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NAW News

Paycheck Fairness

Legislative Issue Update - July 2010

On January 29, 2009, the “Lily Ledbetter Fair Pay Act of 2009” became the second piece of legislation to be signed into law by President Obama (PL 111-2). The practical effect of the “Ledbetter Bill” is to repeal statutes of limitations which applied to workplace discrimination claims, potentially opening the door to a substantial increase in costly litigation.

The day the House first passed “Ledbetter” it also passed H.R. 12, the “Paycheck Fairness Act” and merged the two into one bill before sending it to the Senate. In the name of “equal pay for equal work”, the “Paycheck Fairness Act” could fundamentally affect the way employers go about making employee compensation decisions despite the existence of federal law that protects workers from gender-based pay discrimination. In January 2009, the Senate declined to follow the House’s lead in linking “Ledbetter” and the “Paycheck Fairness Act” and the two were separated thus paving the way for enactment of “Ledbetter”.

In recent weeks, proponents of the “Paycheck Fairness Act” have attempted to by-pass the regular order of the Senate and bring the bill (S. 182) directly to the Senate floor. In response, NAW acting in concert with allies in the employer community, initiated a grassroots lobbying effort to block the supporters’ strategy. To date, S. 182 has not been scheduled for consideration.

In reaching out to wholesaler-distributors through the Legislative E-Alert Program, NAW urged employers to emphasize the following points in their communications with Senators:

  • Today, employers have wide latitude to establish compensation systems for their companies provided anti-discrimination laws aren’t violated. The “Paycheck Fairness Act” will impose unprecedented federal government control over how employers compensate their employees.
  • In the name of eliminating or narrowing the “pay gap”, the “Paycheck Fairness Act” will make it unreasonably difficult for employers to justify legitimate pay differences.
  • The “Paycheck Fairness Act” will be a bonanza for the trial lawyers by making it easier to bring class action lawsuits, eliminating the Equal Pay Act’s limitations on compensatory and punitive damages against employers, and narrowing employer defenses in pay disparity cases. Higher employer legal and insurance costs will be the result.
  • The “Paycheck Fairness Act” bars employers from disciplining employees who disclose employee compensation information, clearing the way for disgruntled employees with an “axe to grind” to do so at the expense of employee morale.
  • Existing federal law already protects workers for gender-based pay discrimination. The Equal Employment Opportunity Commission has reported finding merit in only 5% of the claims brought.

NAW opposed enactment of the “Ledbetter” Bill and will continue to vigorously oppose passage of the “Paycheck Fairness Act”.