Paycheck Fairness Act Would Hold Employers Accountable for Pay Gaps

 

Kathy Gurchiek By Kathy Gurchiek February 15, 2019
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The Paycheck Fairness Act reintroduced in Congress on Jan. 30 is the latest legislative effort to end gender pay disparity by barring discriminatory practices and holding employers accountable for wage equity.

Similar bills at the federal level have stalled in the past, even as state legislatures introduced more than 40 pay-equity bills in 2017 and at least five states passed a pay-equity law in each of the last four years. A common theme among lawmakers in 2018 was banning the practice of asking about a job applicant's salary history as a way to determine starting pay

This proposed federal legislation seeks to update the Equal Pay Act (EPA) of 1963, which the American Bar Association stated "has proven ineffective in eradicating gender-based wage discrimination for several reasons." In its estimation, for example, the EPA's remedies "often provide inadequate compensation to make the victim whole and are insufficient to deter future violations of the law by employers who view them as a cost of doing business."
 
The wage gap affects nearly all women: women of color, mothers and single women without children, according to the National Women's Law Center in Washington, D.C. Women who never married and don't have children are paid 83 cents for every dollar their male peers are paid. Mothers who work full time typically are paid 71 cents for every dollar paid to fathers. Women of color working full time receive less pay than their white, non-Hispanic male counterparts, with the amount varying according to the woman's ethnicity.

[SHRM members-only toolkit: Managing Pay Equity]

Yet research findings issued in 2018 from pay consultancy Korn Ferry found that the gap disappears when analyzing the wages of men and women working at the same level at the same company and performing the same function.

"The much-publicized pay gap between men and women in the U.S. is real, but it is predominantly caused by fewer women than men in higher-paying roles and higher-paying industries," Korn Ferry senior client partner Maryam Morse said.

And compensation data and software firm PayScale reported in its State of the Gender Pay Gap 2018 paper that men continue to move into more-senior positions at significantly higher rates than women. One reason for this is that women are five times more likely than men to take extended leaves from work for child rearing, and that time away often lasts more than a year, its research showed.

Sen. Mark A. Warner, D-Va., has said that the pay gap is "a family and economic issue," not a women's issue. He and Sens. Tim Kaine, D-Va., and Patty Murray, D-Wash., reintroduced the Paycheck Fairness Act in the Senate last month. The bill has 45 co-sponsors.

Rep. Rosa DeLauro, D-Conn., introduced a similar bill in the House. It has 240 co-sponsors, all Democratic members and one Republican member.

Congresswoman Eleanor Holmes Norton, D-D.C., testified on the Paycheck Fairness Act at a Feb. 13 hearing before two U.S. House of Representatives Education and Labor subcommittees. She is an original co-sponsor of the bill DeLauro introduced.

The new legislation updates the Equal Pay Act (EPA), which Norton enforced as chair of the Equal Employment Opportunity Commission (EEOC). It facilitates a complainant's participation in class-action lawsuits challenging systemic pay discrimination, improves the Department of Labor's ability to enforce the EPA, directs the EEOC to survey wage information to help with analysis and enforcement, and prohibits employers from asking job applicants their salary history. 

Rep. Bobby Scott, D-Va., who chairs the Committee on Education and Labor, has vowed to make the legislation one of the committee's top priorities.

What It Means for Employers 

The bill is intended to hold employers accountable for discriminatory practices, end the practice of pay secrecy, ease workers' ability to individually or jointly challenge pay discrimination, and strengthen available remedies for employees who have been wronged.

If approved, it would:

  • Prohibit employers from using salary history to determine a new hire's pay. Disallowing the practice is intended to ensure that salaries are not based on prior pay gaps that can follow workers from job to job.
  • Protect employees against employer retaliation for discussing pay with colleagues. This includes prohibiting employers from firing employees for sharing information that can identify disparities.
  • Require employers to prove that any pay disparities that exist between men and women are a business necessity and are in place for job-related reasons.
  • Equalize discrimination claims based on gender, race and ethnicity so that plaintiffs who file claims under the Equal Pay Act have the same robust remedies as those who make claims under other laws.
Additionally, the Office of Federal Contract Compliance Programs would implement a yearly survey to collect pay data from employers and some data-collection provisions would be introduced for the EEOC and the Bureau of Labor Statistics. The secretary of labor would distribute wage-discrimination information to the public.

Transparency in an organization's pay structure and in other areas, such as supplier diversity, is vital to ending disparity, said Ethan Powell, founder of Impact Shares in the Dallas/Fort Worth area.

"The marketplace"—including consumers and job seekers—"is going to demand [transparency]," he said. "It's a little scary for [organizations] because they're uncomfortable with what they may uncover."

If the act passes Congress, HR professionals will have to determine how to implement the law at their organizations, said Alejandra Castillo, J.D., CEO of the YWCA-USA in Washington, D.C.

It may require conducting a compensation study or audit of different work units "to take a read of where you are in the whole [compensation] spectrum," she said. If an organization has a pay structure based in part on seniority or longevity, for example, it will need to determine how to take that into account.

"Look for different titles and pay scales and do a comparison," she recommended. "That is an eye-opening experience and will render some interesting findings. There are institutional discriminatory practices that have been embedded, and women have lagged behind for many, many years."
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