Hans Bader at the Competitive Enterprise Institute’s Open Market blog comments on H.R. 1338 and also  points us to an effective, tough editorial in today’s Examiner taking down the so-called Paycheck Fairness Act. That’s the bill the House passed on your basic partyline vote right before the August recess, an effort to allow lawyers to sue somebody’s way to “gender equity” in the workforce.

From “Paycheck fairness — or plaintiff’s payoff?”

The bill pretends to promote “gender equity.” Fat chance. Two laws, the Equal Pay Act and Title VII of the Civil Rights Act, already prohibit workplace discrimination against women and do so quite comprehensively.

But in the name of “equal pay for equal work,” the PFA would promote equal pay for grossly unequal experience. For instance, it would put the burden of proof on a business to show that it was impossible to pay equal wages to its male and female workers. Without such proof, as James Sherk of the Heritage Foundation points out, a newly hired woman could sue for the same wages as a man with 10 years of experience. She would need only claim that the employer should “provide her with intensive training to make up for the experience gap, and then pay her identical wages.”

Worse, the bill would for the first time make employers liable not just for intentional discriminatory pay practices, but for unintentional violations, too. It also would make it vastly easier to file “class action” lawsuits.

And the legislation would remove the Equal Pay Act’s limits compensatory and punitive damages available through litigation. Good incentive for somebody.

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 NAM today sent a letter to the House of Representatives signed by Executive Vice President Jay Timmons expressing the association’s opposition to H.R. 1338, the Paycheck Fairness Act. Here’s the body of the letter:

The National Association of Manufacturers (NAM), the nation’s largest industrial trade association representing small and large manufacturers in every industrial sector and in all 50 states, urges you to oppose H.R. 1338, the Paycheck Fairness Act.

The NAM is strongly committed to equal employment opportunity and supports vigorous enforcement of anti-discrimination laws. Manufacturers are committed to equal opportunity in hiring, pay and job advancement for all employees.

The Equal Pay Act, which is current law, already prohibits wage differentials based on gender in the same establishment. The NAM opposes provisions in H.R. 1338 that would:

• Eliminate current caps on punitive and compensatory damages in claims made under the Equal Pay Act;
• Expose employers to unlimited punitive and compensatory damage awards when unintentional pay disparities have occurred;
• Eliminate key employer defenses for pay disparities;
• Prohibit employers from disciplining or discharging employees for publicly disclosing sensitive wage information; and,
• Mandate new federal government “guidelines” about the relative worth of different types of jobs.

Manufacturers strongly oppose a process whereby the federal government determines pay. Such policies would almost certainly result in a confused set of constantly changing government standards and prolonged litigation over employer compensation practices.

The NAM’s Key Vote Advisory Committee has indicated that votes on H.R. 1338, the Paycheck Fairness Act, including potential procedural votes, will be considered for designation as Key Manufacturing Votes in the 110th Congress.

Key Votes are those the NAM uses to develop its vote rankings for each session of Congress.

More updates on yesterday’s 26-17 vote by the House Education and Labor Committee to report out H.R. 1338, the Fair Pay Act, which seeks to mandate equal pay based on gender. If employers fail to meet the law’s standards, lawyers are standing by to sue, encouraged by the bill’s lifting of all caps on damages. Expect the bill on the House floor toward the middle of next week.

News release from Chairman George Miller (D-CA), ”House Labor Committee Passes Bill to Help Close Gender Wage Gap“: “This is a historic day in the fight for equal rights for women. If we are serious about closing the gender pay gap, we must get serious about punishing those who would otherwise scoff at the weak sanctions under current law,” said Rep. George Miller (D-CA), chairman of the committee. “Any wage gap based on gender is unacceptable, especially during these tough economic times. By allowing wage discrimination to continue, we hold down women and their families while harming the American economy as a whole.”

News release from Rep. Buck McKeon (R-CA), Ranking Member, “Democrats Favor Trial Lawyers Over Working Families“: “This bill isn’t about paycheck fairness.  It’s already against federal law to discriminate, in pay or other employment practices, on the basis of sex.  And rightfully so,” said Rep. Howard P. “Buck” McKeon (R-CA), the senior Republican on the committee.  “This bill is about making it easier for trial lawyers to cash in under the Equal Pay Act, and making it more difficult for employers to make legitimate employment decisions based on factors other than sex.”

Update from the Washington Labor & Employment Wire from Akin Gump, “Paycheck Fairness Act (H.R. 1338) Passes Out of House Committee.

News release from the ACLU, “ACLU Supports the Paycheck Fairness Act“: “There should be no doubt that improvements to the Equal Pay Act are necessary,” said ACLU Washington Legislative Office Director Caroline Fredrickson. “More than four decades after the enactment of the Equal Pay Act, women still make only 77 cents for every dollar made by their male counterparts, a wage disparity that cannot be explained by differences in qualifications, education, skills, training, responsibility or life choices. Rather, in many cases, the pay disparity has resulted from unlawful sex discrimination.”

Good thing for the ACLU that inflammatory falsehoods are constitutionally protected. All of the above assertions are demonstrably incorrect. We point you to the diligently documented testimony of the Hudson Institute’s Diana Furchtgott-Roth, an economist, as well as to her op-ed from the New York Sun, “Who’s the Better Feminist?”

Finally, from Secretary of Labor Chao’s letter to the committee: “H.R. 1338 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 would also require the Department 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. For these reasons and those outlined blow, if H.R 1338 were presented to the President, I would recommend that he veto the bill.”

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.