A bill’s working its way through Congress that could cause a lot of headaches for HR and anyone involved in hiring.
It’s called the Paycheck Fairness Act (PFA), and it’s a proposal to strengthen the Equal Pay Act (EPA). The House of Representatives passed the bill by a vote of 247-178 right before Congress’ August recess.
Of course, HR always wants pay to be fair and non-discriminatory. But there’s plenty in the bill that would cause concern for employers and change the way compensation decisions are made.
Here’s what you need to know:
- No more “affirmative defense” — Under the EPA, companies stay off the hook when they can prove a difference in pay was caused by “any factor other than sex.” For example, a man may have been hired at a higher salary than a woman with the same job because he earned more at his previous position or negotiated for more pay when he got the job offer. Those are valid defenses under the EPA. But under the PFA, a wage differential would have to be directly related to performance or responsibility.
- Location doesn’t matter — The “establishment” clause of the EPA accounts for geographically-based wage differences — for example, an employee hired to work in New York City might make more than someone in a rural office. That’s OK, because they work in different “establishments.” In contrast, the PFA would let courts compare employees working anywhere in the country.
- No wage data confidentiality — One way many employers try to avoid co-worker conflict is keeping salary information confidential. The EPA lets companies make a policy to that effect and discipline employees who violate it. Under the PFA, that would be considered unlawful retaliation.
- Tougher record-keeping regs — The PFA would require companies to keep written documentation of how salaries are set and send annual reports to the EEOC about employees’ wages, sex, race and national origin.
- Bigger payouts — The EPA only lets companies sue for set amounts, such as back pay. But under the new bill, they could take claims before a jury to win uncapped punitive damages.
The bill still faces some opposition in the Senate, as well as the threat of a presidential veto. Still, it’s likely to get a big push from Democrats especially as the election nears. We’ll keep you posted as it moves forward.
(You can read the entire text of the bill here.)