Mar 27, 2019 - 3:45pm

Quick Take: Your Primer on the Paycheck Fairness Act

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U.S. Capitol in Washington, D.C.
U.S. Capitol in Washington, D.C.

Fill me in:

Democratic members of the House of Representatives have proposed the Paycheck Fairness Act as their approach to addressing pay discrimination in the workplace.

According to a House Democratic fact sheet, the bill would require employers to prove pay differences exist for “legitimate, job-related reasons.” It would also “remove obstacles” to “allow workers to participate in class action lawsuits.”

Why does it matter:

The Paycheck Fairness Act would eliminate an employer’s ability to use legitimate distinctions when explaining differences in compensation.

It contains a vague “business necessity” test that would prevent employers from making compensation decisions based on factors including a worker’s experience, their education, and where they work. Instead, government would become deeply entangled in compensation issues.

Camille Olson, a labor lawyer at Seyfarth Shaw, testified at the House Education and Labor Committee’s hearing. She said, the bill “seeks to provide a rigid, one-size-fits-all solutions to one of the most complex issues facing U.S. employers. The American workforce is among the most varied workforces in the world. Because there is no one-size-fits-all workplace, there is no one-size-fits-all compensation program. Employers need flexibility in making key decisions about their businesses, including compensation decisions.”

Turning compensation fights into legal battles would be a boon to plaintiffs’ lawyers. By making it easier to launch class action lawsuits, the Paycheck Fairness Act would lead to more frivolous litigation, burdening our economy. The United States already has some of the highest legal costs of any country in the world.

Our take:

“The U.S. Chamber of Commerce opposes pay discrimination and firmly supports equal employment opportunity and strong enforcement of the Equal Pay Act (EPA) and Title VII of the Civil Rights Act of 1964. The Chamber opposes the Paycheck Fairness Act, because it would undermine efforts to combat pay discrimination by conflating discriminatory practices with other non-discriminatory factors that result in legitimate pay disparities.” – Neil Bradley

Numbers to know:

$429 billion. In 2016, total costs and compensation from the tort system cost $429 billion, 2.3% of U.S. GDP. Lawsuits unleashed by the Paycheck Fairness Act would exacerbate this situation.

What’s next:

The bill is expected to pass the House, but it’s unlikely the Senate will take up the legislation.

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