H.R. 1338 - The Paycheck Fairness Act

by Mike Eastman

Tomorrow, the House Education and Labor Committee is scheduled to consider the Paycheck Fairness Act (H.R. 1338), legislation that would radically amend the Equal Pay Act and other laws nondiscrimination laws.

Federal law already provides strong protections against sex discrimination under Title VII of the Civil Rights Act of 1964 and the Equal Pay Act.  Nevertheless, as noted in a letter we sent to all members of the Committee last week, this bill would:

• Eliminate the caps on punitive and compensatory damages
• Make punitive and compensatory damages available for even unintentional pay disparities
• Eliminate employer defenses for pay disparities, such as paying people differently because they work in different parts of the country with different costs of living
• Make it easier for trial lawyers to file large class actions
• Impose comparable worth “guidelines,” second guessing market forces about the relative worth of different types of jobs, and
• Re-impose debunked statistical analyses and auditing methods used by the Labor Department

We likely won’t hear much about these details during tomorrow’s Committee meeting, this being an election season and all.  Instead we will likely hear how something must be done to remedy the "pay gap" – a statistic that attempts to measure the difference between the pay of men and women.  Depending on which study one reads, estimates of the pay gap vary widely between 23 percent and zero.

The principal problem with most of these studies is that they assume that any gap that exists must be due to unlawful discrimination.  This assumption is then used to justify radical rewrites of pay equity laws. While it is possible that unlawful discrimination accounts for some of the gap in any of these studies, the reality is that all a gap indicates is the unexplained wage differential. This is a pretty thin reed on which to base such an expansive bill.

For a more detailed discussion of the problems with H.R. 1338, please see "Testimony on the Paycheck Fairness Act" and our statement on the topic, both from last year; as well as our letter on the subject from July 14 of this year.

Comments

[Terry Dickey]

This piece of legislation is precisely the problem that business people have with politicians who have no experience or true understanding of what it takes to operate a business.

There is no doubt that the basic equal pay for equal work is absolutely proper. However, this piece of legislation has morphed into something that is absolutely absurd. It is a tort lawyer's dream. It will force companies to look at operations in areas with high cost of living and wages and eliminate them by choosing to relocate to the "cheaper" geography. It will have companies looking at consolidation when they were otherwise content to operate in multiple locations, supporting multiple communities.

I am president and CEO of a 102 year-old company. We operate a second location in a very nice small town in another state. The cost of living is less than our primary location and wages are established through local research and industry research. If we are forced to pay the same wages, then the few percentage points for justification are eliminated and we are forced to look at relocation the the main location, or take the reduction in bottom-line earnings in an industry that is a low-margin industry.

I dare say that the Congressman and Senators of that district would think this is a beneficial bill if that happnened.

I will be writing letters to our legislators. I hope that this bill can be blocked until it is properly revised.

Thank you.