Don't overlook the threat of the Paycheck Fairness Act

The Paycheck Fairness Act has reared its ugly head again — and while it’s not likely to make it through this session of Congress, it’s definitely something employers need to keep an eye on.

Employment attorney Ilyse Schuman of the law firm Littler Mendelson calls the PFA a “message piece” — and if it ever does become law, it’ll mean some “significant and adverse” consequences for employers.
The PFA builds on the Lilly Ledbetter Act, which was the first piece of legislation signed into law by President Obama in 2009. Ledbetter made it easier for employees to file unfair pay lawsuits by loosening the statute of limitations for filing complaints.
According to a position statement from the Society of Human Resource Management, the PFA would:

  • Restrict employer flexibility in pay decisions.  The PFA would effectively prohibit employers from using many legitimate factors to compensate their employees, including professional experience, education, training, employer need, local labor market rates, hazard pay, shift differentials and the profitability of the organization.
  • Require collection of employer wage data. The PFA would authorize the Equal Employment Opportunity Commission and the Department of Labor to collect compensation data from compensation managers.
  • Reduce employee privacy. The PFA would effectively encourage employees to discuss or publicize their co-workers’ wages by preventing employer retaliation against an individual who publicly discloses the wages of other employees.

Another key provision: The bill would allow for unlimited compensatory damages to employees who prove they’ve been victims of unfair pay practices.
The narrowing of the factors employers can use to make pay decisions could be a real thorn in the side of companies across the U.S., Schuman added.
The PFA severely restricts the criteria that employers has used for years in making comp decisions, Schuman said. “It would eliminate a lot of reasonable factors” that go into those kinds of decisions, she said, citing such things as operational factors, different salary levels in various parts of the country, and general market conditions.
The Paycheck Fairness Act doesn’t have much of a chance for passage this year, given the makeup of Congress. But as Schuman stressed, the PFA shouldn’t be taken lightly.
“It’s an issue that’s not going away,” she said.