Before the Senate adjourned last night Senate Majority Leader Reid filed cloture on three bills, setting up a scenario for considering the legislation during the first week that the Senate comes back after the mid-term elections. Included in this package is the Paycheck Fairness Act. This means that it’s likely the Senate will vote on the measure in the week of November 15th.

The National Association of Manufacturers has been urging Members of Congress not to poison a lame-duck session by pushing legislation that organized labor has been agitating for, of which the Paycheck Fairness Act is a prime example. It is disappointing that Senate leadership decided to queue up consideration of the Paycheck Fairness Act, a bill that will make it more difficult for employers to create and retain jobs especially in such trying economic conditions.

As Members of Congress head off on the campaign trail, we hope that they will understand that voters are primarily focused on two things: jobs and the economy. The efforts to bring up the Paycheck Fairness Act have been largely motivated by political considerations, not sound economic policy. Well, then, Senators should consider the politics: Voters are not inclined to support bills that threaten the fragile economic recovery. In fact, they may actively reject those policies comes Nov. 2.

There has been much discussion lately about what measures will be considered in a lame-duck session of Congress. While some of the legislation is needed, such as annual appropriation bills and an extension of the so-called Bush tax cuts, other bills would be much more controversial and could be harmful to our fragile economy.

For the past two years, there have been numerous calls for Congress to pass a slew of labor union priorities – often these bills have more to do about strengthening the union apparatchiks than helping the working folk. Three good examples:

• The Employee Free Choice Act
• The Paycheck Fairness Act
• The Protecting American Workers Act

Though all three of these bills have nice titles that make them sound like fair-minded pieces of legislation, all of them will increase the cost of doing business. When you do that, jobs disappear.

The National Association of Manufacturers has been urging Congress to avoid considering each of these bills during a lame-duck session. There has been bipartisan opposition to each of these job-killing proposals in both the House and Senate. To take them up during a session of Congress when, as it appears right now, many Members of Congress will have been voted out of office would not reflect well on the institution. Moreover, all three bills were bad ideas before the election and they’re even worse during a lame-duck session. Congress, don’t make the lame-duck more lame.

White House Advisor Valerie Jarrett has written an op-ed in today’s Washington Post in support of the Paycheck Fairness Act. Her piece uses outdated and inaccurate data to misrepresent the alleged pay gap between genders. In claiming women earn only 77 percent of what their male counterparts do, Ms. Jarrett conveniently ignores updated statistics from the Department of Labor that show the gap is much smaller. More interestingly, she ignores a more comprehensive analysis of the issue that the Department of Labor commissioned by the CONSAD group. This analysis available here was conveniently removed from the Department of Labor’s website after the Obama Administration took over the agency.

While the specifics of the alleged pay gap can be debated ad nauseum by economists, we understand why the White House felt it necessary to offer an op-ed to the Post the paper soundly rejected the proposal in an editorial in January 2009.

While we don’t always agree with the Post’s ed board on many issues, we strongly concur with their position on the bill. The Paycheck Fairness Act will not prevent actual instances of illegal pay discrimination. It will, however, allow the Federal government to second-guess almost all employee wages and encourage lawsuits that expose employers to unlimited damage awards. The bill substantially restricts employers’ ability to base pay decisions on legitimate factors such as professional experience, education, training, employer need, local labor market rates, hazard pay, shift differentials and the profitability of the organization. The legislation could  expose employee wages or salaries to peers, family, friends and competitors.

That’s bad news for employees, as employers are already facing tremendous amounts of uncertainty in today’s economic conditions.

It’s unfortunate that the White House and Senate leaders are pushing this type of legislation before the midterm elections for what looks to be political reasons. Congress should instead focus on getting the economy back on track and not make it harder for manufacturers to create and retain jobs.

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…)

Jane M. McFetridge, managing partner of Jackson Lewis LLP’s Chicago office, testifyied at the Senate Committee on Health, Education, Labor, and Pensions hearing, “A Fair Share for All: Pay Equity in the New American Workplace.” From her prepared statement:

The Paycheck Fairness Act would preclude employers from making market-based pay determinations, encourage frivolous litigation, and expose companies to financial ruin by way of uncapped punitive damages and massive class action litigation. Rather than eliminating discrimination, the legislation, if passed, would provide a windfall to attorneys who litigate employment discrimination cases, but result in no meaningful change in the extant wage differential. Furthermore, the Paycheck Fairness Act would levy enormous cost on companies and employers already reeling from the worst economic crisis we have seen in most of our lives.

As public policy, the legislation would be harmful, she testified, but for law firms like Jackson Lewis, it would mean a lot of lucrative new work.

The hearing Thursday also provided a good reminder of how policymaking benefits from having elected officials with experience in the private sector. Both Sen. Mike Enzi (R-WY) and Sen. Johnny Isakson (R-GA) drew on their backgrounds as former business owners to get beyond ideological talking points into a discussion of how litigation-inviting legislation would burden employers — the people who actually create jobs.

Here’s Enzi’s opening statement.

As we noted earlier today, the Senate HELP Committee held a hearing on the Paycheck Fairness Act this morning. The NAM joined with many other employer groups in sending a letter to the HELP Committee members prior to the hearing. Our letter explains that the Paycheck Fairness Act “would jeopardize employee incentive pay and employee privacy, and promote costly litigation against even well-intentioned employers – all while doing little to prevent actual wage discrimination.”

Our letter further explains that if the bill were to become law it would:

threaten employee bonus or incentive pay that, by definition, provides some employees a higher wage than others,

prohibit employees from negotiating higher pay either before being hired or during employment,

allow employees’ wages to be disclosed to peers, friends, family and competitors,

require employers to submit pay data on their employees to the Federal government,

force the Labor Department to reinstate a flawed and duplicative pay grade survey that has proven ineffective at enforcing civil rights laws among federal contractors,

make it easier for trial lawyers to file large class actions against employers, and

establish unlimited punitive and compensatory liability under the Equal Pay Act against employers of every size.

While the Senate has been focusing on numerous bills to create jobs, it seems counterintuitive to move forward on legislation that would make it more difficult for employers to create and retain jobs.

The Senate HELP Committee this Thursday will hold a hearing on the Paycheck Fairness Act. While this bill’s title gives the casual observer the sense that it will prevent discrimination in pay, in reality it only promotes more litigation. In the process, the legislation creates tremendous uncertainty for employers who are struggling to create and retain jobs in these trying economic conditions.

This legislation will be a boon to the trial bar by allowing unlimited punitive damages and larger class action suits against employers under the Equal Pay Act. Because the Equal Pay Act is a strict-liability statute, plaintiffs’ attorneys don’t even need to demonstrate an employer’s intent to do harm to file a suit. If passed into law the Paycheck Fairness Act would force employers to second-guess every pay decision that they make.

In addition, the bill eliminates key employer affirmative defenses when presented with such claims. Just last year EEOC data shows that fewer than 5 percent of discrimination claims actually had legal grounds behind them. What does this mean? Even though a case may not have grounds, it forces employers to mount expensive defenses themselves against such claims. As The Washington Post when they rightfully pointed out that this legislation “risks tilting the scales too far against employers and would remove, rather than restore, a sense of balance.”

While illegal discrimination has no place in today’s workplaces, this legislation will not address those issues. Discrimination on the basis of gender is already illegal. The legislation does not make discrimination any more against the law, it simply opens up the judicial process to more civil lawsuits based on equal pay claims. Who benefits? Not the worker, the lawyers

How much does Big Labor Bosses’ legislative agenda cost? The answer unfortunately is hundreds of thousands of American jobs. And that figure keeps growing.

Already economic analysis of the big ticket item of their agenda, the misnamed Employee Free Choice Act, shows that 600,000 jobs would be lost in the first year after that bill’s enactment.

Now this week, a new report shows that big labor bosses’ misguided approach to protectionism costs our economy 585,000 jobs.

Their agenda doesn’t just kill jobs, but it also makes it more difficult to create new ones. Delegates to the AFL-CIO’s convention this week passed Resolution #14 which expresses support for the Healthy Families Act and the Paycheck Fairness Act. Sure, the titles of these pieces of legislation sound great, who can be against healthy families? The impact of these items are unhealthy for manufacturers’ ability to create new jobs in our struggling economy.

The AFL-CIO’s mission statement appears more ironic than ever today. It states:

We will speak for working people in the global economy, in the industries in which we are employed, in the firms where we work, and on the job every day.

Hard working Americans, whether they’re unionized or not, don’t want to see our economy continue to falter. However, if organized labor’s current leadership is successful in its advocacy, a faltering economy may be the best we can hope for.

While most employers are concerned with the immediate threat posed by the Employee Free Choice Act in Congress, there is a long list of other threats facing job providers.

Workforce Management magazine provides a great overview of the spectrum of employment policy legislation pending in the 111th Congress. This article details proposals like the Healthy Families Act that would make job creation more difficult and expensive, WARN Act expansion which makes it harder for employers to retain jobs during times of economic down turn and proposals like the Paycheck Fairness Act that will expose employers to unlimited punitive damages for allegations of gender-based discrimination.

Worth a read.

From Mickey Kaus, the reform-minded Democratic columnist, blogger, card-check observer:

‘Employee Free Choice’ Still on the Move! Yet another Democratic Senator, Michael Bennet of Colorado, declares “card check” unpassable. He also calls it an impediment to enacting health care reform–a potentially convenient “frame” for other wobbly Dems, Greg Sargent notes. … P.S.: At some point doesn’t the near-stampede of moderate Democrats to renounce the unions’ top agenda item cut into labor’s leverage when it comes to negotiating a compromise? Just asking! These Dems are defying labor. Are they paying a big price for it, or do they know labor needs them as much as they need labor? Lesson learned? … P.P.S.: Didn’t Robert Reich try to warn Andy Stern that this would happen? … P.P.P.S.: Or is labor angling for a pity vote–they’re about to be so humiliated, Dems will have to do something to help them? … 12:03 A.M.

That last post-post-post-script raises a serious point. If you’re organized labor and usual political allies in the Senate have spurned you on the Employee Free Choice Act, don’t you turn up the heat on them?  The argument would go:

You knew the Employee Free Choice Act was our priority, we helped get you elected, and now you bailed. We are going to withhold our support and even look at primary challengers. We might reconsider if you get behind the rest of our agenda, with no deviation. The RESPECT Act, you’ll need to cosponsor that. You know, the unionize supervisors law. Davis-Bacon, keeping adding that to every spending bill. Paycheck Fairness Act, H.R. 11, that’s a big one. We’ll be back with some others.

None of those bills or provisions are as much political poison as EFCA’s destruction of the secret ballot, so the members of Congress could sign off with less concern about constituent backlash.

Thus, even if organized labor is privately coming to grips with the Employee Free Choice Act being dead legislatively, they still see value in agitating for congressional action. It’s leverage.