The Paycheck Fairness Act

Those pushing for the Paycheck Fairness Act rarely (if ever) mention the words “law suits”.  Yet the Paycheck Fairness Act’s primary effect is to tilt the legal playing field more in the favor of plaintiffs and encourage more litigation and profits for trial lawyers.

In particular, the Paycheck Fairness Act would:

Encourage More, Larger Class Action Lawsuits:  Currently, a worker has to agree to be included in a class action lawsuit against her employer.  The Paycheck Fairness Act would change this so that employees are automatically included in the class unless they opt out.  This creates a new burden for workers, but makes it much easier for lawyers to obtain certification as a class and increase the size of awards.

Increase Awards for Lawsuits:  Currently, employees found by the courts to have been victims of discrimination can receive back-pay for the earnings they were unfairly denied, and punitive damages of up to $300,000 when discrimination was intentional.  The Paycheck Fairness Act would change that by allowing employees to also receive unlimited punitive damage awards, including for unintentional discrimination.  This dramatically increases the motivation for both lawyers and employees to sue employers in hopes of a super-sized payout.

Make It Harder for Businesses to Defend Themselves:   Instead of being able to justify differences in pay based on factors such as experience, job duties, and business necessity, employers would be vulnerable if an employee could demonstrate that “an alternative employment practice exists that would serve the same business purpose without producing such differential.”   What does that mean?  No one knows exactly.  Therefore, this new standard would leave employers open to lawsuits for essentially any compensation decision that they make—whether that is rewarding an employee with a raise for superior performance or allowing an employee to renegotiate her existing compensation package to provide flexible hours.  Again, this ambiguity would be an invitation to lawyers looking for clients and a piece of damage awards to initiate lawsuits, regardless of their merits.

Are more lawsuits really good for women? Perhaps for female lawyers, but not for the rest of us.  Businesses facing higher legal costs have to rebalance the budgets and find new ways to reduce their exposure to potentially bankrupting litigation.

One way that employers could move to shield companies from liability under this uncertain, new legal regime is to adopt more rigid, one-size-fits-all compensation practices.  

Even the Washington Post called the Paycheck Fairness Act “a flawed approach to job bias,” and warned in an editorial that the legislation “would allow employees and courts to intrude too far into core business decisions.”  The good news is research commissioned by the Independent Women’s Voice reveals that regulations like the Paycheck Fairness Act remain unpopular.  

Equal pay for equal work has long been the law of the land.  Women unfairly treated by employers can seek remedy under the Equal Pay Act of 1963 and Title VII of the Civil Rights Act of 1964.  And in fact, each year, tens of thousands of sex-based discrimination cases are filed under existing law, which suggests that women (and men) who are truly victims of discrimination can and do make their case in the courts and get the justice they deserve.   The Paycheck Fairness Act is an unnecessary law that would increase the number of lawsuits—but not the amount of justice—while decreasing job opportunities for women.


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