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Does the Equal Pay Act need updating?

The Paycheck Fairness Act seeks to amend and improve the “EPA,” but there’s much disagreement about whether it’s even necessary, and whom it would hurt more — employers or employees.

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From the pages of In Business magazine.

There is general agreement that women and men with the same experience should get paid the same for performing the same work.

What’s not as clear is what constitutes similar experience, or whether the most recent legislative attempt to close the gender wage gap — the Paycheck Fairness Act — is even necessary to do so.

As it stands now, the Paycheck Fairness Act stands little chance of becoming law in the current Congress.

Democrats have been trying to pass the PFA for going on 22 years, and while in March the Act passed the U.S. House on a 242–187 vote margin, with seven Republicans joining Democrats in passage, the proposal faces stiff opposition in the Republican-controlled Senate.

Still, the Paycheck Fairness Act, which is not a new law but rather an amendment to the Equal Pay Act of 1963, keeps getting reintroduced every couple years, and proponents argue it’s a necessary measure to close the gender wage gap they say results in American women earning just 80 cents on the dollar compared to men — a gap the Equal Pay Act and Fair Labor Standards Act have failed to adequately address.

Not so fast, argue opponents of the Paycheck Fairness Act. Wage discrimination based on gender is already illegal, and rather than fixing a wage gap that might actually be much less than we’ve been led to believe, the PFA would apply unnecessarily punitive damages to employers that would have a harder time defending themselves against wage discrimination claims.

Wisconsin enacted its own equal pay law in 2009, the Equal Pay Enforcement Act, but it was quietly repealed in 2012 by then-Gov. Scott Walker and Republican legislators, leaving Badger State employers and employees subject only to federal provisions.

In this exercise in “What if the Paycheck Fairness Act, in its current form, became law?” IB found that the truth of the matter, as it so often does, lies somewhere in the murky middle.

What is fair?

The question of fair pay is a difficult one.

Does fair pay come in the form of ostensibly rigid pay scales that treat every employee the same, regardless of experience or performance? Or does salary start from the same point for everyone and diverge based on experience, education, productivity, talent, and any number of other, potentially more nebulous criteria?

Try arguing over how many cookies your children can have for dessert — after they’ve already had ice cream and cotton candy earlier in the day — and you quickly realize “fair” is entirely in the eye of the beholder.

In short, the Paycheck Fairness Act seeks to:

  • Require employers to prove that pay disparities exist for legitimate, job-related reasons and not based on gender alone;
  • Ban retaliation against workers who discuss their wages;
  • Limit how employers can use the salary history of prospective employees;
  • Create a negotiation and skills-training program;
  • Remove obstacles in the Equal Pay Act to allow workers to participate in class-action lawsuits that challenge systemic pay discrimination; and
  • Improve the Department of Labor’s (DOL) tools for enforcing the Equal Pay Act.

U.S. Rep. Mark Pocan, who represents Wisconsin’s Second Congressional District, and U.S. Sen. Tammy Baldwin are both co-sponsors of the Paycheck Fairness Act.

“There is paycheck inequality for hardworking American women across this country, and it is time we do something about it,” Sen. Baldwin said in a release upon introduction of the proposal in January. “Many women are working full time, and many are working two jobs to make ends meet, yet far too many are barely getting by, and far too many women and children are living in poverty. The least we can do is level the playing field and give women a fair shot at getting ahead because they deserve equal pay for equal work.”

Rep. Pocan’s office did not respond to a request for comment on the current legislation.

According to a House Democratic Fact Sheet, pay inequity not only affects women, it affects children, families, and the economy as a whole. “Women are the sole or co-breadwinner in two-thirds of American families with children and providing equal pay to women would have a dramatic impact on their families.

“If women were paid the same as men, the poverty rate for all working women would be cut in half (from 8.0 percent to 3.8 percent) and the poverty rate for working single mothers would be cut by nearly half (from 28.9 percent to 14.5 percent),” the fact sheet continues. “The wage gap undermines women’s financial security and limits their ability to save for retirement, contributing to more women living in poverty. For the 15.3 million single women — divorced, widowed, separated, and never-married women living on their own — equal pay would mean a significant drop in poverty rates from 10.8 percent to 4.4 percent.”

An analysis of the Paycheck Fairness Act by the American Bar Association (ABA) notes, “Gender-based wage discrimination remains a pernicious problem in the workplace despite enactment over 50 years ago of the Equal Pay Act of 1963 (EPA), which made it illegal for employers to pay unequal wages to men and women in the same workplace who perform substantially equal work.”

This wage gap cannot be dismissed entirely as the inevitable by-product of “women’s choices” in education, career, and family matters, the ABA analysis continues. “Recent authoritative studies show that even when all relevant career and family attributes are taken into account, there still is a unexplained gap between men’s and women’s earnings.”

Causing, not correcting problems

While no one really disputes the pay disparity between men and women, there are some groups that argue the bill is simply a solution in search of a problem.

In a March 26 letter to the U.S. House of Representatives, Neil Bradley of the U.S. Chamber of Commerce, the nation’s leading business advocacy group, said the Chamber opposes the Paycheck Fairness Act (H.R. 7) because it would undermine efforts to combat pay discrimination by conflating discriminatory practices with other non-discriminatory factors that result in legitimate pay disparities.

“Factors such as experience, education, location, and shift work can and often do result in pay differentials between employees employed by the same business in similar positions,” Bradley wrote. “Current law recognizes that these are legitimate, non-discriminatory distinctions. H.R. 7 would impose a new multifactor test that includes a vague ‘business necessity’ test that would effectively eliminate the ability of an employer to make compensation decisions on the basis of such factors. As a result, employees will not be compensated based on the attributes they bring to the job and their actual contributions to their employer.”

“The proposal is an unnecessary intrusion into the workplace that will expose employers to frivolous lawsuits and interfere with workplace flexibility … ” — Bill Smith, NFIB Wisconsin state director

Bradley also argues the Paycheck Fairness Act would for the first time allow for compensatory and punitive damages. “The [Equal Pay Act] is a strict liability statute that requires no employer intent to act unlawfully for a violation to be found. If an employee is the victim of intentional discrimination, then he or she should bring a claim under Title VII of the Civil Rights Act of 1964, where punitive and compensatory damages (capped at certain levels) are available.

“This bill would also modify existing rules concerning collective actions, making it easier for plaintiffs’ attorneys to mount class-action suits by reducing the criteria necessary for employees to join a class,” Bradley adds. “While a potential boon to the trial bar, these changes are likely to result in more frivolous litigation rather than appropriate enforcement against actual gender-based pay discrimination.”

It’s a sentiment shared by Bill Smith, Wisconsin state director for the National Federation of Independent Business.

“The Paycheck Fairness Act has failed to become law because members of Congress recognize adequate pay protections already exist under current law,” states Smith. “NFIB strongly supports equal employment opportunity and appropriate enforcement of the Equal Pay Act, which protects all employees, and Title VII of the Civil Rights Act of 1964, which covers employers with 15 or more employees. The Paycheck Fairness Act would expand remedies under the Equal Pay Act to include unlimited punitive and compensatory damages, significantly eroding the ability of employers to defend legitimate pay disparities.”

Smith says proponents believe the PFA is necessary to respond to employers who devalue certain occupations, trades, and professions dominated by women. “They argue there is a significant gender wage gap that is unfair and discriminatory. However, this so-called gap is exaggerated when consideration is given to variables such as education, maternity policies, child rearing, flexible work arrangements, part-time work, shift differentials, etc. The wage gap between men and women shrinks dramatically when the variables are considered in calculating the basis for wage disparities.”

According to Smith, there are bad employers who may discriminate based on several protected classifications under current law. However, employees have a number of remedies available under current law that they may pursue to address alleged discrimination.

“The payment scale in the typical marketplace can include many factors that are the basis for wage disparities,” explains Smith. “The same experience for the same work is just one criterion that may provide a fair and justified wage difference between men and women.

“The proposal is an unnecessary intrusion into the workplace that will expose employers to frivolous lawsuits and interfere with workplace flexibility that is sought by employers and employees,” Smith adds.

(Continued)

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