Senate to Vote on Paycheck Fairness Act

November 15, 2010

The U.S. Senate is currently scheduled to vote on the Paycheck Fairness Act, S. 3772, as early as Wednesday, November 17, 2010. Because of the drastic effects this would have on wage and hour laws, employers may wish to contact their senators in advance of the vote.

The Act would greatly increase employer exposure for claims of gender-based wage discrimination and narrow the defenses currently available to refute such actions. Specifically, the Act would:

  • Bar retaliation against workers who share information about wages with other employees.
  • Allow for potentially unlimited compensatory and punitive damages.
  • Encourage class actions by requiring employees to “opt-out” of (as opposed to “opting-in” for) collective actions under the Fair Labor Standards Act.
  • Narrow the affirmative defense previously available to employers that a particular pay differential is caused by a “factor other than sex”, such that employers would be required to show that wage differences are caused by job-related, “bona fide” factors consistent with business necessities.
  • Expand the current “employer’s establishment” requirement that employees must work in the same place of employment for wage comparison purposes, to include workplaces located in the same county or similar political subdivision of the state.

Besides making changes to existing legislation, the Paycheck Fairness Act also provides the U.S. Department of Labor with additional resources to enforce the statute, once enacted.

  1. The Act requires the OFCCP and EEOC to provide specific training to their employees on performing compensation analyses and investigating allegations of wage discrimination.
  2. The statute would reinstate the Equal Opportunity Survey (EO Survey) abolished during the Bush Administration, which allows the OFCCP to collect certain employment information from federal contractors and subcontractors related to their affirmative action obligations, including personnel activity and compensation data.
  3. The Secretary of Labor would be authorized to give grants to entities for negotiation skills training programs for women and for these programs to become part of training provided to U.S. Education and Labor Department employees.
  4. The Act directs the Secretary of Labor to provide for certain studies and programs that evaluate employers on the specific goals of the statute.

When combined with other recently passed legislation such as the Lilly Ledbetter Fair Pay Act, the Paycheck Fairness Act make it extremely likely that employers will see a dramatic increase in wage and hour suits, both in terms of individual and collective actions. As a result, employers should take appropriate measures to ensure their compensation policies and procedures are updated and properly implemented. Employers should also review their compensation structure to ensure that any disparity is based on bona fide factors related to business necessity, given that they will have the burden of proof on this issue if and when the Act passes.

McGuireWoods will continue to monitor the progress of the Paycheck Fairness Act in the Senate and provide further updates as this and other employment-related legislation comes closer to enactment. For further inquiries regarding pending legislation in Congress or for compliance questions regarding your current compensation structure and policies, please contact the authors or any other member of McGuireWoods’ Labor & Employment Team.