Benefits & Compensation News

Paycheck Fairness Act refuses to die: Will it pass this time?

House Democrats are hoping the third time will be a charm for the resilient Paycheck Fairness Act (PFA), a bill that has already been shot down twice in the last four years.

The Paycheck Fairness Act, which builds on the Lilly Ledbetter Act and would strengthen the Equal Pay Act of 1963, is back before Congress. While experts don’t foresee the PFA getting passed on its third go-around, the issue of pay disparity isn’t likely to away anytime soon.

After all, the Obama administration has made gender pay equity a top priority, and the EEOC recently added equal pay enforcement to its 2013 Enforcement Target List.

A ‘crippling’ effect on small biz

You can bet the majority of employers are hoping the PFA is shot down, as the bill is widely believed to have a tremendously negative impact on business owners.

In fact, attorney Jane McFetridge told the Senate Committee on Health, Education, Labor and Pensions that the PFA had “the potential to cripple companies, particularly smaller businesses.”

As it is currently worded, the Paycheck Fairness Act would:

  • make companies liable for unlimited punitive damages under the Fair Labor Standards Act (FLSA) – even for unintentional pay disparities
  • repeal a requirement that workers give written consent to become part of an Equal Pay Act lawsuit, and
  • restrict a company’s flexibility to base workers’ compensation on factors such as cost-of-living differences among geographic locations and different work duties within similar job categories.

And, according to a position statement from the Society for Human Resource Management, the PFA would also:

  • Restrict employer flexibility in pay decisions.  The PFA would effectively prohibit employers from using many legitimate factors to compensate their employees, including professional experience, education, training, employer need, local labor market rates, hazard pay, shift differentials and the profitability of the organization.
  • Require the collection of employer wage data. The PFA would authorize the EEOC and the DOL to collect compensation data from compensation managers, which would require some extra work on employers’ end.
  • Reduce employee privacy. The PFA would effectively encourage employees to discuss or publicize their co-workers’ wages by preventing employer retaliation against an individual who publicly discloses their wages or the wages of other employees.

We’ll keep you posted.

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  • ME

    Incredibly ridiculous legislation that leads even closer to the “socialist” state that Obama desires! No one is entitled to what they have earned via education, work experience, hard work…everyone is “entitled” to the same thing…yada yada yada…is this Cuba????

  • MMAN

    “The PFA would effectively encourage employees to discuss or publicize their co-workers’ wages by preventing employer retaliation against an individual who publicly discloses their wages or the wages of other employees” obviously some people are unaware that employees already have a right to discuss their wages and working conditions under the NLRA. However, employees also have a right to remain silent on these issues as well. With that said, it is already illegal for an employer to punish an employee who voluntarily publicly/privately discloses their wages as that is the employee’s right. And I’m pretty sure the disclosure of the wages of other employees when the employee gains knowledge of their coworkers’ wages through their coworkers’ own admission(s) wouldn’t be deemed punishable in a court of law by their employer either. How else would an employee know the wages of their coworkers’ unless his/her coworkers told him/her?