AIM Business Insider

'Paycheck Fairness Act' Anything But Fair to Employers

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The so-called Paycheck Fairness Act now pending on Congress is anything but fair to employers working in good faith to provide opportunity to all employees.

Senate Majority Leader Harry Reid (D-NV) signaled recently that he will re-introduce the long-pending Paycheck Fairness Act (S.372) before the Senate adjourns for mid-term elections. The House approved the measure last spring.   

The legislation would allow unprecedented penalties of unlimited punitive and compensatory damages in cases of suspected pay discrimination. Employers of all sizes would be exposed to increased litigation and a spate of frivolous class-action suits even when they act with a reasonable belief that their pay policies are lawful.

AIM opposes the Paycheck Fairness Act. Here’s why:

• It would remove the Equal Pay Act caps on punitive and compensatory damages and would apply punitive damages to all cases.
• The bill would also eliminate a key justification for pay disparities by requiring that any difference in pay be substantiated as a “business necessity.” Additionally, these defenses would have to be based on “bona fide” factors and would prevent employers from paying employees in different localities different rates.
• This legislation would make it easier for plaintiffs’ attorneys to file class-action suits against employers by requiring participants to “opt-out” of equal pay class-action suits. Currently, claimants must “opt-in” to suits if they wish to be part of the class.
• If passed into law, the Paycheck Fairness Act would require that the government collect information on employee wages and other data. This would also enable confidential salary information to be publicly shared with employees’ coworkers, competitors and others. In addition, the bill would allow the Equal Employment Opportunity Commission (EEOC) to require employers to report sensitive wage information that may be publicly disclosed. 

We believe that existing laws protect workers from gender discrimination while allowing employers the necessary freedom to adopt the best competitive business practices available to retain and attract employees. Expanding punitive damages will not prevent actual instances of discrimination; instead it would encourage the filing of claims to the benefit of plaintiffs’ attorneys.

Employers who are concerned about the impact the bill will have on their respective operations are urged to contact Senators Kerry and Brown and ask them to oppose the measure, and indicate that Senate should not act to expose employers to frivolous lawsuits or dictate business practices.