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Equal Pay

This bill would amend the Fair Labor Standards Act (FLSA) to provide more effective remedies to victims of pay discrimination based on sex under the Equal Pay Act.

September 6, 2001
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Related Topics: Miscellaneous Legal Issues
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Bills include: Paycheck Fairness Act(S.77); Enhancing Economic Security for America's Working Families Act (S.8).

Summary
   Senator Daschle (D-SD) introduced thePaycheck Fairness Act (S. 77), which would amend the Fair Labor Standards Act (FLSA)to provide more effective remedies to victims of pay discrimination based on sexunder the Equal Pay Act. The same bill was introduced in the last Congress, butno action was taken on it.

    S. 77 increases penalties forviolations, making employers liable for unlimited compensatory and punitivedamages. (Currently, employers are liable for only liquidated damages and backpay awards). The bill would simplify the process for employees to bring classaction lawsuits under the Equal Pay Act by creating an "opt out," vs.an "opt in" mechanism for attracting plaintiffs. It would eliminatethe requirement that a claimed pay disparity be between jobs in the same"establishment," or geographic location, of a business. Thelegislation specifies standards for employers to demonstrate in claiming anaffirmative defense to alleged unequal pay practices.

    Also, it would prohibit employers frompunishing or retaliating against employees for sharing salary information withtheir co-workers, and encourages the Department of Labor (DOL) to develop payequity "guidelines" that employers would be encouraged to adopt. Thebill would require that the EEOC issue regulations within 18 months fromenactment to provide for the collection of additional pay information data fromemployers for use in enforcing the Equal Pay Act.

    A broad bill introduced by Sen. Daschle(S. 8) addresses several wage-related issues, including the provisions of thePaycheck Fairness Act.

Status
   Sen. Daschle introduced S. 77 alongwith 22 Democratic cosponsors, and the bill was referred to the Committee onHealth, Education, Labor, and Pensions. The broader bill introduced by Sen.Daschle (which also contains a paycheck fairness measure) was referred to theFinance Committee.

Impact
   In light of this legislation andsimilar efforts in the states, employers may want to consider pay equity andbegin anticipating how changes to their compensation programs may affect, and beaffected by, future pay equity enforcement. Some employers with federalcontracts have already started this process because they are required to reportwage data as part of their affirmative action obligations, as required by theDepartment of Labor Office of Federal Contract Compliance Programs.

    Companies that have classified jobsinto broad pay grades already are one step closer to analyzing their pay datafrom a pay equity perspective. Under these classification systems, dissimilarjobs are placed into single, broad pay groups based on criteria such as skills,education requirements, accountability and responsibility. These are some of thesame criteria used in pay equity analysis.

    However, companies that haveimplemented these types of nontraditional job classification systems should beable to explain their systems in a more traditional context in the event of agovernment audit.

    The important lesson for organizationsto understand is how their pay programs are determined, administered andcommunicated, and to know whether any areas of the organization should beexamined more closely.

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SOURCE: HewittAssociates LLC


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