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CCH® PAYROLL — 01/27/09

House passes Paycheck Fairness Act

Wasting no time moving forward with its comprehensive labor and employment law legislative agenda, the Democratic-led 111th House of Representatives passed the Paycheck Fairness Act (H.R.12) on January 9, 2009. The Paycheck Fairness Act passed by a vote of 256-163.

Reintroduced by Representative Rosa DeLauro (D-Conn) on January 6, the Paycheck Fairness Act would amend the Equal Pay Act of 1963 (EPA) by imposing stiffer penalties against employers who violate the EPA, prohibit employers from retaliating against employees who share salary information with their coworkers and require employers who make legitimate employment decisions based on "factors other than sex" to prove those factors are "job-related" and "consistent with business necessity."

In particular, the Paycheck Fairness Act 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. To recover punitive damages, however, a plaintiff must show intent (i.e., malice or reckless indifference). 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 would also prohibit 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 would also clarify 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 would also mandate that the 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 would require the DOL to make competitive grants available that would help provide "effective negotiation skills training" for girls and women. The bill also expressly prohibits grant programs created by the EPA from being used for Congressional earmarks. Further, nothing in the Paycheck Fairness Act would affect the obligation of employers and employees to fully comply with all the nation's immigration laws.

The Paycheck Fairness Act would take effect six months after the date it is enacted.

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