The White House theme on Thursday was economic opportunity for woman, with messaging pegged to a new National Economic Council document, “Jobs and Economic Securityfor America’s Women,” President Obama’s “backyard” event in Seattle, and his campaigning for Sen. Patty Murray (D-WA).

Unfortunately, in its highlighting of the Paycheck Fairness Act, the White House’s messaging Thursday conflicts with the President’s overarching theme, that of economic recovery and jobs growth. At the same time, the messaging reminds the public of the political power of the litigation lobby.

The White House blog listed the Paycheck Fairness Act as No. 2 in its list, following Lilly Ledbetter Act Fair Pay Act, in its list, “10 Ways Our Economic Policies Benefit Women.”

It’s weird to be boasting about a bill that hasn’t passed yet. But more importantly, the legislation would lead to a more stagnant labor market, transfer more business wealth into the pockets of trial lawyers, and raise marginal costs of each new hire. A White House concerned about jobs should be renouncing the bill, not touting it.

The Paycheck Fairness Act would extend the federal government’s control over employers’ personnel decisions through rigid “pay equity” mandates and then expanding the grounds for litigation for even unintentional violations. In making hiring and salary decisions, an employer’s chief concern would not be whether the person is worth the price in the competitive labor market, but rather, “Am I going to get sued?”

As the National Association of Manufacturers’ 2009 “Key Vote” letter to the House explained:

By removing all limits to punitive and compensatory damage awards on claims made under the Equal Pay Act (EPA), the Paycheck Fairness Act (H.R. 12) would expose employers to increased threats of litigation – even when unintentional pay disparities may have occurred. Its passage would likely prompt many employers to purchase additional legal liability insurance, increasing their costs and decreasing their ability to raise wages, increase benefits or hire new U.S. House of Representatives workers. In fact, it is difficult to imagine a scenario in which the bill would not lead to lower wages and fewer jobs.

Senate Majority Leader Reid re-introduced the Senate version of the bill, S. 3722, in late September and filed cloture for possible Senate consideration in a lame-duck session of Congress. We tend to think the maneuvering is more about exciting the political base than actually pushing through the bill in a very crowded, riven post-election Congress.

Still, for employers it’s hard to ignore: A President campaigning on expanded economic opportunities for women by touting legislation that would diminish opportunities for men and women, both.

President Obama released a statement calling for passage of the Paycheck Fairness Act, giving a publicity boost to a panel that plans to release a report today, the Equal Pay Enforcement Task Force. The President said:

We cannot do this work alone. So today, I thank the House for its work on this issue and encourage the Senate to pass the Paycheck Fairness Act, a common-sense bill that will help ensure that men and women who do equal work receive the equal pay that they and their families deserve. Passing this bill is one of the Task Force’s key recommendations, and I hope Congress will act swiftly so that I can sign it into law.

The message that many business owners will hear from the President is not “common-sense” and “fairness” but rather, “Get ready for more government rules to micromanage your business, along with an increased risk of lawsuits, no matter how honestly and fairly you treat your employees. The more jobs you create, the more the risk!”

Now, please invest and help our economy grow.

The National Association of Manufacturers has prepared a ManuFact, that is, a summary sheet of the legislation, H.R. 12 and S. 182. It states:

Manufacturers strongly support equal employment opportunities for American workers and oppose any form of unlawful discrimination.  Remedies available under existing law prohibit discrimination to protect
men and women working under similar conditions from pay disparities in jobs that require equal skill, effort and responsibility. 

The proposed Paycheck Fairness Act (H.R. 12, S. 182) would alter the existing Equal Pay Act to allow unprecedented penalties of unlimited punitive and compensatory damages in cases of suspected discrimination. This exposes manufacturers of all sizes to increased litigation and a spate of frivolous class-action suits even when they act with a reasonable belief that their pay policies are lawful.

Under this legislation, equal pay class-action suits would change significantly from a system of “opt-in” to “opt-out.”  This provision would encourage frivolous class-action suits. (continue reading…)

H.R. 1338 passed by a vote of 247-178. Voting yes: 233 Democrats, 14 Republicans. Voting no: 178 Republican, 0 Democrats.

Basic argument by the opposition: You know, it’s already against the law to discriminate on the basis of gender.

AP story hits the highlights.

The House Majority Leader’s floor schedule for the day includes H.R. 1338, the Paycheck Fairness Act. (For previous Shopfloor posts, go here.)

The Statement of Administration Policy, which promises a veto, hits upon a recurring theme from opponents, that the legislation really just makes more money for lawyers suing businesses.

The bill’s provision for unlimited compensatory and punitive damages without even a showing of intent is especially troubling. Other employment statutes, such as Title VII of the Civil Rights Act and the Americans with Disabilities Act, provide for limited compensatory and punitive
damages of up to $300,000 (but unlimited backpay). These statutes only provide for such
damages after a showing that the discrimination was intentional and, for punitive damages, that
the employer “engaged in a discriminatory practice or discriminatory practices with malice or
with reckless indifference to the federally protected rights of an aggrieved individual.” To
permit punitive damages in the absence of intent or reckless indifference would be wrong.
Moreover, there is no need to add punitive damages to the EPA, since such damages are already
available under Title VII for pay discrimination. 

Another problem: The bill does not allow a company to account for geographical pay disparities. If you have an office in Beulah, Boston or Biloxi employees doing similar work must all be paid the same.
�
The NAM’s Key Vote letter in opposition is here.

Carrie Lukas, Independent Women’s Forum, “Feminists Meddle with the Market“: “[A] bill that is the equivalent of throwing sand into the wheels of our economic machine.
 

The Statement of Administration Policy on H.R. 1338, the Paycheck Fairness Act, has now been posted. First paragraph:

The Administration strongly supports and aggressively enforces our Nation’s anti-discrimination laws and is firmly committed to the principle of equal pay for equal work. But rather than contributing to that cause, H.R. 1338 would make enforcement of these laws more difficult and error-prone and invite a surge of litigation. Therefore, the Administration strongly opposes the “Paycheck Fairness Act.” The bill would unjustifiably amend the Equal Pay Act (EPA) to allow for, among other things, unlimited compensatory and punitive damages, even when a disparity in pay was unintentional. It also would encourage discrimination claims to be made based on factors unrelated to actual pay discrimination by allowing pay comparisons between potentially different labor markets. In addition, it would require the Department of Labor (DOL) to replace its successful approach to detecting pay discrimination with a failed methodology that was abandoned because it had a 93 percent false positive rate. Thus, if H.R. 1338 were presented to the President, his senior advisors would recommend that he veto the bill.

The NAM’s key Vote letter on H.R. 1338 is here. We oppose it.

UPDATE: The Heritage Foundation has just issued a new web memo on the legislation, “Paycheck Fairness Act Unfairly Burdens Employees and Employers.” Written by Heritage’s labor expert, James Sherk, the memo makes the case against this bill clearly:

In the name of protecting women from discrimination, the Act permits the government and the courts to micromanage employers, tying them up in a sea of red tape. The Act gives a windfall to trial lawyers, exposing employers to unlimited punitive damages for unintentional mistakes. Any financial benefits reaped by trial lawyers, however, will come at the expense of workers, whose wages will fall in order to cover the increased cost of legal liability insurance. The Act also obliges the government to adopt junk science by requiring the use of a highly flawed survey while declaring the best scientific practices for assessing discrimination superfluous. The PFA will hurt the very workers it is meant to help.

The full House Committee on Education and Labor is marking up today (1 p.m.) H.R. 1338, the Paycheck Fairness Act, a gender pay equity bill. The Committee held its hearing on the legislation back in April 2007, and the bill had just been hanging around then, waiting for the politically propitious moment.

So last Thursday, July 17, there was a Capitol Hill rally organized by Sen. Barbara Milkulski (D-MD) to make a push for the legislation and its Senate version (S. 766). Also speaking were House Speaker Pelosi, chief sponsors of the bill in the Senate and House, Senator Hillary Rodham Clinton (D-NY) and Representative Rosa DeLauro (D-CT). (Coverage from Ms Magazine and the Hartford Courant.)

Profile elevated, the politics primed, markup follows and the bill could soon be on the House floor.

Despite the title’s invocation of “fairness,” in an effort to end the “wage gap,” this legislation would radically expand government involvement in employment decisions, encourage a flood of litigation, and create disadvantages for a new group of employees.

Sue them until they cry uncle, and then sue them again for not crying aunt.

Section 3 is particularly danger-rife, creating a section “enhanced penalties” that broadens the grounds for suing and removes any limits on compensatory and punitive damages. The provisions would become a powerful tool for attacking, harassing and damaging any company that got on the wrong side of organized labor, the plaintiffs’ bar, and the grievance industry. 

In her committee testimony last year, Diana Furchtgott-Roth of the Hudson Institute detailed supporters’ erroneous premises about pay and gender disparities and examined the negative consequences of its provisions.

The “Paycheck Fairness Act” would have Washington interfere with employers’ ability to set wages. Section 7 of the proposed bill reads “The Secretary of Labor shall develop guidelines to enable employers to evaluate job categories based on objective criteria such as educational requirements, skill requirements, independence, working conditions, and responsibility…”

These factors are not only difficult to measure, but favor white collar and service jobs over manual, blue collar work. The bill’s language omits experience, risk, inflexibility of work schedule, or physical strength, factors that increase men’s wages relative to women’s. The bill does not include effort, so there is little leeway to promote those who work harder.

Ultimately, as Furchtgott-Roth suggests, this looks like a stalking horse’s nose under the tent for yet another run at “comparable worth” legislation. As if government setting salaries and benefits would be fair.