Recent data released by the US census bureau on the male-female wage gap is causing fierce debates in the media on whether the statistical fact that women make on average only 77 cents to the dollar than men is a result of gender-based discrimination. Christina Hoff Sommers refutes that claim in her Wednesday New York Times Op-ed, while a Newsweek article today argues the opposite. IWF reported on this alleged discrimination in the past (here, here, here, and here) and showed that there are many reasons for why the statistical gap exists.
Regardless of whether you are sympathetic to one side or the other, you should recognize that the Paycheck Fairness Act , which is currently sitting on the sideline in the Senate, is going to do more harm than good.
The language in the text is highly ambiguous and presents a true feast for trial lawyers. Under the current Equal Pay Act of 1963, once employees provide evidence of sex discrimination at first sight, employers have to show that the alleged discrimination results from “any factor other than sex.” Section 3 on enhanced enforcement of equal pay, in the Paycheck Fairness Act currently considered in the Senate, states that employers can only use this good-faith defense when they can demonstrate that
such factor (i) is not based upon or derived from a sex-based differential in compensation; (ii) is job-related with respect to the position in question; and (iii) is consistent with business necessity.
an alternative employment practice exists that would serve the same business purpose without producing such differential and that the employer has refused to adopt such alternative practice.
What is consistent with business necessity? What, exactly, does an alternative employment practice look like? Those are the questions that will have to be decided in the courts.
Trial lawyers can’t wait for the Act to be passed. Once it’s through, the prospect of unlimited punitive damages, in addition to compensatory damages, in an environment that facilitates class action lawsuits, creates tremendous incentives to initiate frivolous lawsuits with the prospect of winning just a few large cases.
It’s not just businesses that will be hurt by these lawsuits, although it might look like that on the surface. Women who are working or looking to enter the workforce will bear the brunt of the costs. As employers’ costs increase not only by actual lawsuits brought against them – whether or not any gender differentials in their businesses are based on discriminatory actions-but, the risk and costs of hiring women go up, too.
Fewer women will be hired, more women may be laid off, women will have fewer choices to take lower pay in exchange for experience, schedule flexibility, or other preferences they may have.
The Act suggests to “substantially [reduce] the number of working women earning unfairly low wages [.]. That’s right, because they won’t be earning any wages at all.