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House OKs Pay Discrimination Bill Ushering in Punitive, Compensatory Damages

August 1, 2008
Related Topics: Compensation Design and Communication, Discrimination and EEOC Compliance, Wages and Hours, Latest News
Women who are victims of pay discrimination could sue for unlimited punitive and compensatory damages under a bill approved by the House of Representatives on Thursday, July 31.

The measure, which updates a mid-1960s law prohibiting wage disparities between men and women performing the same job, has drawn a veto threat from the White House. It passed by a 247-178 vote in the House. Its prospects in the Senate are unclear.

Under the bill, a company that pays women at a different rate than men would have to prove the practice is based on a business necessity.

Wage comparisons between men and women could be made at business operations within the same county. In addition, the bill would permit workers to share pay information and prohibit employers from banning such discussions from the office.

It also would establish Department of Labor grants for “negotiation skills training programs for girls and women.”

The bill could significantly increase penalties for businesses that are found to pay men more than women. The unlimited damages apply even if the discrimination is unintentional. Under Title VII of the Civil Rights Act, damages are capped at $300,000.

The House approved an amendment, 397-29, that would require a plaintiff show an employer intentionally discriminated in order to collect punitive damages.
The increased exposure of businesses to pay lawsuits stoked Bush administration opposition.

The bill “would make enforcement of [anti-discrimination] laws more difficult and error-prone and invite a surge of litigation,” said a White House policy statement. “It also would encourage discrimination claims to be made based on factors unrelated to actual pay discrimination by allowing pay comparisons between potentially different labor markets.”

Democrats argued during the House floor debate that such pay disparities are real. Many speakers cited a Census Bureau statistic showing that women make 77 cents for every dollar earned by a man.

Rep. George Miller, D-California and chairman of the House Education and Labor Committee, said that imposing tougher sanctions against companies and forcing them to prove that pay discrepancies are a business necessity would help close the gap.

“The [current] law still allows employers to pay on a discriminatory basis,” Miller said. “They can pull any defense out of the air they want.”

Republicans said the bill was unnecessary because wage discrimination is already illegal under the Equal Pay Act of 1963. They asserted that the bill would increase litigation costs.

“This bill will invite more lawyers to bring more lawsuits because it offers them a bigger payday,” said Rep. Howard “Buck” McKeon, R-California and the ranking member of the labor committee.

McKeon also questioned statistics showing that women make less than men. He said they “distort reality” because they compare the earnings of all women and all men without taking into account factors like experience and education.

The bill’s author, Rep. Rosa DeLauro, D-Connecticut, dismissed that argument, saying that schooling does not ameliorate pay disparities.

“The gap barely closes among women with college degrees,” DeLauro said. “The marketplace will not correct this injustice.”

House approval was a triumph for DeLauro, who introduced her bill 11 years ago. Republicans kept the measured bottled up while they controlled the House. It finally got a hearing when Democrats captured the majority last year.

The House vote might help Democrats politically. Battling pay disparity is an issue that the party believes is one of its strong suits, especially as the economy falters. Another bill they’re pushing is the Lilly Ledbetter Fair Pay Act, which would broaden the statute of limitations on pay claims.

Polls show presumptive Democratic presidential nominee Sen. Barack Obama leading Republican rival Sen. John McCain by a substantial margin among women.

“There is a sense of economic insecurity for women,” DeLauro said after the House labor committee approved her bill on July 24. “It’s palpable nationwide.”

—Mark Schoeff Jr.

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