It’s January after an election year, and things are going to start moving fast in the world of employment law. The 111th Congress of the United States convened this morning and by the end of this week two laws may have passed that drastically affect employers.
An entry on this blog dated December 1, 2008, predicted that a new Democratic administration and Congress would try to pass the Ledbetter Fair Pay Act and amendments to the Equal Pay Act. As expected, the U.S. House of Representatives is scheduled to vote on these laws in this first week. If you don’t like the proposed changes, you better contact your congressman quickly.
The Ledbetter Fair Pay Act, if passed, will override the U.S. Supreme Court’s decision in 2007 in Ledbetter v. Goodyear Tire & Rubber Co. The change will affect the statute of limitations on pay discrimination claims to allow employees to sue over discriminatory pay based on each successive paycheck in which the discriminatory pay is received. So if you decided to pay a woman less than a man for the same job in 1983, and that inequity still exists despite 25 years of raises and bonuses, you could still be liable as an employer for discrimination based on each new paycheck that she receives.
If the Paycheck Fairness Act, which amends the Equal Pay Act of 1963, is passed, it will require you to pay the same amount to any employee in your company if the job requires comparable functions, skills, effort and responsibility in the same working conditions. The problem that I foresee is that you may pay workers in other areas of the country differently because of different costs of living and different market factors. This would become illegal. This law could also bring into question whether your payment of different employees for the same job is really based on tenure and experience or discrimination.
The law also would make it illegal for employers to discipline or fire workers who publicly reveal their salaries. The National Labor Relations Act already frowns on employer policies that prohibit employees from discussing their salaries because such a policy is perceived to have a chilling effect on the formation of unions. The Paycheck Fairness Act will provide the final nail in the coffin for these types of salary discussion prohibitions.
Finally the Paycheck Fairness Act would lift the caps currently in place on compensatory and punitive damages under pay discrimination laws. This could create a powerful incentive for plaintiff’s employment lawyers to accept and file more employment discrimination cases.
The end result is that as an employer, your company will be more vulnerable than ever to discrimination lawsuits. That makes your preventative efforts all the more important. Delete any policy that prohibits your employees from discussing their salaries. Then get the rest of your employment policies and procedures, especially your pay practices, reviewed now if you want to avoid costly litigation against your company.