The Paycheck Fairness Act: The Next Step in the Fight for Fair Pay

Women's rights coalition partners applaud Congress and the Obama administration for moving quickly to enact the Lilly Ledbetter Fair Pay Restoration Act. It is a critical new law that preserves the rights of victims of pay discrimination to seek vindication. However, the Ledbetter bill is only a down-payment on making real progress in closing the wage gap. The next critical step is for the Senate to pass the Paycheck Fairness Act (S. 182/H.R. 12); the House already passed the measure in January by an even stronger bipartisan vote (256-163) than the Ledbetter bill (247-171).

Passing both bills is critical to the overall goal of achieving pay equity for all. The Lilly Ledbetter Fair Pay Act amended Title VII of the Civil Rights Act of 1964 and righted the wrongs done by the Supreme Court, regaining ground we recently lost. The Ledbetter Act is a narrow fix that simply restores legal practices and EEOC policies to what they were the day before the Supreme Court's Ledbetter decision was issued in 2007 -- nothing more, nothing less.

The Paycheck Fairness Act is a much-needed update of the 45-year-old Equal Pay Act, closing longstanding loopholes and strengthening incentives to prevent pay discrimination. Together, these bills can help to create a climate where wage discrimination is not tolerated, where fair employers can have a healthy workplace, and where the administration has the enforcement tools it needs to make real progress on ending wage discrimination.

Since women tend to be hurt "first and worst" during economic downturns, new legislation strengthening pay equity laws is needed now more than ever. An unprecedented number of women are now family breadwinners due to rising employment rates -- making pay equity critical not simply to family economic security but also to the nation's economic recovery.

Background on the Equal Pay Act of 1963: This law requires that men and women be given equal pay for equal work in the same place of business or establishment. The jobs do not have to be identical, but they must be substantially equal. It is job content, not job titles, that determines whether jobs are substantially equal. Pay differentials are permitted only when they are based on seniority, merit, quantity or quality of production, or a factor other than sex. It is important to note that when correcting a pay differential, no employee's pay may be reduced. Instead, the pay of the lower-paid employee(s) must be increased. While laudable in its goals, the Equal Pay Act of 1963 has never lived up to its promise to provide "equal pay for equal work."

Damages Currently Allowed under the Equal Pay Act: The statute currently only provides for up to three years of back pay and double that amount if the plaintiff can prove a willful violation - hardly a deterrent to employers. In fact, given the persistent nature of the wage gap, these deterrents are weak indeed. Without the ability to seek the compensatory and punitive damages added to the Equal Pay Act via this legislation, an employer may continue to treat its labor violations as merely a cost of doing business. The Paycheck Fairness Act's measured approach also levels the playing field, ensuring that women can obtain the same types of damages as those subject to discrimination on the basis of race or national origin.

Paycheck Fairness and Small Businesses: Maintaining the expectation that small businesses also follow fair pay requirements is critical to the long-term goal of pay equity for women. Given that one out of two workers nationwide works for a small business, exempting them further would significantly diminish women's civil rights protections. It should also be noted that the Paycheck Fairness Act would not go into effect until six months from the time of enactment, and requires the Department of Labor to educate small businesses about what is required under the law and assist them with compliance. Supporters of fair pay for women should oppose adding any additional small business exemptions to the Paycheck Fairness Act.

What the Paycheck Fairness Act Will Do: This comprehensive bill strengthens the Equal Pay Act by taking meaningful steps to create incentives for employers to follow the law, help women to negotiate for equal pay, and strengthen federal outreach and enforcement efforts. Specifically, the Paycheck Fairness Act would:

• Close a loophole in affirmative defenses for employers: The legislation clarifies acceptable reasons for differences in pay by requiring employers to demonstrate that wage gaps between men and women doing the same work have a business justification and are truly a result of factors other than sex.
• Fix the "Establishment" Requirement: The bill would clarify the establishment provision under the Equal Pay Act, which would allow for reasonable comparisons between employees within clearly defined geographical areas to determine fair wages. This provision is based on a similar plan successfully used in the state of Illinois.
• Prohibit Employer Retaliation: The legislation would deter wage discrimination by prohibiting retaliation against workers who inquire about employers' wage practices or disclose their own wages. (NOTE: Employees with access to colleagues' wage information in the course of their work, such as human resources employees, may still be prohibited from sharing that information.) This non-retaliation provision would have been particularly helpful to Lilly Ledbetter, because Goodyear prohibited employees from discussing or sharing their wages. This policy delayed her discovery of the discrimination by more than a decade.
• Improve Equal Pay Remedies: The bill would deter wage discrimination by strengthening penalties for equal pay violations. Women would be provided the option to proceed in an opt-out class action suit under the Equal Pay Act, and allowed to receive punitive and compensatory damages for pay discrimination. The bill's measured approach levels the playing field, ensuring that women can obtain the same remedies as those subject to discrimination on the basis of race or national origin. Supporters of fair pay for women should strongly oppose any efforts to cap damages.
• Increase Training, Research and Education: The legislation would authorize additional training for Equal Employment Opportunity Commission staff to better identify and handle wage disputes. It would also aid in the efficient and effective enforcement of federal anti-pay discrimination laws by requiring the EEOC to develop regulations directing employers to collect wage data reported by the race, sex and national origin of employees. The bill would also require the U.S. Department of Labor to reinstate activities that promote equal pay, such as: directing educational programs, providing technical assistance to employers, recognizing businesses that address the wage gap, and conducting and promoting research about pay disparities between men and women.
• Establish Salary Negotiation Skills-Training: The bill would create a competitive grant program to develop salary negotiation training for women and girls.
• Improve Collection of Pay Information: The bill would also reinstate the Equal Opportunity Survey. The Survey would enable targeting of the Labor Department's enforcement efforts by requiring all federal contractors to submit data on employment practices such as hiring, promotions, terminations and pay. This survey, first used in 2000, was developed over two decades and three presidential administrations, but was rescinded by the Department of Labor in 2006.

For more information about this fact sheet please contact the American Association of University Women at 1111 Sixteenth Street, NW Washington, DC 20036 (202) 785-7793 or visit www.aauw.org