McKeon. “It’s already against federal law to discriminate, in pay or other employment practices, on the basis of sex. And rightfully so. In 1963, Congress established the Equal Pay Act, or EPA, within the Fair Labor Standards Act. The EPA makes it illegal to pay different wages to employees of the opposite sex for equal work.” McKeon said, “what we’re actually debating today is whether it should be easier for trial lawyers to cash in under the Equal Pay Act, and whether it should be more difficult for employers to make legitimate employment decisions based on factors other than sex.”

An amendment offered by Representative Cathy McMorris Rodgers (R-Wash) to expand workplace flexibility by giving private sector workers access to comp time, an optional benefit that would allow workers to choose paid time off, at the time-and-a-half rate, in lieu of overtime cash wages was deemed not related to the bill at hand and not voted on. Amendments offered by Representative Tom Price (R-Ga) sought to limit excessive trial lawyer fees and avert unintended job loss that could be caused by the bill’s costly litigation traps. His first amendment would have limited attorney’s fees to no more than $2,000 per hour and his second amendment would have prevented the bill from taking effect until its consequences were fully evaluated. Both amendments were defeated.

DOL opposes bill. In a July 24 letter to the committee, DOL Secretary Elaine Chao said she would recommend that President Bush veto the bill. “H.R. 1338 would unjustifiably amend the Equal Pay Act to allow for, among other things, unlimited compensatory and punitive damages, even when a disparity in pay was unintentional,” she wrote. “To permit punitive damages in the absence of intent or reckless indifference would be wrong. Moreover, there is no need to add punitive damages to the EPA, since such damages are already available under Title VII for pay discrimination.” Chao also wrote that the bill would “require the Department to replace its successful approach to detecting pay discrimination with a failed methodology.” The methodology referred to in the letter is the EO Survey collection requirement, which the OFCCP rescinded due to its 93 percent false positive rate. Such a move would invalidate the OFCCP’s successful Interpretive Standards for Systemic Compensation Discrimination, she wrote. Chao confirmed that the DOL has “produced record results” in protecting workers from wage discrimination. In FY 2007, over 22,000 workers who had been subjected to unlawful discrimination by government contractors received more than 51 million in back pay and other benefits because of the OFCCP’s efforts, she wrote.

Timetable. Media reports indicate that the bill could go to the House floor as early as next week. A companion bill (S. 766), introduced by Senator Hillary Rodham Clinton (D-NY), is with 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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