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NAW News

Paycheck Fairness

- April 2014

On April 7th, Senate Majority Leader Harry Reid (D-NV) signaled the Senate had moved into full-time political mode when he brought S. 2199, Paycheck Fairness Act to the Senate floor. Long a legislative ambition of Senator Barbara Mikulski (D-MD), it was clear the votes needed to get past a filibuster on the “motion to proceed” to this controversial bill were not there. To the surprise of no one, on April 9th the bill came up seven votes short of the 60 required to invoke “cloture” with all Republican Senators and one Democrat-leaning independent voting against limiting debate.

The day before the Senate vote, the President took two executive actions:

  • The President issued an executive order prohibiting federal contractors from retaliating against employees for disclosing or inquiring about their wages. (Similar obligations have already been imposed on both union and non-union employers by the National Labor Relations Board (NLRB))
  • The President issued a memorandum instructing the Department of Labor (DoL) to issue new regulations requiring federal contractors to submit to the government summary compensation data, broken down by race and gender. (Federal contractors are now required to submit compensation data to DoL’s Office of Federal Contract Compliance Programs (OFCCP) during scheduled compliance reviews.)

It is worth noting that the President had recently taken similar executive action, thus by-passing the Congress, to liberalize minimum wage and overtime requirements applicable to federal contractors. The paycheck fairness actions, taken together with the minimum wage and overtime actions, combine to form key elements of the Democrats’ efforts to highlight income inequality as a leading issue in the 2014 mid-term Congressional elections.

The Paycheck Fairness Act would prohibit employers from retaliating against employees for discussing/sharing pay information with one another. It would place the burden on employers to show that any disparities in pay for workers who do the same job are based on a “bona fide factor other than sex.” And it would provide punitive damages when the worker shows “that an employer has acted with malice or reckless indifference.”

NAW opposes the bill, the justification for which is grounded in Census Bureau data that reveals that women earn 77 cents per every dollar earned by a man. This statistic does not take into consideration disparities in hours worked, choice of occupation, education, and uninterrupted years of work. A federal Office of Personnel Management (OPM) study release on April 11th reveals a gender-based pay gap of 12.7% among federal employees in 37 white collar job categories, down from 19.8% in 2002 and 30% in 1992. The report noted that “differences in the distribution of males and females across occupational categories appear to explain much of the pay gap.” The OPM report went on to acknowledge that while “some portion of the male-female pay gap is unexplained … that does not mean that the unexplained gap is necessarily attributable to discrimination.”

It is important to note that two federal statutes – the Equal Pay Act of 1963 and Title VII of the Civil Rights Act of 1964 – outlaw and sanction pay discrimination. Employers are also concerned that the Paycheck Fairness Act will breed discontent in the workplace and will lead to costly litigation.

The political significance of this issue virtually assures that it will reappear in the Senate later in this session. It is unlikely this issue will see any action in the House of Representatives.