HR: The Paycheck Fairness Act
In January of this year the US House of Representatives passed the "Paycheck Fairness Act" by a vote of 256 to 163. The Senate is expected to pass the bill before the end of the year. If the bill becomes law, employers should be aware of the significant changes it could bring to the employer-employee relationship, especially in pay related disputes.
The Paycheck Fairness Act amends the Fair Labor Standards Act of 1938(FLSA) and the Equal Pay Act of 1963(EPA) and is meant to strengthen current law that states "employers must pay equal wages to female and male employees for equal work". Additionally, the Paycheck Fairness Act eliminates practices that have any basis in gender discrimination and places the burden on employers to determine which practices and polices have a basis.
The proposed changes to the Equal Pay Act of 1963 include:
- Allowing for unlimited compensatory or punitive damages for which employers would be liable for, in addition to current liability for double back pay.
- Barring retaliation against employees who inquire, discuss or share wage information among one another.
- Eliminating the "opt in" requirement and automatically including members in a gender discrimination class action suit, unless they choose to "opt out".
- Prohibiting certain defenses for pay disparities- shifting the burden of proof to the employer, who will be required to show that "bona-fide" business-related factors were used in making salary decisions and these factors were not based or derived from a sex based differential in pay.
While I believe that the EPA Act is probably due for some updating/revisions and women should receive equal pay for equal work, I'm concerned that if this bill becomes law it could trigger a wave of legal actions by employees. As it seems that pay practices and gender discrimination will be more carefully examined under this law, it may be wise for employers to take appropriate measures to ensure that their compensation polices are updated and they are being properly implemented.