As anticipated, the House swiftly passed two pay-related bills that will make it easier for employees to sue for wage discrimination. The Paycheck Fairness Act (H.R. 12) and the Lilly Ledbetter Fair Pay Act (H.R. 11) were put to a vote without amendment, as they had been heavily vetted in the last Congress, yet failed to survive the Senate. The House today voted 256-163 in favor of the Paycheck Fairness Act, and 247-171 in favor of the Lilly Ledbetter Fair Pay Act. They will be sent to the Senate – which is likely to be more receptive to these bills this time around – as a package. Consideration may begin as early as next week. If approved, President-elect Obama will almost certainly sign them into law, starting the 111th Congress off to a decidedly worker-friendly start. Interestingly, Congress got off to a similar start in the Clinton era by passing a previously-vetted Family and Medical Leave Act as its first major bill weeks after Clinton took office.
Among other things, the Paycheck Fairness Act expands damages under the Equal Pay Act of 1963 to include potentially unlimited compensatory and punitive awards. In prepared remarks in opposition to this bill, Rep. Howard “Buck” McKeon (R-CA), senior Republican member on the U.S. House Education and Labor Committee, referred to this aspect of the legislation as a “trial lawyer boondoggle” that would encourage more and costlier lawsuits.
Additionally, the bill amends the broad affirmative defense previously available to employers that the pay differential in question is caused by a factor other than sex. Under the new legislation, an employer is required to show that any wage discrepancy is caused by a bona fide factor other than sex, such as education, training and experience, and that this factor is job-related and consistent with business necessity. An employee can rebut this claim by showing that there exists an alternative employment practice that would serve the same business purpose without resulting in the pay disparity, and that the employer has refused to adopt this alternative practice. It is this portion of the affirmative defense that will likely cause significant litigation, pitting the viability of an alternative work practice against the employer’s sound business discretion.
The Act also eliminates the “establishment” requirement that employees must work in the same place of employment for wage comparison purposes. Under this bill, an employer’s establishment would include workplaces located in the same county or similar political subdivision of a state.
The Lilly Ledbetter Fair Pay Act amends the Civil Rights Act of 1964 to declare that an unlawful employment practice occurs when: (1) a discriminatory compensation decision or other practice is adopted; (2) an individual becomes subject to the decision or practice; or (3) an individual is affected by application of the decision or practice, including each time compensation is paid. Stated differently, this bill would allow plaintiffs to bring wage claims years after the alleged discrimination occurred. The Ledbetter Act would reinstitute the “paycheck rule,” which was expressly rejected in the Supreme Court decision Ledbetter v. Goodyear Tire & Rubber Co. In this case, the Supreme Court held that employees cannot challenge ongoing compensation discrimination if the employer's original discriminatory decision occurred more than 180 days before. Under the paycheck rule, the statute of limitations for filing a wage claim would effectively be reset each time the employee receives a paycheck. Liability accrues, so an aggrieved claimant could recover back pay and other relief for up to two years preceding the filing of the charge, where the unlawful employment practices that have occurred during the charge filing period are similar or related to practices that occurred outside the time for filing a charge. These amendments would apply to claims of pay discrimination under Title VII, the Americans with Disabilities Act of 1990, the Rehabilitation Act of 1973, and the Age Discrimination in Employment Act of 1967.
Either of these bills, if enacted, would open the doors to increased wage discrimination litigation. Under the Lilly Ledbetter Fair Pay Act, employers could be scrutinized – and made liable for – acts and decisions made years earlier. Moreover, a worker or retiree could seek damages against a company run by employees and executives who had nothing to do with the initial act of alleged discrimination that occurred 5, 10, or even 20 years earlier. Trying to reconstruct ancient alleged acts of discrimination in order to defend these lawsuits could prove challenging for employers. Under the Paycheck Fairness Act, a valuable affirmative defense would be significantly restricted. With either Act, employers face increased financial penalties for any violations.
