Legislative Notice: S. 2199 – Paycheck Fairness Act
Noteworthy
Background: The Paycheck Fairness Act has been introduced in various versions dating back to at least the 105th Congress. The Senate last voted on this issue in 2012, when the vote to invoke cloture failed 52 to 47 on a party-line vote. In 2010, the Senate voted 58 to 41 against cloture on a party-line vote with Sen. Ben Nelson joining Republicans and Sen. Murkowski not voting. In 2000, all Republicans voted to oppose waiving the Budget Act to allow for consideration of the Paycheck Fairness Act.
Floor Situation: On Monday, cloture was filed on the motion to proceed to S. 2199, the Paycheck Fairness bill. Under the rule, the cloture vote will occur one hour after the Senate convenes on Wednesday.
Executive Summary: The Paycheck Fairness Act amends the section of the Fair Labor Standards Act known as the Equal Pay Act to broaden the legal standard to sue, and remedies for sex-based pay discrimination. The legislation also requires the Equal Employment Opportunity Commission (EEOC) and the U.S. Department of Labor to impose new data collection requirements and create a new grant program to provide training to girls and women on how to negotiate. The bill would also impose new data collection requirements on employers regarding wages by sex, race, and national origin, and new data to be collected by the federal government.
Considerations
- The Equal Pay Act of 1963 and Title VII of the Civil Rights Act of 1964 already exist to address alleged pay discrimination. The Paycheck Fairness Act seeks to create a new standard for acceptable salary differences between men and women. Under the new language, the differences must not only be “job-related,” but also “consistent with business necessity.” What constitutes “necessity” is left open to a jury or court to decide. If employers prove that the wage difference is in fact consistent with business necessity, they would still have to prove they could not implement an alternative that would produce the same business outcome without creating a difference in salary. The Paycheck Fairness Act could restrict performance pay incentive programs because these programs pay some workers more than others.
- Under current law, the Equal Pay Act allows successful claimants to collect back-pay damages, but not compensatory or punitive damages. Compensatory or punitive damages can be awarded under Title VII if intentional discrimination is found, but there are caps on those damages depending upon the size of the employer. The Paycheck Fairness Act would allow unlimited compensatory and punitive damages under the Equal Pay Act.
- Under current law, workers must provide written consent to join a class action lawsuit under the Equal Pay Act -- a process known as “opt-in.” The Paycheck Fairness Act would change that by automatically including all employees in a class and requiring people to “opt-out” if they do not want to be party to the suit. This would likely result in more class action lawsuits being filed, make it easier to obtain class certification, and increase the size of the class, regardless of whether the suit has any merit.
- Under the bill, the EEOC would be directed to collect sensitive pay and compensation data from all covered employers, which it could then disclose publicly. The EEOC would have unlimited authority to determine the level of wage data employers must report -- data that could be searched by attorneys looking to bring a discrimination suit.
- The Paycheck Fairness Act would apply to all businesses that fall under the Fair Labor Standards Act. Exceptions would be made for businesses with fewer than two employees or with less than $500,000 a year in business.
Bill Provisions
Section 3
Creates a new “bona fide factors” test so that an employer would have to demonstrate that a wage differential is not sex-based, is job-related, and is consistent with business necessity. This defense does not apply if the employee demonstrates that an alternative employment practice could have been implemented without creating a wage differential, and the employer refused to adopt the alternative practice.
Prohibits employer retaliation if an employee inquires about, discusses, or discloses the wages of another employee in response to a complaint or charge.
Makes employers who violate the law liable for unlimited compensatory or punitive damages.
Establishes all employees as part of a class action, without their written consent, unless the employee submits written notification requesting not to be included.
Authorizes the Secretary of Labor to seek additional compensatory or punitive damages in a sex discrimination action.
Section 4
Requires the EEOC and the Department of Labor’s Office of Federal Contract Compliance Programs (OFCCP), subject to the availability of funds, to train EEOC employees on matters involving wage discrimination.
Section 5
Creates a new competitive grant program for negotiation skills training programs for girls and women. Eligible grantees are to include public agencies, private nonprofit organizations, or community-based organizations. Directs the Secretaries of Labor and Education to issue regulations on how the negotiation skills training for girls and women should be integrated into the Elementary and Secondary Education Act, the Carl D. Perkins Career and Technical Education Act, the Higher Education Act, the Workforce Investment Act, and other programs.
Section 6
Directs the Secretary of Labor to conduct studies and provide information to employers, unions, and the public on ways to eliminate pay disparities between men and women.
Section 7
Establishes the Secretary of Labor’s National Award for Pay Equity in the Workplace to encourage proactive measures to comply with the law. Businesses, partnerships, professional associations, unions, training programs, and any partnership of these groups are eligible.
Section 8
Directs the EEOC to determine what wage data would be useful in strengthening the enforcement of wage discrimination laws and then require the EEOC to issue regulations on type of pay information employers are to submit. The data must include pay details on the sex, race, and national origin of employees. There are no prohibitions on EEOC publicly disclosing the data.
Section 9
Directs the Bureau of Labor Statistics to collect data on women workers in the Current Employment Statistics survey. Directs the OFCCP to reinstate the Equal Employment Survey (EO Survey), which was adopted in 2000 and rescinded in 2006. Not less than half of all non-construction federal contractors are to file the survey annually. The EO Survey included detailed information on personnel hiring, compensation practices, and worker tenure, and duplicated other surveys in place. The survey includes pay grade methodology and prohibits the requirement of multiple regression analysis and anecdotal evidence.
The Department of Labor is to distribute information on compensation discrimination, explanation of employee rights, and any other information that will assist in understanding and addressing discrimination.
Section 10
Authorizes $15 million. Prohibits earmarks for the Negotiating Skill Training for Girls and Women grants.
Section 11
Directs the Secretary of Labor and the Commissioner of the EEOC to develop technical assistance materials to help small businesses implement the law. Clarifies that only small businesses that are exempt from the Fair Labor Standards Act (those with fewer than two employees or with less than $500,000 a year in business) are exempt from the Paycheck Fairness Act.
Section 12
Clarifies that nothing in the bill exempts an employer from fully complying with all applicable immigration laws.
Administration Position
The administration has not issued a formal position on the bill.
Cost
The Congressional Budget Office has not issued a cost analysis on S. 2199.
Possible Amendments
The amendment situation remains uncertain at this time.