With the one year anniversary of the Lilly Ledbetter Fair Pay Act (click here and here) has come talk of the possible passage of the Paycheck Fairness Act (S. 182; H.R. 11). This act was passed by the House of Representatives in July 2008 but hasn’t been acted on in the Senate.

Word on the street is that backers of the act in the Senate will begin moving the proposed legislation forward in time for Equal Pay Day, an event sponsored on April 20 this year by the National Committee on Pay Equity. It’s too early to tell whether the Paycheck Fairness Act can gain enough traction for passage in the Senate, given everything thing else on the congressional agenda at present. It’s probably a good idea to begin monitoring the status of this proposal in the Senate, however.

Here’s a summary to refresh your memory on this proposal: 

The Paycheck Fairness Act would amend the Equal Pay Act (“EPA”) in five major ways for private employers.

●          First, the bill would revise the remedies for sex discrimination in the payment of wages by permitting uncapped punitive and compensatory damages. (Currently, the only monetary remedies available under the EPA are back pay and liquidated damages, which are capped at the back pay award.)

●          Second, the bill would limit employers’ ability to defend against EPA claims. At present, the EPA allows an employer to defend against a claim by showing that a pay differential was caused by “any factor other than sex.” The Paycheck Fairness Act would require employers to show “a bona fide factor other than sex, such as education, training, or experience” to establish a defense to a EPA claim. Moreover, employers would have to show that this bona fide factor is: (1) not sex-based; (2) job-related to the position in question; and (3) consistent with business necessity.  However, even if an employer met this burden, the employee would still prevail under the Paycheck Fairness Act if the employee could show that the employer refused to adopt an alternative employment practice that would serve the same business purpose without producing differential results.

●          Third, the Paycheck Fairness Act would facilitate the filing of class action litigation by forcing class members to “opt out,” whereas each putative class member in an EPA collective action currently has to “opt in” to such a claim.

●          Fourth, the bill would prohibit an employer from retaliating against an employee who inquires about, discusses, or discloses his/her own wage or that of another employee unless the disclosing employee has access to that wage information as part of his/her essential job function. (While case law developed under the National Labor Relations Act prohibits this sort of retaliation for most private employers already, the Paycheck Fairness Act would provide impacted employees with much stronger remedies.)

●          Fifth, the bill would require the Equal Employment Opportunity Commission (“EEOC”) to issue regulations regarding the collection of pay information from employers and would require the Office of Federal Contract Compliance Programs (“OFCCP”) to use its “full range of investigatory tools” to dig up evidence of possible compensation discrimination.

If the Paycheck Fairness Act becomes law, the impact would be significant from both a compliance and a litigation standpoint. At the bare minimum, this bill would likely require most employers to actively track and report employee pay information to the EEOC and to deal with a more aggressive OFCCP. On the litigation front, it’s almost a certainty that pay discrepancies exist between men and women performing similar jobs at many employers. It’s also almost a certainty that a number of courts would find that there are questions of fact as to whether any bona fide factors an employer might claim for such pay discrepancies are job-related and/or consistent with business necessity.

Stay tuned.