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What the Failure of the Paycheck Fairness Act Means for Employers

A bill that would have eased the ability to win gender-based pay disparity lawsuits failed in the Senate this month.  The Paycheck Fairness Act would have placed the burden on employers to prove that pay disparities were based on job-related factors, such as education, training, or experience.  It also would have prohibited employers from retaliating against employees who “inquired about, discussed, or disclosed” their wages or other employees’ wages.  In addition, it provided for punitive damages in some cases.

As an employer, what are you permitted to do now that you would not have been able to do if the law had passed?  Nothing.  The Paycheck Fairness Act was not the sweeping legislation politicians touted it to be.  It is already unlawful under the National Labor Relations Act for employers to prohibit employees from discussing their wages or to retaliate against employees who do.  Pay disparities based on gender are already unlawful under the Equal Pay Act and Title VII of the Civil Rights Act of 1964.

Although the Paycheck Fairness Act failed, it is clear that pay equity remains a priority of the Obama Administration.  Typically, the Obama Administration has acted by strengthening enforcement of existing laws, rather than by passing new legislation.  President Obama called the failure of the Paycheck Fairness Act “incredibly disappointing.”  Employers should expect to see strengthened enforcement of the existing laws in light of this development.

Employers should take this opportunity to review their payrolls to determine whether a gender disparity exists and whether it is accounted for by a non-discriminatory factor.  Are you paying overtime when necessary?  Have you properly classified employees and independent contractors?  Conducting an internal HR audit can help identify these or other pay issues.  (But be sure to do it right and without creating any “smoking guns!”) An agency audit on any one of these issues can lead to audits on your pay practices in general, so it is in your best interest to be proactive in identifying where your policies can be improved.

Brody and Associates regularly advises management on complying with state and federal employment laws including wage and hour laws.  If we can be of assistance in this area, please contact us at info@brodyandassociates.com or  203.965.0560.