Bill Seeks To Broadly Expand Gender Discrimination Suits

A bill recently introduced in the United States Senate could lead to a wave of new gender discrimination suits and leave employers vulnerable to high-dollar damages. The "Paycheck Fairness" bill, which passed the House last year, could become law if Senate leaders succeed in their efforts to pass the bill before November. Of course, discriminatorily paying women less than men already is illegal under existing statutes such as the Civil Rights and Equal Pay Acts. If passed, however, the Paycheck Fairness Act would expand employers' potential liability well beyond what was previously possible. Among other things, the Act would dramatically increase available damages and at the same time curtail the employer's ability to defend itself.

The most significant provisions of the Paycheck Fairness Act are as follows:

1. Uncapped Punitive and Compensatory Damages. The current version of the Equal Pay Act limits monetary damages to back pay and liquidated damages, but the Paycheck Fairness Act would to do away with these limitations and permit uncapped punitive and compensatory damages for Equal Pay Act plaintiffs.
2. Dramatically Reduced Employer Defenses. An employer can defend itself against a claim under the current version of the Equal Pay Act by showing that a pay differential was caused by "any factor other than sex." This defense has proved invaluable to employers because it allows them to articulate the myriad factors that could go into an individual compensation determination. For instance, without discriminating, an employer might pay a particular male employee more than a particular female employee because that male employee worked at a facility in a higher cost of living area or because of other legitimate market factors.
   
   The Paycheck Fairness Act, however, could eviscerate such defenses by requiring an employer to meet a much higher burden to avoid liability. Under the vague language of the Paycheck Fairness Act, for instance, a geographical explanation for varying pay rates may not be an explanation that is "job-related with respect to the position in question." Moreover, even if an employer met that burden, a plaintiff could still prevail by showing that the employer refused to adopt some "alternative employment practice" that would have served the "same business purpose" without producing a pay differential.
3. Class Actions for Equal Pay Act Plaintiffs. Multiple plaintiffs already can proceed collectively under the Equal Pay Act, but anyone that wants to join a collective action must affirmatively opt-in to the lawsuit. The Paycheck Fairness Act also permits an alternate method, whereby plaintiffs can bring a Rule 23 class action. Many plaintiffs' attorneys prefer the class action method because, unlike in existing Equal Pay Act collective actions, in a class action all relevant employees are automatically included in the suit unless they affirmatively opt-out. Although the difference is subtle, the net effect would be that class litigation would be easier, making Equal Pay Act claims even more attractive to plaintiffs' attorneys.
4. New Breed of Retaliation Claims. The Paycheck Fairness Act would also introduce new provisions to the Equal Pay Act that would, except in limited circumstances, prohibit an employer from taking any adverse action against employees for inquiring about, discussing, or disclosing compensation information. This sort of retaliation is already prohibited under federal labor law, but the Paycheck Fairness Act would give the prohibition much bigger teeth.
5. Additional Record Keeping Requirements. If the Paycheck Fairness Act becomes law, the Equal Employment Opportunity Commission would be required to collect pay information from employers, and the Office of Federal Contract Compliance Programs would be directed to use its "full range of investigatory tools" to uncover compensation discrimination by government contractors. At bottom, these changes would impose greater record keeping requirements for employers and expose them to more aggressive and intrusive audits.

Proponents of the Paycheck Fairness Act note, correctly, that the disparity between male and female wages persists across the country, and they argue that the new law is necessary to eliminate that disparity. However, the current versions of the Equal Pay Act and Title VII already provide mechanisms to combat unlawful sex discrimination, and the Paycheck Fairness Act would do little to aid that effort while dramatically increasing the burden for employers in a difficult economic environment. By allowing uncapped damages and facilitating class-litigation, the Paycheck Fairness Act could make Equal Pay Act claims very attractive to plaintiffs' lawyers. Moreover, by making Equal Pay Act cases easier to advance and defenses harder to prove, more lawsuits would survive summary judgment, increasing the financial burden of litigation regardless of the merits of the underlying claims.

However, the Bill's prospects for passage are unclear. Although it passed in the House of Representatives, and it has now been re-introduced in the Senate, the Senate has refused twice previously to vote on the bill. Further, anticipated Republican gains in Congress make passage less likely if the Senate is unable to move on its passage prior to November. Nevertheless, the Obama administration has given the bill its support, and Senate leaders may seek to pass it as an amendment to otherwise unrelated legislation. Thus, employers should act now to educate themselves on the current Equal Pay Act and the changes that would be effected by the proposed Paycheck Fairness Act in order to effectively examine their compensation practices and minimize their legal exposure.

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