[Senate Hearing 111-1135]
[From the U.S. Government Publishing Office]
S. Hrg. 111-1135
A FAIR SHARE FOR ALL: PAY EQUITY IN THE NEW AMERICAN WORKPLACE
=======================================================================
HEARING
OF THE
COMMITTEE ON HEALTH, EDUCATION,
LABOR, AND PENSIONS
UNITED STATES SENATE
ONE HUNDRED ELEVENTH CONGRESS
SECOND SESSION
ON
EXAMINING PAY EQUITY IN THE NEW AMERICAN WORKPLACE, INCLUDING S. 182,
TO AMEND THE FAIR LABOR STANDARDS ACT OF 1928 TO PROVIDE MORE EFFECTIVE
REMEDIES TO VICTIMS OF DISCRIMINATION IN THE PAYMENT OF WAGES ON THE
BASIS OF SEX, AND S. 904, TO AMEND THE FAIR LABOR STANDARDS ACT OF 1938
TO PROHIBIT DISCRIMINATION IN THE PAYMENT OF WAGES ON ACCOUNT OF SEX,
RACE, OR NATIONAL ORIGIN
__________
MARCH 11, 2010
__________
Printed for the use of the Committee on Health, Education, Labor, and
Pensions
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COMMITTEE ON HEALTH, EDUCATION, LABOR, AND PENSIONS
TOM HARKIN, Iowa, Chairman
CHRISTOPHER J. DODD, Connecticut MICHAEL B. ENZI, Wyoming
BARBARA A. MIKULSKI, Maryland JUDD GREGG, New Hampshire
JEFF BINGAMAN, New Mexico LAMAR ALEXANDER, Tennessee
PATTY MURRAY, Washington RICHARD BURR, North Carolina
JACK REED, Rhode Island JOHNNY ISAKSON, Georgia
BERNARD SANDERS (I), Vermont JOHN McCAIN, Arizona
SHERROD BROWN, Ohio ORRIN G. HATCH, Utah
ROBERT P. CASEY, JR., Pennsylvania LISA MURKOWSKI, Alaska
KAY R. HAGAN, North Carolina TOM COBURN, M.D., Oklahoma
JEFF MERKLEY, Oregon PAT ROBERTS, Kansas
AL FRANKEN, Minnesota
MICHAEL F. BENNET, Colorado
Daniel Smith, Staff Director
Pamela Smith, Deputy Staff Director
Frank Macchiarola, Republican Staff Director and Chief Counsel
(ii)
C O N T E N T S
__________
STATEMENTS
THURSDAY, MARCH 11, 2010
Page
Harkin, Hon. Tom, Chairman, Committee on Health, Education,
Labor, and Pensions, opening statement......................... 1
Enzi, Hon. Michael B., a U.S. Senator from the State of Wyoming,
opening statement.............................................. 3
Dodd, Hon. Christopher J., a U.S. Senator from the State of
Connecticut.................................................... 7
Prepared statement........................................... 9
DeLauro, Hon. Rosa L., a U.S. Representative from the State of
Connecticut.................................................... 10
Prepared statement........................................... 13
Ishimaru, Stuart J., Acting Chairman, Equal Employment
Commission, Washington, DC..................................... 15
Prepared statement........................................... 18
Isakson, Hon. Johnny, a U.S. Senator from the State of Georgia... 25
Mikulski, Hon. Barbara A., a U.S. Senator from the State of
Maryland....................................................... 27
Franken, Hon. Al, a U.S. Senator from the State of Minnesota..... 28
Boushey, Heather, Senior Economist, Center for American Progress,
Washington, DC................................................. 39
Prepared statement........................................... 41
Brake, Deborah L., Professor of Law, University of Pittsburgh,
Pittsburgh, PA................................................. 50
Prepared statement........................................... 52
Frett, Deborah L., Chief Executive Officer, Business and
Professional Women's Foundation, Washington, DC................ 62
Prepared statement........................................... 64
McFetridge, Jane M., Esq., Partner, Jackson Lewis LLP, Chicago,
IL............................................................. 69
Prepared statement........................................... 71
ADDITIONAL MATERIAL
Statements, articles, publications, letters, etc.:
Senator Murray............................................... 89
Senator Brown................................................ 90
Senator Bennet............................................... 91
HR Policy association........................................ 92
Letters of Opposition:
Associated Builders and Contractors, Inc..................... 105
Various Organizations........................................ 106
Organizations representing State and local government
employers.................................................. 107
Response by Stuart J. Ishimaru to questions of:
Senator Harkin............................................... 107
Senator Enzi................................................. 109
Senator Coburn............................................... 110
Response by Heather Boushey to questions of:
Senator Enzi................................................. 114
Senator Coburn............................................... 115
Response by Deborah L. Frett to questions of:
Senator Enzi................................................. 118
Senator Coburn............................................... 119
Response by Jane McFetridge to questions of:
Senator Enzi................................................. 122
(iii)
A FAIR SHARE FOR ALL: PAY EQUITY IN THE NEW AMERICAN WORKPLACE
----------
THURSDAY, MARCH 11, 2010
U.S. Senate,
Committee on Health, Education, Labor, and Pensions,
Washington, DC.
The committee met, pursuant to notice, at 10:03 a.m. in
Room SD-430, Dirksen Senate Office Building, Hon. Tom Harkin,
chairman of the committee, presiding.
Present: Senators Harkin, Dodd, Mikulski, Brown, Casey,
Hagan, Franken, Enzi, and Isakson.
Also present: Hon. Rosa L. DeLauro, U.S. Representative.
Opening Statement of Senator Harkin
The Chairman. The Committee on Health, Education, Labor,
and Pensions will come to order.
We have convened this hearing to examine the issue of fair
pay for women. Now, again, it is not a new issue. In 1963,
responding to the fact that 25 million female workers in the
workforce earned just 60 percent--60 cents of the dollar--of
the average pay for men, Congress enacted the Equal Pay Act to
end this unfair discrimination.
Now, this hearing is about reaffirming the basic promise of
the Equal Pay Act, that every worker should be judged and
compensated based on the quality of the work that he or she
performs, and not based on gender.
Over the past 47 years, we have made progress toward this
important goal, but over the last several years, a decade or
so, that progress has been stalled. It is unacceptable that,
after all these years, a woman still makes only 77 cents for
every dollar that a man makes.
This wage gap exists in every segment of our society. Women
of every race and national origin earn less than their
counterparts. An African-American woman earns 69 cents for
every dollar that a white male earns, while a Latina woman
earns only 59 cents for every dollar a white man earns. These
differences add up to real hardships for working women and
their families.
Now, again, make no mistake--the wage gap is not just a
women's issue. It is a family issue. As we will hear today,
women represent half of all workers. Millions of families rely
on a woman's paycheck to get by.
Two-thirds of mothers are bringing home at least a quarter
of their family's earnings. In many families, the woman is the
sole breadwinner. And during the latest economic downturn, more
men have lost jobs than women, making households even more
dependent than ever on women's earnings.
Just last night while reading before I went to bed, I read
a factoid that was in a publication. I forget what magazine it
was in--Newsweek, something like that. It said that very soon,
for the first time ever in our national history, more women
will be working than men, for the first time ever.
So America's women are working harder than ever, but they
are not being fairly compensated for their contributions to our
economy. As a result, their families are struggling to put food
on the table, pay for child care, deal with rising healthcare
bills. It isn't fair. It isn't right.
Now it is true that some of the wage gap is explained by
how society deals with the realities of working women's lives,
such as time away from the workforce to have children, care for
family members. But as we will hear today, the substantial gap
in earnings between men and women cannot be explained
completely by differences in work patterns, or even by
differences in education, experience, or occupation. The
evidence shows that actual gender discrimination accounts for
much of the disparity between men and women's pays, and our
laws have not done enough to prevent this from happening.
So, I am pleased and proud that the first piece of
legislation that President Obama signed into law was the Lilly
Ledbetter Fair Pay Act, but that was only the first step.
Now, too many women are still not getting paid equally for
doing the exact same jobs as men. That is, of course, illegal.
It is unacceptable. But it happens every day, and there are too
many loopholes.
That is why I strongly support the Paycheck Fairness Act,
which Senators Dodd and Mikulski have long championed. This
critical legislation will strengthen penalties for
discrimination, help give women the tools they need to identify
and confront unfair treatment. In January, the House of
Representatives voted overwhelmingly, on a bipartisan basis, to
pass the Paycheck Fairness Act, under the great leadership of
Representative DeLauro. I look forward to working with my
colleagues in the Senate to pass this bill and send it to the
President during this Congress.
I might just add that while strengthening our existing laws
is the next step toward wage equality, it can't be the last
one. It is not enough to say that women and men performing the
same jobs should be paid the same. That is only part of the
problem. We also must tackle the more subtle discrimination and
more widespread discrimination that occurs when we
systematically undervalue the work traditionally done by women,
particularly women of color.
Unfortunately, women are making less not only because of
insidious discrimination, but because we do not value jobs we
traditionally view as ``women's jobs'' as we value those that
we think of as ``men's jobs.''
Today, millions of female-dominated jobs--for example,
social workers, teachers, child care workers, nurses, long-term
care workers--are equivalent in skills, effort, responsibility,
and working conditions to similar jobs dominated by men. But
the female-dominated jobs pay significantly less. This is
inexplicable. Why is a housekeeper worth less than a janitor?
Why is a parking meter reader worth less than an electrical
meter reader? Why is a social worker worth less than a
probation officer? Why is a nurse, who still has to lift and
have manual dexterity and stuff--why is a nurse paid less than
a truck driver?
That is why I introduced the Fair Pay Act. My bill, which
is championed in the House by Eleanor Holmes Norton, requires
employers to provide equal pay for jobs that are equivalent in
skill, effort, responsibility, and working conditions. My bill
would require employers to publicly disclose their job
categories and their pay scales, without requiring specific
information on individual employees.
If we give women information about what their male
colleagues are earning, they can negotiate a better deal for
themselves in the workplace. In fact, last year, I asked Lilly
Ledbetter at a hearing that if my bill, the Fair Pay Act, had
been law, would she have been still discriminated against? And
she said, no. She said that with the information that she would
have had, she would have known right from the beginning that
she was a victim of discrimination, before it caused a lifelong
drop in her earnings and she had to go all the way to the
Supreme Court to try to make things right.
So while I admire Lilly's strength and determination, I
would like to say that no American woman ever again should have
to go through what she went through just to receive a fair
day's pay for a fair day's work.
I want to thank my colleague Senator Dodd publicly, as I
have privately, for his great leadership in this area for so
many, many years. And I want to thank Senator Enzi as well, as
all of our witnesses for being here today, and I look forward
to a great hearing.
Unfortunately, pay discrimination is a harsh reality in
today's workplace, but it doesn't have to be that way. And
hopefully, we can begin to close that gap.
With that, I would recognize my Ranking Member, Senator
Enzi.
Statement of Senator Enzi
Senator Enzi. Thank you, Mr. Chairman. Thank you for
holding this hearing.
I am confident that there is no member of this committee
who would tolerate paying a woman less for the same work simply
because she is a woman. As husbands and fathers and mothers of
working women, we all recognize the gross inequity of
discrimination in pay based on gender.
Congress has put two laws on the books to combat such
discrimination--Title VII of the Civil Rights Act of 1964 and
the Equal Pay Act of 1963.
Undeniably, the last several decades have been
transformational with regard to women's opportunities. Today,
more women than men are earning college degrees, and women are
enrolling in many graduate degree programs in equal numbers. At
some of the Nation's top law schools today, women students
outnumber men.
As women have become commonplace at every level in the
workplace, so have women's earnings increased in comparison to
men's. Last month, I noticed several news articles reporting
that the number of dual-income families where the wife out-
earns the husband has increased from 4 percent in 1970 to 22
percent in 2009. So times have changed, and certainly, it is
appropriate for this committee to survey the fairness of the
American workplace.
Some argue that a pay gap continues to exist in terms of
the compensation levels between men and women and that this
proves current legal protections are not sufficient and must be
augmented. Many labor specialists note that pay differentials
are a function of labor market economics, that they reflect the
choices that individual workers and groups of workers tend to
make and their underlying skill sets.
A study released last year found that if you factor in
observable choices, such as part-time work, seniority, and
occupational choice, the pay gap stands between 5 to 7 percent.
I believe the best way to address that gap is by drawing more
women into higher-earning fields.
The career choices we all make impact our earnings, and
data shows that women are more likely to select fields that pay
less. There are many reasons one might make such a choice,
including schedule flexibility, job security, and the quality
of fringe benefits, such as health, retirement, and child care.
I, for one, would never question the logic of making such a
tradeoff. In fact, economists have noted that the current
economic downturn has had a harsher effect in traditionally
male occupations, and the unemployment rate for men has been a
full 2 percentage points above that for women throughout the
recession.
Yet, to the extent that women may not enter traditionally
male fields precisely because they have been traditionally
male, they may not be earning to their full potential. I
believe the goal of this committee should be to find solutions,
and I have two solutions to offer for this potential problem.
One is, improve our national job training programs so all
Americans, men and women, have access to the skills training
they need to enter those fields. And two, fix the economy so
that these higher earning jobs are plentiful and hiring again.
I have worked in four Congresses to update the Workforce
Investment Act, which has not been reauthorized since its
enactment 12 years ago. I am working now with Senators Harkin,
Murray, and Isakson, and building on the bill that passed the
full Senate in the 109th Congress. We should reauthorize WIA
this Congress to ensure workers have access to the education
and skill training they need to be successful and that
employers have the skilled workforce they need in order to be
competitive.
We need to look no further than my home State of Wyoming to
find a perfect example of what is happening and what can happen
to improve the job skills and training for all Americans.
Wyoming, as some of you may know, is nicknamed ``The Equality
State.'' It was the first territory and the first State to
extend the right to vote to women.
Wyoming was home to our Nation's first woman judge, the
Nation's first woman Governor, the Nation's first woman elected
to State-wide office, and a whole slew of other firsts. In
1920, the town of Jackson, WY, elected the Nation's first all-
woman town government. Of course, with our change in the law,
we were about 50 years ahead of everybody else.
Despite Wyoming's long history of gender equality, its pay
gap is among the highest in all the States. I can assure you
this is not because Wyoming employers are notoriously
discriminatory or grossly undervalue their female workers.
Rather, Wyoming demonstrates that markets, choices, education,
training, and opportunity all play a role in the establishment
of wages and wage differentials.
In Wyoming, important sectors of the economy, such as
energy, natural resources, and construction, have faced
significant labor shortages and therefore offer very high-
paying jobs. The reality is that many of these jobs, from heavy
equipment operators to carpenters, and from welders to coal
miners, are not positions to which women traditionally
gravitate.
In Wyoming, market forces have greatly increased the labor
rates for those jobs traditionally held by men, which largely
explains the magnitude of the wage gap. Closing this gap
requires an increase in training and educational opportunities
for women.
The role of education and training is evident in the
results of one such program. It is called Climb Wyoming. It is
a not-for-profit program funded through a mix of private and
public funds. Its mission is to move low-income single mothers
to higher-paying careers through training and placement
assistance. The program has enjoyed considerable success, with
program graduates earning double and even triple their pre-
program income levels.
In many instances, these gains have been achieved by
encouraging program participants to consider nontraditional
work in the energy, natural resources, and construction
industries, and providing participants with necessary skills
and placement assistance to make the transition into such
nontraditional work.
To date, Climb has trained and placed more than 1,000
single mothers in such nontraditional careers as short-haul
truck driving, welding, and construction trades. Now that may
not sound like a lot, but we only have half a million people
that live in Wyoming.
One woman from my home town of Gillette earned a commercial
driver's license and now works as a short-haul truck driver for
a construction company, more than doubling her pre-program
earnings. Another single mother with two children entered the
program in Cheyenne. Previously, she worked in a fast food
restaurant and earned $6 an hour. She enrolled in Climb,
studied integrated systems technology, and is now employed at a
wind energy generation farm and earning nearly three times her
pre-program income.
These are all real examples of women that have, with
encouragement, training, and education, managed to eliminate
the pay gap in their own working careers. A coal haul truck is
35 foot by 35 foot by 35 foot. It is kind of a mountain moving
around. But it has super power steering. It has 10-foot tires
that turn easily. The cab is air conditioned, and the special-
fitting driving seats are even anti-vibration.
Incidentally, these are all-electric trucks. Drivers work 3
days a week 1 week and 4 days a week the next week, and they
make $60,000 to $80,000 a year. That is one of the areas that
women have been moving into with these jobs.
But as good as the programs like Climb Wyoming are, they
cannot create jobs in a bad economy. And unfortunately, this
prolonged downturn has added another hurdle for the women who
graduate from the program.
In Gillette, for the first time, the majority of the most
recent class of graduates has not been able to find employment.
Women who trained as heavy equipment operators and commercial
truck drivers are either still waiting for companies to be in a
position to hire or are working just 1 day a week.
This brings me to my second solution--fix the economy. As a
Congress, we should be devoting our time to developing ways to
encourage private sector job creation. In the energy field,
which creates many jobs in Wyoming, this means working to get
permits for energy development on Federal lands processed in a
timely manner and promoting tax policies that encourage the
energy industry to hire workers and continue the domestic
energy development. This means scrapping the plans for a cap
and trade tax that has created economic fear and uncertainty in
many energy sectors, which inevitably depresses job growth.
We must reject proposals that make employers less likely to
create new positions and fill vacant ones. Legislation that
makes it more costly to employ someone by adding unfunded
mandates, increasing litigation burdens, and complicating
regulation and increasing taxes are taking us in the wrong
direction. Even when these proposals are not enacted, they have
a chilling effect on employers who understandably look to
congressional hearings and debates to figure out what new
government burdens may be placed on them.
The legislative process being promoted here today will not
create jobs, except for trial lawyers. The Paycheck Fairness
Act will subject employers to more litigation, including far
larger class action suits, and increase penalties even when
there is no showing that an employer intended to discriminate
at all. It will tilt the law so heavily against employers that
they will be advised to settle such suits instead of defending
their pay practices.
The bill adds more of the burdensome government reporting
requirements that don't just waste hours of employers' time,
they also cost them money that could be directed toward new
hires. Further, we must be exceedingly cautious about proposals
that ultimately seek government-set wage rates and would turn
our economy down a disastrous road.
I appreciate the chance to review women's pay in the
workplace and share the success of Climb Wyoming with my
colleagues. The real pathway to closing the remaining wage gap
lies not with increased litigation and government intervention,
but with increasing opportunities for women to gain lucrative
skills and choose high-earning occupations.
We should redouble our efforts to reauthorize the Workforce
Investment Act and focus on other job growth policies without
delay.
Thank you, Mr. Chairman.
The Chairman. Thank you, Senator Enzi.
I now recognize Senator Dodd for both a statement and
purposes of introduction.
Statement of Senator Dodd
Senator Dodd. Well, thank you very much, Mr. Chairman. I
will be brief. I know we have our witnesses here this morning
and am honored to have them with us.
First of all, thank you, Mr. Chairman. You have been a
champion of these issues for as long as we have served
together, and that is a long time, going back to our years
together in the House of Representatives and then almost 30
years we have spent together here in the U.S. Senate. So there
is no better champion about fairness in terms of compensation
than Tom Harkin of Iowa. So I am pleased to be with you.
I want to thank Mike Enzi. I couldn't agree more. We need
to get our economy back on its feet again. Yesterday, the
Senate passed a good bill on tax credits to try and increase
employment opportunities in the private sector, and the more we
can do on that front is going to be beneficial to everyone. So
that is important as well.
I am going to introduce briefly my good friend and
colleague who is no stranger to this room, by the way. Rosa
DeLauro was my chief of staff for 7 years and spent a lot of
time in this room as I became a member of this committee,
sitting way down at the end in that chair. I think where
Michael Bennet sits today is the chair I occupied when I first
was a part of this committee and over the 30 years have crawled
my way up here.
I want to let Bob Casey and Sherrod Brown know they can get
to this chair, Tom Harkin's chair, and hopefully more rapidly
than I had the opportunity to along the way. But let me thank
them as well. Both of our new members have strong records and
background.
In fact, I was mentioning both of you last night in your
absence. I spoke to the national child care organization that I
worked with for years and, having announced my own retirement
from the Senate come next January, was talking about people
that I thought would be able to carry on the terrific work on
children's issues and work on family issues. I mentioned both
Bob Casey and Sherrod Brown as examples of people coming along
in the Senate who already are demonstrating a great interest in
the subject matter.
So the cause is not going to suffer at all. In fact, I
argue it will be enhanced by the people who are coming along in
this area. I thank both of you for your continuing interest in
this.
Well, Rosa, you have been a champion, as Tom Harkin has
been, throughout your career: one of the most vocal and
successful advocates for women and families for as long as I
have known you--for 30 years. I am delighted to have you here
today to be our leadoff witness because, frankly, it is a
little embarrassing, to put it mildly, to have to be here today
talking about wage gaps.
Obviously, getting improved opportunities for women is
great so they can move up the scale and become lawyers and
doctors and all these other wonderful occupations. We agree
with that. The problem is that when you are talking about
people doing the same jobs, the pay scales are different. That
is really what we are talking about here.
For every man out there working, women earn 77 percent of
what men earn in these areas. So the gap exists. The average
woman in my State of Connecticut, which has a good record on
many of these issues, needs a bachelor's degree just to earn
what a man with a high school diploma earns. So the gap is
there. So if you can get that further education, it is great,
but understand when you do so, that the wage comparisons fall
apart based on educational levels.
The gap is even larger in the African-American and Hispanic
communities. It persists across the income spectrum. And
astonishingly, in some occupations, it is actually getting
worse with time. Now here we are in the year 2010, well into
the 21st century. Even when studies control for factors such as
education, job tenure, choice of industry, the gap remains.
We will hear from Heather Boushey this morning that labor
economists have conducted study after study and controlled for
every measurable variable--job characteristics, union
membership, ethnic and racial backgrounds, education
experience, and on and on and on, and still cannot explain
nearly half of the wage gap. The answer is that women are being
paid less than men simply because they are women, in my view.
This isn't just a matter of fairness. It is a matter of
economic security for millions of families as well. In 2008,
two out of every five mothers were their family's breadwinners,
as Tom Harkin has pointed out, either as a single parent or as
a spouse with higher income. These women are being hurt, and so
are their families. And the recession is only increasing the
trend and exacerbating the problem.
I am proud that the first law that President Obama signed
into law was one that Rosa championed, the Lilly Ledbetter
legislation, along with your colleagues and, of course, Barbara
Mikulski here and other members of this committee. That law
reverses an awful U.S. Supreme Court decision that barred women
from the judicial system to fight against pay discrimination.
Rosa, as I said, was a lead sponsor of that, along with others.
But as significant achievement as that law was, we still
need to act to eliminate pay discrimination--again, a point
that Tom Harkin has made--so that women don't have to fight in
the first place to get that which they deserve. That is why,
for the last seven Congresses, I have co-sponsored the Paycheck
Fairness Act, and that is why I was an original co-sponsor of
Chairman Harkin's Fair Pay Act as well.
As we will hear today, the wage gap is an anachronism, a
relic of discrimination that should be, of course, eliminated.
It is not just about women's rights. It is about economic
justice in our country. Rosa has been the lead sponsor of the
Paycheck Fairness Act in the House year after year after year.
Tireless in her devotion to this issue, there is no better
advocate for pay equity--a more compelling person or more
eloquent--than Rosa is on this issue.
I note, Mr. Chairman, as well, yesterday, along with many
of our colleagues--and I am not sure the rest of you were there
as well--I went to the ceremony in the new visitors center,
where we gave out gold medals to the women WASPs. The women who
were pilots--a little over 1,000 women during World War II
volunteered.
Twenty-five thousand women applied for those jobs to go out
and become pilots to ferry the 150,000 aircraft we built in
those 2 or 3 years, built by women, by the way, in the
manufacturing facilities in Detroit and elsewhere because men
were off fighting in the Pacific and the European theaters.
Over 60 million miles these women flew; 38 of them lost their
lives in the process.
But what a tragedy it was in so many ways because they had
to pay their own way to get to that training facility in Texas,
paid their own way once they lost their jobs at the end of the
war, never allowed to put a flag on their caskets, having
served in the Air Force, because they weren't considered
members of the armed services.
One woman told me that her pal died, and her mother put her
picture in the window in Arizona when her daughter lost her
life as one of those pilots. And the Air Force made her take
the picture out of the window because she wasn't considered a
member of the Air Force.
Now, the Air Force, obviously, has substantially changed.
Today, 20 percent of the Air Force personnel are women. Many
women are combat pilots, and they get the same pay, by the way,
and same grade in our military forces.
I know that is a long time ago. It is 60 years ago. But it
is reflective of where we have been on these issues. And today,
once again, we are there.
People I know make all sorts of arguments about these other
matters. The fact is, we have discriminated on this basis. And
the sooner we come to the reality of that and get this right
and equalize this process, there won't be lawsuits. There are
not going to be people running to court on this. It is just
seeing to it that if a woman or any person works at the same
job, they deserve the same pay. This ought not to be
complicated, in my view.
So my hope is, in this Congress here, we can get this done
right and eliminate these barriers that exist between men and
women when it comes to fair pay.
With that, Rosa, delighted you are here, and thank you for
your hard work.
[The prepared statement of Senator Dodd follows:]
Prepared Statement of Senator Dodd
Thank you, Chairman Harkin. You have long been a champion
on this issue, and I thank you for calling this important
hearing I have the privilege of introducing our first witness
this morning, a good friend of mine and a great public servant
from Connecticut, Congresswoman Rosa DeLauro. Throughout her
career, she has been one of the most vocal and successful
advocates for women and families, and I am delighted that she
is here to join us today.
It is, frankly, a little embarrassing that we have to be
here today talking about the wage gap between men and women. It
is, after all, 2010. We have made so much progress as a nation
to eradicate discrimination in all its forms.
And yet, as we convene this morning, women still earn just
77 percent of what men earn. The average woman in my State of
Connecticut needs a bachelor's degree just to earn what a man
with a high school diploma earns. The gap is larger in the
African-American and Hispanic communities, it persists across
the income spectrum, and, astonishingly, in some occupations
it's actually getting worse with time.
Even when studies control for factors such as education,
job tenure, and choice of industry, the gap remains. As we'll
hear from Heather Boushey (boo-SHAY), labor economists have
conducted study after study and controlled for every measurable
variable--job characteristics, union membership, ethnic and
racial background, educational experience, and on and on--and
still cannot explain nearly half of the wage gap. The answer is
that women are being paid less than men simply because they are
women.
This isn't just a matter of fairness. It's a matter of
economic security for millions of American families. In 2008,
two out of every five mothers were their families'
breadwinners, either as a single parent or as the spouse with
the higher income. These women are being hurt, and so are their
families. And the recession is only increasing this trend.
I am so proud that the first law President Obama signed was
the Lilly Ledbetter Fair Pay Act, which reverses an awful
Supreme Court decision that barred women from the judicial
system to fight against pay discrimination. And Rosa DeLauro
was one of the lead people fighting day and night in the House
of Representatives to get that important legislation over the
finish line.
But as significant an achievement as that law was, we still
need to act to eliminate that pay discrimination so that women
don't have to fight it in the first place.
That's why, for the last seven Congresses, I've cosponsored
the Paycheck Fairness Act. And that's why I was an original
cosponsor of Chairman Harkin's Fair Pay Act.
As we'll hear today, the wage gap is an anachronism, a
relic of discrimination that should be stamped out. It's not
just about women's rights--it's about economic justice.
Rosa DeLauro has been the lead sponsor of the Paycheck
Fairness Act in the House year after year. She is tireless in
her devotion to the issue. There is no advocate for pay equity
more compelling and more eloquent than Rosa, and she is a true
champion for women everywhere. I'm proud to fight with her to
see this through and thrilled that she's joined us today to
talk about this important issue.
STATEMENT OF HON. ROSA L. DeLAURO, U.S. REPRESENTATIVE FOR
CONNECTICUT'S 3d DISTRICT, NEW HAVEN, CT
Ms. DeLauro. Thank you very, very much, Senator. It is
wonderful to be with all of you this morning and to get a
chance to speak about and to support this critical legislation.
I want to say a thank you to the members of the committee,
particularly Chairman Harkin, to Senator Dodd. And I just would
say, as we have a long history together, and he has spent so
much of his professional career in trying to ensure the
economic security of women and families in this Nation. And he
is a Senate sponsor of the Paycheck Fairness Act.
Senator Mikulski, for her outstanding work on this issue,
Ranking Member Enzi, my colleague--former colleague Senator
Brown, wonderful to be with you, and Senator Casey, thank you
for your advocacy.
I am pleased to be invited here today to testify. Mr.
Chairman, let me just say to you, as the author of the Fair Pay
Act and, as you have pointed out, a bill that I have long
supported, you have been such a long-time champion of pay
equity for women, and I thank you for your leadership on this
issue.
Put simply, the Paycheck Fairness Act is a modest, common-
sense reform that closes numerous longstanding loopholes in the
Equal Pay Act, and it stiffens penalties for employers who
discriminate based on gender. In America today, women now make
up half of the workforce. Two-thirds of women are either the
sole breadwinner or co-breadwinner in their family.
Women are also more likely, as been pointed out, than men
to graduate from college. They run more than 10 million
businesses, with combined annual sales of $1.1 trillion, and
they are responsible for making 80 percent of consumer buying
decisions. And yet, women are still only paid 78 cents on the
dollar as compared to men.
As had been pointed out, women of color even worse off.
African-American women 68 cents on the dollar, compared to the
highest earners. Hispanic women 57 cents. Unmarried women--and
unmarried women are single, widowed, divorced, or separated.
They run the age gamut, and their wages determine, particularly
for younger women, what their retirement benefits will be. And
women live longer than men. It is one of the reasons why women
today over 70 years old are the demographic that has the
highest level of poverty in this Nation.
Unmarried women have an average household salary that is
almost $12,000 lower than unmarried men. They make a paltry 56
cents on the dollar when compared to married men.
The National Committee on Pay Equity tells us that these
pay disparities have a substantial long-term impact on women's
lifetime earnings, costing anywhere from $400,000 to $2 million
over a lifetime. And that lack of pay equity translates into
less income toward calculating pension and in some cases, as I
have mentioned, Social Security benefits. It is no coincidence
that 70 percent of older adults living in poverty are women.
Congress originally passed the Equal Pay Act in 1963. It
was to end, and I quote, ``serious and endemic problem of
unequal wages.'' Forty-seven years later, it is clear that the
act is not quite working as intended in its current form. And
with more women responsible for their families' economic
security than ever before, we have an obligation to face this
continuing pay inequity head-on.
Very early in this Congress, we passed the Lilly Ledbetter
Fair Pay Act. It would ensure that women who are discriminated
against have the right to sue, as long as their discriminatory
pay continues. But this critical law, which reaffirmed a right
which had been denied in a short-sighted 2007 U.S. Supreme
Court decision, brings us back to where we had been all along.
The Paycheck Fairness Act will represent progress for women
who fight pay discrimination in the workplace every single day.
It would clarify that ``any factor other than sex'' defense, so
that an employer trying to justify paying a man more than a
woman for the same job must show the disparity is not sex-
based, that it is job-related and necessary for the business.
It would also prohibit employers from retaliating against
employees who discuss or disclose salary information with their
co-workers. Of course, employees such as human resources
personnel, who have access to payroll information as part of
their job, would not be protected if they disclose workers'
salaries of other workers.
That being said, just ask Lilly Ledbetter how much sooner
she could have found out that she was being discriminated
against had this protection been in place. Thanks to a company
policy that is still not uncommon today, she was prohibited
from discussing her pay with her co-workers. It was not until
someone gave her an anonymous note shortly before she retired
that she was alerted to the pay discrimination she had
experienced throughout her career.
The Paycheck Fairness Act would also strengthen the
remedies available for women to include punitive and
compensatory damages. In other words, this act brings equal pay
law into line with other civil rights law, and it provides to
victims of sex-based discrimination the very same standards for
lawsuits and options for damages that are already afforded to
victims of race-based discrimination already in the law.
It is sometimes suggested that passing this bill would
result in a torrent of class action lawsuits that employers
could simply not afford to pay. That is not the pattern we have
seen for anti-discrimination legislation. Race-based
discrimination laws have been on the books for years. Employers
have made adjustments necessary to avoid that circumstance.
There is no reason to think that applying the same standards to
sex-based discrimination would alter this equation. And for
sure, companies are better, more productive, stronger, when
they send a signal that there is no place for sex-based
discrimination.
So, again, this legislation is a common-sense solution to
the lingering problem of pay equity. It extends simply the
standards that are already part of our civil rights law to
include discrimination against women. And by acting now to
ensure that women get paid the same as men for the same work,
the Senate can give them, their families, and the entire
economy the tools to recover and thrive.
And that is why the Paycheck Fairness Act has been endorsed
by over 200 organizations, including the U.S. Women's Chamber
of Commerce, the American Association of University Women,
Business and Professional Women, the National Women's Law
Center, and it is why it has passed twice in the House of
Representatives.
It is now 13 years after I first introduced this piece of
legislation. I believe that paycheck fairness is legislation
whose time has come. I believe we have a moral obligation to
ensure that one half of the American workforce is treated as
fairly and equitably as the other half. And on behalf of all of
America's women, I strongly encourage the Senate to take action
and at last to make this bill law.
Let me make one final comment. We men and women who serve
in this extraordinary institution, whether in the House or in
the Senate, are blessed to have the opportunity to serve here
because of the potential of the institution to make a
difference in people's lives.
Yes, we are men and women. We come from all over this
country. We come with different backgrounds, different
educational backgrounds, different training, different skill
sets, and yet we are paid the same amount of money for the same
job.
Unfortunately, that is not true for most women in this
Nation. Whether you are a waitress, whether you are a bus
driver, whether you are a university professor, whether you are
an engineer, whether you are a news anchor--I hope, Senator
Enzi, that in the long-haul transport women are being paid the
same amount of money as their male counterparts are doing.
We have an opportunity to make sure that what we have by
virtue of serving in this job, that we have the benefit of the
same pay as men and women, that we can extend that benefit to
women across this country.
Thanks so very, very much for letting me be here this
morning.
[The prepared statement of Ms. DeLauro follows:]
Prepared Statement of Hon. Rosa L. DeLauro
Thank you. It is good to be with you this morning, and to
get a chance to support this important legislation.
I first want to thank the members of the committee,
particularly Chairman Harkin, Senator Dodd--the Senate sponsor
of the Paycheck Fairness Act--Senator Mikulski, and Ranking
Member Enzi for hosting this important hearing today, and for
inviting me to testify. Mr. Chairman, as the author of the Fair
Pay Act--a bill I have also long supported--you have been a
longtime champion of pay equity for women, and I thank you for
your leadership.
Put simply, the Paycheck Fairness Act is a modest, common-
sense reform that closes numerous longstanding loopholes in the
Equal Pay Act and stiffens penalties for employers who
discriminate based on gender.
In America today, women now make up half of the workforce,
and two-thirds of women are either the sole breadwinner or co-
breadwinner in their family. Women are also more likely than
men to graduate from college. They run more than 10 million
businesses with combined annual sales of $1.1 trillion, and are
responsible for making 80 percent of consumer buying decisions.
And yet, women are still only being paid 78 cents on the
dollar as compared to men. Women of color are even worse off--
African-American women make 68 cents on the dollar compared to
the highest earners, while Hispanic women make only 57 cents.
Unmarried women have an average household salary that is almost
$12,000 lower than unmarried men, and they make a paltry 56
cents on the dollar when compared to married men.
As the National Committee on Pay Equity tells us, these pay
disparities have a substantial long term impact on women's
lifetime earnings, costing anywhere from $400,000 to $2 million
over a lifetime. And that lack of pay equity translates into
less income toward calculating pension and in some cases Social
Security benefits. It is no coincidence that 70 percent of
older adults living in poverty are women.
Congress originally passed the Equal Pay Act in 1963 to end
the ``serious and endemic problem'' of unequal wages. Forty-
seven years later, it is clear that the act is not quite
working as intended in its current form. And with more women
responsible for their families' economic security than ever
before, we have an obligation to face this continuing pay
inequity head-on.
Very early in this Congress, we passed the Lilly Ledbetter
Fair Pay Act, ensuring that women who are discriminated against
have the right to sue as long as their discriminatory pay
continues. But this critical law--reaffirming a right which had
been denied in a shortsighted 2007 Supreme Court decision--only
brings us back to where we had been all along.
By contrast, the Paycheck Fairness Act will represent real
progress for women who fight pay discrimination in the work
place every day. It would clarify the ``any factor other than
sex'' defense, so that an employer trying to justify paying a
man more than a woman for the same job must show the disparity
is not sex-based; that it is job-related and necessary for the
business.
It would also prohibit employers from retaliating against
employees who discuss or disclose salary information with their
co-workers. Of course, employees such as HR personnel who have
access to payroll information as part of their job would not be
protected if they disclose workers' salaries of other workers.
That being said, just ask Lilly Ledbetter how much sooner
she could have found out she was being discriminated against
had this protection been in place. Thanks to a company policy
that is still not uncommon today, she was prohibited from
discussing her pay with her co-workers. It was not until
someone gave her an anonymous note shortly before she retired
that she was alerted to the pay discrimination she had
experienced throughout her career.
The Paycheck Fairness Act would also strengthen the
remedies available for women to include punitive and
compensatory damages. In other words, this act brings equal pay
law into line with other civil rights law, and provides to
victims of sex-based discrimination the same standards for
lawsuits and options for damages that are already afforded to
victims of race-based discrimination.
It is sometimes suggested that passing this bill would
result in a torrent of class-action lawsuits that employers
could simply not afford to pay. But that is not the pattern we
have seen for anti-discrimination legislation. Race-based
discrimination laws have been on the books for years, and
employers have made the adjustments necessary to avoid that.
There is no reason to think that applying the same standards to
sex-based discrimination would alter this equation. And for
sure, companies are better and more productive when they send a
signal that there is no place for sex-based discrimination.
So, again, this legislation is a common-sense solution to
the lingering problem of pay inequity. It simply extends
standards that are already part of our civil rights law to
include discrimination against women. And by acting now to
ensure that women get paid the same as men for the same work,
the Senate can give them, their families and our entire economy
the tools to recover and thrive.
That is why the Paycheck Fairness Act has been endorsed by
over 200 organizations, including the U.S. Women's Chamber of
Commerce, the American Association of University Women (AAUW),
Business and Professional Women (BPW), and the National Women's
Law Center. And it is why we have passed it twice in the House
of Representatives.
Now, 13 years after I first introduced it, I believe that
Paycheck Fairness is legislation whose time has come. I believe
we have a moral obligation to ensure that one half of the
American workforce is treated as fairly and equitably as the
other half. And on behalf of all of America's women, I strongly
encourage the Senate to take action and at last make this bill
law.
Thank you.
Senator Dodd. Let us vote.
[Laughter.]
Ms. DeLauro. Thank you. Thank you.
The Chairman. Well, Congresswoman DeLauro, thank you very
much for a very enlightened and enlightening presentation. And
thank you for your great leadership on this over all these
years. It has been a sheer joy to work with you on this and a
lot of other issues, and thank you for your passion.
Ms. DeLauro. Thank you. I am honored to be here today.
Thank you.
The Chairman. It is not enough just to be intellectually
good on this, but your passion just comes through. And
hopefully, we can act on this bill and join you in the House by
getting it done and, hopefully, sending it to the President,
hopefully, this Congress.
Ms. DeLauro. Looking forward to that day, Senator. Thank
you.
The Chairman. Thank you very much. I know you are very
busy, and you have to leave. Thank you very much, Congresswoman
DeLauro.
Senator Dodd. Thank you, Rosa.
The Chairman. Our next panel would be Commissioner Stuart
Ishimaru. Stuart Ishimaru was appointed to the EEOC in 2003,
and now serves as acting chairman. He is a graduate of the
University of California at Berkeley, and received his law
degree from George Washington University here.
Mr. Ishimaru spent 7 years as assistant counsel on the
House Judiciary Committee, Subcommittee on Civil and
Constitutional Rights and then 2 years with the House Armed
Services Committee. He has also served as acting staff director
of the Civil Rights Commission and as Deputy Assistant Attorney
General in the Civil Rights Division at the Department of
Justice.
Mr. Ishimaru, again, welcome. Your statement will be made a
part of the record in its entirety. And if you could sum it up
in 5 or so minutes, we would be most appreciative. Welcome.
STATEMENT OF STUART J. ISHIMARU, ACTING CHAIRMAN, EQUAL
EMPLOYMENT OPPORTUNITY COMMISSION, WASHINGTON, DC
Mr. Ishimaru. Mr. Chairman, thank you very much. Always
hard to follow Congresswoman DeLauro, but I will do my best.
So much was raised earlier during the opening statements
and by her statement, so it lets me finish mine much quicker.
But you know, the one thing that struck me as we were getting
ready for this hearing. This is the new American workplace, and
here we are, 47 years after enactment of the Equal Pay Act, the
act that was passed before the landmark 1964 Civil Rights Act.
And here we are with huge problems still remaining in the
country.
The pay gap continues to perpetuate, even though with the
existence of the Equal Pay Act and title VII and the other
civil rights laws. Obviously, much more work remains to be done
to deal with this problem.
Last year, Maria Shriver, the first lady of California,
working with the Center for American Progress, released a
ground-breaking report entitled, ``A Woman's Nation Changes
Everything.'' You will hear later from one of the authors of
that report, Heather Boushey. So I won't go into detail. But I
would like to talk about some of the findings that they found
that we have known for many years at the EEOC.
First, the gender wage gap persists. As have been mentioned
by other speakers, it is 77 cents on the dollar that women earn
versus their male counterparts. It is even less for minority
women, for women with disabilities, for the undocumented
workers as well.
Second, caregiver discrimination results in gender pay
discrepancies. Women continue to be more likely to bear
significant responsibility for providing care to children,
elderly family members, and family members with illness or
disability.
Discrimination against caregivers in the workplace based on
gender stereotypes and presumptions about the competence of
working mothers and others with significant caregiving
responsibilities continues to drag down wages for women. This
is an issue that I have taken a particular interest in at the
EEOC, and I am proud that the EEOC during the Bush years, as a
part of a bipartisan unanimous effort, adopted caregiver
guidance dealing with the issue of gender discrimination. And
we issued guidance for employers that was well received so they
would not have problems of gender discrimination in their
workplace.
Earlier last year, we issued a guidance of best practices
that employers were, in fact, doing, which again helps
employers know how to deal with this issue.
Third, part-time work leads to lower benefits and pay over
both the short- and long-term. Women are more than twice as
likely as men to work part time, and they often make the choice
to work part time in order to provide care for their children
and other family members. Part-time work is less likely to come
with benefits, and it is likely to be paid less as well.
Fourth and finally, gender-based wage discrimination is
especially untenable now in this economy, as most families have
come to rely on the incomes brought in by working women to make
ends meet.
I would like to spend a few minutes talking about the role
that the EEOC plays in enforcing equal pay laws. We enforce
both the Equal Pay Act, Title VII of the 1964 Civil Rights Act,
as well as other laws that prohibit pay discrimination.
Over the past 13 years, from fiscal year 1997 to the year
2009, the EEOC received 30,000 charges, over 30,000 charges
alleging sex-based pay discrimination. This may sound like a
lot, but it was over 13 years. And during that time, we
received over 1 million charges of discrimination. This
resulted in roughly 3 percent of charges coming into the EEOC
that actually alleged pay discrimination.
Over the past 3 years, we have seen a 30 percent rise in
cases or in charges coming before us. Again, though, this is
rising from 1,700 roughly to 2,200. Not a very large number.
And probably, the largest driver for this is that we just don't
know. We just don't know whether wage discrimination is going
on because of the secrecy that surrounds pay information in the
workplace.
Many workers operate under strict instructions not to
discuss their pay with co-workers and fear retaliation if they
do go against those instructions. We also face broader systemic
barriers in the private sector due to inadequate data on wages.
While some data is available in the aggregate, Federal agencies
have very little in the way of company-specific wage data in
the private sector, and this hinders our possible enforcement.
In my written statement, I talk about a number of cases
that we have brought. I leave that for the written record.
I want to spend a minute talking about the Federal sector
because I think that is actually an interesting way to compare
what is going on.
In the Federal sector, for Federal employees, there is--we
get far fewer complaints of wage discrimination. That is
partially because it is so transparent. People know what people
make. And I think that may serve as a model for us, that the
more people know what people are making with a large view, less
pay discrimination will go on.
Between 1988 and 2007, the gender gap for women decreased
from 28 cents to 11 cents on the dollar. So there was real
progress made in dealing with discrimination in the Federal
sector.
So now we look forward, and certainly, there are many
challenges at the EEOC. I want to thank members of this
committee for moving our nominees through so we get a quorum
again at the EEOC and a new chair. We are looking forward to
having them join us, hopefully soon. But we look forward to
working with all members of this committee with the Senate and
members in the House.
We were pleased with the passage last year of the Paycheck
Fairness Act in the House, and we are delighted that the Senate
is holding the hearings today. I want to commend the committee
for their leadership on this issue and want to note that the
Paycheck Fairness Act provides essential tools toward realizing
the promise of equal pay by strengthening provisions to the
act.
I would also note that last month, the President announced
the establishment of the National Equal Pay Enforcement Task
Force to improve compliance, public education, and enforcement
of equal pay laws. The EEOC is a key part of this task force,
actively coordinating with our colleagues at the Department of
Justice and the Department of Labor and the Office of Personnel
Management, to ensure that the most rigorous possible
enforcement happens with our equal pay laws.
Our work would undoubtedly be strengthened by the passage
of the Paycheck Fairness Act, a bill that President Obama has
strongly supported since his tenure here in this body.
Again, I would like to thank you for the opportunity to
testify today and look forward to answering any questions
members may have.
[The prepared statement of Mr. Ishimaru follows:]
Prepared Statement of Stuart J. Ishimaru
Mr. Chairman, and distinguished members of the Committee on Health,
Education, Labor, and Pensions, thank you for the opportunity to appear
before you at this important hearing, ``A Fair Share for All: Pay
Equity in the New American Workplace.''
the problem of gender inequality in employment compensation
In 1963, Congress passed the Equal Pay Act, amending the Fair Labor
Standards Act to address pay inequities based on sex. At that time,
Congress denounced sex-based wage discrimination as contributing to
depressed wages, underutilization of the labor force, obstruction of
commerce, and unfair competition. While the passage of the Equal Pay
Act and subsequent year's passage of the Civil Rights Act of 1964 have
done much to equalize pay for men and women in this country, in 2010
the pay gap continues to perpetuate the very same problems the Equal
Pay Act and title VII were intended to combat. Much work remains to
close the gap, to end gender pay inequity, and to deliver on the
promise of equal pay for equal work.
In 2009, Maria Shriver, working with the Center for American
Progress, released a ground breaking report entitled, ``A Woman's
Nation Changes Everything.'' This sweeping study of the role of women
in our Nation's economies and the economies of our families today
provided a wealth of insights into the challenges women still face when
it comes to earning equal pay for equal work. This report and other
recent studies confirm what we at the EEOC have recognized for some
time:
The gender wage gap persists. The wage gap is alive and
well in America, with the typical full-time, year-round female worker
making $.77 for every dollar earned by her male counterpart.\1\ The gap
is even wider for women of color and people with disabilities, and
undocumented immigrant workers often don't even manage to earn minimum
wage. Although some of the pay gap can be explained by differentials in
experience or as a result of the differences in the occupations men and
women typically do, the Shriver Report estimates that about 41 percent
of the pay gap cannot be explained by these factors.\2\
---------------------------------------------------------------------------
\1\ The Shriver Report: A Woman's Nation Changes Everything 57-58
(Heather Boushey and Ann O'Leary, eds., 2009).
\2\ Id. at 58.
---------------------------------------------------------------------------
Caregiver discrimination results in gender pay
discrepancies. Women continue to be more likely to bear significant
responsibility for providing care to children, elderly family members,
and family members with illnesses or disabilities.\3\ Discrimination
against caregivers in the workplace based on gender stereotypes and
presumptions about the competence and commitment of working mothers and
others with significant caregiving responsibilities continues to drag
down wages for women.\4\ This is an issue I have taken a particular
interest in at the EEOC, and I am proud to have been a part of the
bipartisan effort to address this kind of discrimination through the
Caregiver Guidance \5\ the Commission issued in 2007, and the Best
Practices Guide \6\ we issued in 2009.
---------------------------------------------------------------------------
\3\ See generally Laura T. Kessler, The Attachment Gap: Employment
Discrimination Law, Women's Cultural Caregiving, and the Limits of
Economic and Liberal Legal Theory, 34 U. MICH. J.L. REFORM 371, 378-80
(2001) (discussing women's continued role as primary caregivers in our
society and citing studies).
\4\ See generally Shelley J. Correll, Stephen Benard and In Paik,
Getting a Job: Is There a Motherhood Penalty?, AJS Volume 112 Number 5
(March 2007): 1297-338.
\5\ Equal Employment Opportunity Commission Enforcement Guidance,
Unlawful Disparate Treatment of Workers with Caregiving
Responsibilities (2007).
\6\ Equal Employment Opportunity Commission, Employer Best
Practices for Workers with Caregiving Responsibilities (2009).
---------------------------------------------------------------------------
Part time work leads to lower benefits and pay over both
the short term and long term. Women are more than twice as likely as
men to work part-time, and they often make the choice to work part time
in order to provide care for their children or other family members.
According to the Department of Labor Women's Bureau, 24.6 percent of
employed women worked part time in 2008, the most recent year for which
data is available, as compared to only 11.1 percent of men.\7\ Part
time work is less likely to come with benefits such as health insurance
or paid time off, and by its very nature, tends to pay less than full-
time work. Because so much of the way our earnings increase over time
is based on raises calculated as a percentage of current salary, the
fact that women are more likely to work part time causes the pay gap to
accumulate and widen over time.
---------------------------------------------------------------------------
\7\ DOL Women's Bureau, Employment Status for Women and Men in
2008, available at http://www.dol.gov/wb/factsheets/Qf-ESWM08.htm.
---------------------------------------------------------------------------
Gender-based wage discrimination is especially untenable
now, as more families come to rely on the income brought in by women
workers to make ends meet. Recent studies show that the current
economic downturn is resulting in more women serving as the primary
breadwinners for their families.\8\ This is because men are losing jobs
at a much higher rate than women.\9\ You don't have to be a
mathematician to figure out that where women make 77 cents on the
dollar versus their male counterparts, where a father's wages are lost,
an average family can lose over 50 percent of its income. If there ever
was a time to act to remedy the gender pay gap, it is now.
---------------------------------------------------------------------------
\8\ Heather Boushey and Ann O'Leary, Our Working Nation: How
Working Women Are Reshaping America's Families And What It Means For
Policymakers (2010).
\9\ Heather Boushey, Women Breadwinners, Men Unemployed, available
at http://www.
americanprogress.org/issues/2009/07/breadwin_women.html. (July 20,
2009).
---------------------------------------------------------------------------
eeoc's role in enforcing equal pay laws
The EEOC's role in enforcing the Nation's equal pay laws is a
central one. EEOC is the primary enforcement agency for both the Equal
Pay Act and title VII's prohibitions on compensation discrimination. We
have further jurisdiction to address pay discrimination under the Age
Discrimination in Employment Act, the Americans with Disabilities Act,
and the Genetic Information Nondiscrimination Act. The EEOC has issued
a Compliance Manual Chapter of Compensation Discrimination which
provides detailed guidance and instructions for investigating and
analyzing claims of compensation discrimination under each of the
statutes enforced by the EEOC.
On January 29, 2009, President Obama signed the Lilly Ledbetter
Fair Pay Act of 2009 which supersedes the Supreme Court's decision in
Ledbetter v. Goodyear Tire & Rubber Co., Inc. Ledbetter had required a
compensation discrimination charge to be filed within 180 days of a
discriminatory pay-setting decision (or 300 days in jurisdictions that
have a local or State law prohibiting the same form of compensation
discrimination), an unrealistic expectation given the secrecy that
usually surrounds pay decisions.
The Ledbetter Act restores the pre-Ledbetter position of the EEOC
that each paycheck that delivers discriminatory compensation is a wrong
actionable under the Federal EEO statutes, regardless of when the
discrimination began. As noted in the act, it recognizes the ``reality
of wage discrimination'' and restores ``bedrock principles of American
law.''
recent private sector charge receipt trends and litigation
Over the past 13 years (from fiscal year 1997 through fiscal year
2009), the EEOC has received a total of 30,312 charges alleging sex-
based pay discrimination in violation of the EPA and/or title VII. This
is an average of 2,332 charges per fiscal year (out of an average of
82,022 total charges per fiscal year over the same period).
Over the last 3 fiscal years, the EEOC has experienced a 30 percent
increase in gender-based wage discrimination charges. Most recently, in
fiscal year 2009, the EEOC received 2,252 sex-based pay discrimination
charges out of a total of 93,277 total charges. Of those, 944 charges
alleged violations of the EPA, specifically (roughly 1 percent of total
receipts). Through our administrative enforcement process alone in
2009, the EEOC obtained almost $19 million in monetary benefits for
victims of wage discrimination. Settlements and judgments obtained in
litigation make this figure even greater. A number of reasons may
account for the relatively small number of wage claims the EEOC
receives, but the single biggest challenge the EEOC faces in
identifying wage discrimination is the secrecy that surrounds pay
information in the workplace.
Many workers operate under strict instructions not to discuss their
pay with their co-workers, and fear retaliation if they go against
those instructions. For this reason, many people earn less for
potentially discriminatory reasons for many years without knowing it,
just as Lilly Ledbetter did until an anonymous co-worker left her a
note telling her the salaries of some of her male peers. These policies
that prevent workers from discussing pay create a serious barrier to
charge filing under our equal pay laws.
We also face broader systemic barriers in the private sector due to
inadequate data on wages. While some data is available in the
aggregate, Federal agencies have very little in the way of company
specific wage data in the private sector, and this hinders systemic
enforcement efforts by the Commission in the realm of wage
discrimination.
Notwithstanding these challenges the EEOC has litigated and
resolved a number of important wage discrimination cases in recent
years. These include:
EEOC v. Woodward Governor Company (filed 10/4/06)--A title
VII/EPA lawsuit filed by the EEOC's Chicago District Office alleging,
among other claims, that defendant discriminated against females,
blacks, Hispanics and Asians with respect to compensation. This was
resolved 2/16/07 for $9,674,489.
EEOC v. Morgan Stanley (filed 9/10/2001)--A title VII
lawsuit filed by the EEOC's New York office alleging discrimination
against women in compensation, promotions, and terms and conditions of
employment. The case was resolved on
7/12/2004 for $54 million.
EEOC v. Tavern on the Green (filed 9/24/07)--A title VII
lawsuit filed by the EEOC's New York District Office alleging, among
other claims, that defendant discriminated against females, Blacks, and
Hispanics with respect to wages when they complained of harassment.
This was resolved on 6/3/08 for $2,200,000.
EEOC v. New York State Department of Corrections (filed 3/
29/07)--An EPA lawsuit filed by the EEOC's New York District Office
alleging that defendant discriminatorily transferred at least 13 female
employees from workers' compensation leave to less lucrative maternity
leave on or before the birth of their children without determining
whether the underlying work-related injuries were ongoing. This was
resolved on 5/20/08 for $971,961.
The EEOC is currently actively engaged in 14 cases in which wage
discrimination is alleged. Five of those cases involve EPA claims.
These include:
EEOC v. Southeastern Telecom Inc. (filed 9/22/09)--A title
VII/EPA case filed by the EEOC's Memphis District Office alleging that
Charging Party, an account executive, was discharged after complaining
of sex discrimination in commissions in violation of title VII and the
EPA.
EEOC v. The Health Management Group (filed 7/29/09)--A
title VII/EPA case filed by the EEOC's Philadelphia District Office
alleging that defendant, a weight loss enterprise, failed to pay
Charging Party and another employee equal wages because of their sex,
female.
eeoc's role in enforcing federal sector equal pay laws
The EEOC plays an important role in enforcing equal pay laws for
Federal employees through our Federal sector hearings program, our
Federal sector appeals, program, and our Federal sector training
programs.
Federal sector pay discrimination complaints are relatively rare,
due in part to the transparency of the GS pay scale. There were 44 EPA
complaints filed against Federal agencies in fiscal year 2008 out of a
total of 16,752, 40 EPA complaints out of a total of 16,363 in fiscal
year 2007, and 33 such complaints out of 16,723 total complaints in
fiscal year 2006. In any given year, approximately .2 percent of all
complaints filed by Federal employees allege EPA claims.
Since fiscal year 2006, the EEOC's Office of Federal Operations has
issued approximately 59 decisions on appeal in which an EPA violation
was asserted. Of these, only four cases resulted in a finding of
discrimination based on pay.
As in the private sector, gender-based compensation discrimination
claims can also be made under title VII. In fiscal year 2008, there
were 388 complaints alleging discrimination on the basis of gender
under title VII that raised pay-related discrimination issues. In
fiscal year 2007, that number was 366, and in fiscal year 2006, it was
364. From October 2006 through the end of February 2010, the EEOC
issued approximately 300 appellate decisions raising wage-related
discrimination (on the basis of gender and other protected traits)
under title VII.
In March 2009, the government Accountability Office issued a Report
entitled: ``Women's Pay: Gender Pay Gap in the Federal Workforce
Narrows as Differences in Occupation, Education and Experience
Diminish.'' This report found that while a pay gap between men and
women in the Federal workforce still exists, it has narrowed
considerably since the 1980s. Between 1988 and 2007, the gender pay gap
declined from 28 cents to 11 cents on the dollar. The GAO also found
that much of the gap was explained by measurable factors such as
occupations, experience and education. However, 7 cents of the gap
could not be accounted for in its study.
The GAO study suggests several factors that may be contributing to
the lessening of the gender pay gap in the Federal Government. These
include the fact that some occupational categories have become better
integrated by gender, the decline in the clerical workforce, and the
fact that men and women have increasingly similar levels of education
and Federal work experience.
The EEOC is committed to working with Federal agencies to eliminate
pay discrimination in Federal employment, so the Federal Government can
truly set the standard for fair pay in this country, and serve as a
model workplace for others to follow.
looking forward
There remain many challenges on the road ahead, and the EEOC stands
ready to work with Congress to successfully meet these challenges. I
was very pleased by the House's passage last year of the Paycheck
Fairness Act, and I am encouraged that the Senate is holding this
hearing today in order to bring attention to the important issues
addressed by this legislation. I would also like to thank this
committee for their leadership on the issue of pay equity. This hearing
provides an opportunity to bring attention to the issue, and to the
legislation in the Senate.
The Paycheck Fairness Act provides essential tools toward realizing
the promise of equal pay, and I look forward to working with the Senate
to strengthen and move forward on this important legislation soon.
Passage of this legislation would make it easier to establish
violations of the Equal Pay Act, by clarifying the affirmative defense
for ``factors other than sex,'' and refining the ``establishment''
requirement to comply with commonsense notions of how employers set
wages.
The Paycheck Fairness Act would enhance the EEOC's data collection
capabilities, allowing us to detect violations of the law and more
readily engage in targeted enforcement of equal pay laws.
The bill would also enhance remedies to allow for compensatory and
punitive damages, putting gender-based pay discrimination on a more
equal footing with pay discrimination on other bases such as race. It
would further allow class action claims to proceed under the EPA under
the Federal Rules of Civil Procedure.
Last month, the President announced the establishment of a National
Equal Pay Enforcement Task Force ``to improve compliance, public
education, and enforcement of equal pay laws.'' The EEOC is a key
participant in this Task Force, actively coordinating with our
colleagues in the Department of Justice Civil Rights Division, at the
Department of Labor, and at the Office of Personnel Management to
ensure the most rigorous possible enforcement of our Federal equal pay
laws. Our work would undoubtedly be strengthened by the passage of the
Paycheck Fairness Act, a bill President Obama has strongly supported
since his tenure in the Senate.
conclusion
I'd like to thank you again for inviting me here today to testify
on this very important issue. I look forward to your questions.
The Chairman. Thank you very much, Mr. Ishimaru, and thank
you for your leadership at EEOC.
I just have one brief question. Again, a lot of people say,
``well, you had a lot of success.'' People might argue that you
have plenty enough tools, that current law is sufficient.
Again, briefly for the record, what is it in the bill that
would give you additional tools to better enforce the law?
Mr. Ishimaru. Well, one would be knowing, having pay data
about what people are generally making. We do not collect data
like that, and it is very limited. The Lilly Ledbetter case is
instructive to us. Nobody would have known that, and she didn't
know it until somebody slipped her that note.
Pay data, certainly in the private sector, quite often is
kept very close. People don't talk about it. They are told not
to talk about it. We have no real way of knowing what people
are making so people can make that determination whether they
want to file a charge with us. That is really a huge driver for
this, giving us the tools we need to actively take a look, to
see whether employees are having problems.
The one thing that I have found, having been a civil rights
lawyer for many years now and having worked on Capitol Hill and
going to the EEOC somewhat skeptical about whether employers do
a good job, what I have learned is that employers want to do a
good job, generally. They want to know what the law is. They
want to know what the requirements are. And I have been truly
pleased to find that many employers and certainly most big
employers understand this, and they want to do better. They
want to know what the standards are.
And that, I think, will cut down on any worries or the big
worries about litigation and undue action against employers. I
have found that there has been a lot of progress made.
The Chairman. Thank you very much, Mr. Ishimaru.
Senator Enzi.
Senator Enzi. Thank you.
One of the things that I note as I go through a lot of
these hearings is that it all seems so simple as long as we are
not the ones running the business and looking at the specifics.
But to get into the questions, the U.S. District Court for the
Northern District of Iowa recently issued a decision in which
it dismissed all claims brought by the EEOC against CRST
Trucking in Cedar Rapids, IA, and ordered the EEOC to pay the
trucking company some $4.5 million to defray its costs and
attorneys' fees dollars defending this lawsuit.
Many observers have characterized the EEOC's conduct in
this case is one of sue first and ask questions later. They
also allege that the kind of legal overreaching and slipshod
investigating that was evident in the trucking case is not
uncommon and that the only thing uncommon was an employer with
the wherewithal to fight the agency's legal bullying.
As you know, in 2010, the omnibus appropriations bill, the
EEOC was provided with an extra $23 million. Nearly a quarter
of the extra appropriations have been effectively wasted on a
single case because of the agency's mishandling of the claim.
As chairman, what specific steps have you taken to review
the procedures and decisions of the agency, which culminated in
the pursuit of this legislation and the eventual ruling in the
court in Iowa? What steps can and should be taken to be sure
that the agency doesn't again fail to meet its legal
obligations and does not again pursue claims without a factual
legal or procedural basis?
Mr. Ishimaru. Senator, thank you for the question.
I will note that that case is still in litigation. So I
can't talk about the specifics of the case and won't talk about
the specifics of the case. But I will talk to the broader issue
of whether our people have their ducks lined up in a row.
First, I would like to thank Senator Mikulski for her
leadership and her help in getting us the resources we need to
rebuild the agency. In recent years, the EEOC budget was
basically flat, which meant we had a declining budget, given
all the increases that pop up over time. We lost, over the last
8 years, approximately 25 percent of our front-line workforce.
And due to the help of the appropriators and the Congress as a
whole, we have been able to start to rebuild the agency, start
to hire people again. We have really brought in a tremendous
cadre of new people that will help us do our work.
What I have found, both at the EEOC and having served time
at the Department of Justice in the 1990s, Federal cases are
not brought frivolously, or they are not brought without much
preparation and thought behind it. In every case that comes
before us and is brought by our Office of General Counsel, as I
found earlier at the Department of Justice, we pre-litigate
these cases in memoranda going back and forth before we are
ready to go. Very seldom do we get in a situation like this
where a judge has ruled against us.
I think the quality of our legal work is first rate, and I
think that is shown over the years. There are times when--rare
times when we have been in a situation like this where a judge
has ruled against us, and we believe at the end of the day, we
will prevail on this case. But this does happen from time to
time. That is the beauty of our court system that courts can
rule this way if they see fit. But we believe that we have a
solid case here, and at the end of the day, we will prevail.
Senator Enzi. Well, the government has a lot more resources
and a lot more capability to pursue these things than private
individuals do. But to shift gears here a little bit because my
time is limited, from a plaintiff s perspective, one of the
main differences between filing an Equal Pay Act claim or a
title VII claim is the requirement to initiate all the title
VII charges through the EEOC or a State employment agency
initially.
What purpose does filing a charge with the EEOC fulfill?
Why shouldn't the law require Equal Pay Act charges to be
similarly initiated with your agency?
Mr. Ishimaru. Well, certainly, when the Equal Pay Act was
enacted back in 1963, there wasn't an EEOC. There wasn't a
Title VII of this 1964 Civil Rights Act. And that act, like
many other civil rights acts, Congress set up an administrative
mechanism to try to deal with these cases before they went to
court. And that has worked to a large extent, but there are
still issues with that. There are ways to make it better, I
think.
And as we worked on civil rights legislation over the
years, there has always been an active debate whether we should
let people go to court directly or whether they should come to
the administrative agency. And Congress, in its wisdom, chose
to go a certain route, and that is why we do what we do at the
EEOC.
Senator Enzi. Thank you. My time has expired.
The Chairman. Senator Dodd.
Senator Dodd. Well, very quickly--and again, we want to
thank you for your service and thank your staff and others at
the EEOC because, for a number of years, they were just gutted.
There was a concerted effort to just virtually eliminate the
EEOC, if they could, by strangling it financially and starving
it. And as a result, you have ended up where you have. So thank
you for your work. Thank you for those who hung on and stayed
there to try and make this work as well along the way.
The Equal Pay Act, I wonder if you might just share or
discuss how the current language of the Equal Pay Act allows an
affirmative defense based on ``any factor other than sex''
inhibits your department's ability to effectively protect
victims of pay discrimination under the EPA.
Mr. Ishimaru. Well, I think that the language in the
Paycheck Fairness Act tries to adopt the framework used by
other civil rights acts, which I think will help employers
understand what the requirements are under the law. Using any
factor other than sex, we found to be a rather large loophole,
and we think that the framework laid out in the bill will help
tighten it. So it is linked to business purposes.
Senator Dodd. Don't you have some practical examples? What
are some of the defenses that you hear?
Mr. Ishimaru. Well, one of the practical examples is that
someone may say, ``well, that is what you made in your old job,
and that is why we are paying you less.'' It would perpetuate
discrimination that has gone on in other places.
We think that the better approach is to look at how the
wage scale is dealt with for this job, rather than comparing it
to something else that may or may not have relevance to that
job. What you were making in a past job may or may not be
relevant to what you should be making in this job for these
tasks.
Senator Dodd. Would the Paycheck Fairness Act's provision
prohibiting employers from retaliating against employees who
share wage information help the EEOC better protect women
against discrimination?
Mr. Ishimaru. Oh, it is huge. The fact that people are
prohibited from talking about their wages in many cases stifles
the conversation. People have no idea what their colleagues are
making. They don't know if there is a disparity, whether it is
based on gender or race or some other factor.
Having worked for the Federal Government for so long, you
sort of get used to having your rate of pay as a matter of
public record. And certainly, in the private sector, that is
not always so. And for people who were strictly told that they
cannot do it, it is totally inhibiting that people cannot share
this information with their colleagues. They have no way of
knowing. And I think Lilly Ledbetter showed that.
Senator Dodd. And last, let me ask you, and again, I don't
know if these numbers are correct or not. You can tell me if
they are. But I am told that for fiscal year 2009, EEOC
received 2,250 sex-based pay discrimination charges. But of
those, only about 900, a little more than 900 charges alleged
violations of the Equal Pay Act, which is just over 40 percent.
Why are the Equal Pay Act charges brought so much less
frequently than under title VII?
Mr. Ishimaru. Hard to say. It could be based on
jurisdictional reasons. It could be based because the person
wants to bring it under one statute versus another. It could be
based on our need to having to educate our employees more on
the various parts of the Equal Pay Act.
As I stated, very few charges come in under the Equal Pay
Act. The bulk of our work is carried on under title VII of the
1964 act. People are used to going to title VII as sort of the
go-to law, and that is quite often the framework that they use.
Senator Dodd. Very good. Thank you, Mr. Chairman.
The Chairman. Senator Isakson.
Statement of Senator Isakson
Senator Isakson. Thank you, Mr. Chairman. I appreciate it.
Thank you very much for being here, Mr. Ishimaru. You
stated there were 1 million claims over 13 years before the
EEOC. Is that correct?
Mr. Ishimaru. Right.
Senator Isakson. What percentage of those were pay claims,
equal pay claims?
Mr. Ishimaru. Equal pay claims was about 3 percent.
Senator Isakson. OK. And you stated that you were very
formidable in your victories in court in those cases that were
litigated, I think?
Mr. Ishimaru. Right.
Senator Isakson. What percentage of those were litigated?
How many do you litigate?
Mr. Ishimaru. We litigate year-to-year between 300 and 400
cases a year.
Senator Isakson. Out of how many?
Mr. Ishimaru. Out of every year, 80,000 charges come into
the agency, roughly speaking.
Senator Isakson. How many of them are dismissed--how many
of those that you don't litigate are dismissed and how many are
settled?
Mr. Ishimaru. I don't know exactly. I am happy to provide
that for the record.
Senator Isakson. There is a reason--you know, I ran a
company for 22 years. And 96 percent of my employees and 100
percent of my independent contractors were women. I never had a
sex discrimination for pay case filed against me. I want that
to go on the record.
[Laughter.]
However, the second most-sensitive thing among employees is
their age, and age discrimination, which is also under EEOC
jurisdiction. And oftentimes, those are filed because someone
either was dismissed from their job or felt like they didn't
get the raise somebody else got. Really, it was because of
performance, but they would use the age discrimination law as a
reason to bring the case to EEOC.
And quite frankly, most all the time, the EEOC
investigators would suggest settling rather than pursuing a
defense of the claim. And if you open up liability, tort
liability, which I understand this does greatly open up
punitive damages. Is that correct?
Mr. Ishimaru. The Paycheck Fairness Act provides for
compensatory and punitive damages. Yes.
Senator Isakson. I know tort issue is always a big
Republican and Democrat issue, and I don't want to--I am not
playing partisan politics. But when you have a case filed
against you as a business person and there is a potential
unlimited liability in the court system, there is even more of
a tendency to settle rather than take the risk of a runaway
jury, runaway verdict, or what may not always be justice at the
courthouse.
The same thing is true--I am all for transparency and
disclosure, but you know, we have antitrust laws against two
business people discussing what they charge for a product or
how they structure it. Yet you publish publicly what is paid
for performance in the production of that business, and you
skew in which the way the business operates.
Now I am not trying to defend discrimination. I am against
discrimination. And obviously, with the number of women I
hired, I am all for--women were a lot better workers than men
were, I will tell you as a matter of fact in my particular--
But I do know that there is a balance between disclosure
and worker's privacy, and there is a balance between
appropriate damages and intimidation for the threat of a
runaway award. And if you open that up too greatly, you have
the unintended consequence of lessening pay-for-performance,
lessening opportunity, and businesses trying to run themselves
defensively, which runs counterproductive to the free
enterprise system. So I know that is not a question, and I
apologize for making a statement.
But having gone through those types of filings and then
having had it suggested, well, just settle is cheaper than
defending yourself, if you open up the liability to be more
skewed one way or the other, you run the risk of that type of
intimidation of small businesses, which the end result is not
good, I don't think, for performance or not good for the
operation of the business. I would love your comment on that.
Mr. Ishimaru. If I could comment first about getting the
pay information, we realize how sensitive this issue can be,
and I think before we--if the Paycheck Fairness Act was
enacted, we would take special pains to make sure that we did
it right. One thing that I have been sensitive to at the agency
is that when the government collects data, it needs to analyze
it. It needs to use it.
We just can't put the burden on businesses to collect and
not use it. I think we would use this data prudently, and I
think we would have to figure out ways to make sure that it is
collected in a fair way that would not have unintended
consequences.
Senator Isakson. But you do understand what I am talking
about in the risk of the pervasive availability of that
information?
Mr. Ishimaru. Oh, surely. Surely. And I think we would
certainly factor that in to make sure that we would not have
unintended consequences result from it. I think that would
definitely be on the table, and we would be very sensitive to
that.
I think as to the question of settling, those are larger
questions. I think one of the things that the Congress wanted
us to do when it created the EEOC in 1964 as part of the act is
that they wanted to have this alternative mechanism so it
didn't have to go to court. And we have found, especially with
our mediation program, that people, if they can, want to
resolve cases before it results in litigation. And we have
found that employers who have participated in our mediation
program have actually found it to be a useful activity. They
have not felt intimidated. They felt that it was worth their
while to actually participate.
So that gives us some hope that the path we are on is
making sense. There are obviously ways to make it better, and
we are working to try to make that happen.
Senator Isakson. Thank you very much for your time.
Thank you, Mr. Chairman.
The Chairman. Thank you, Senator.
Senator Mikulski.
Statement of Senator Mikulski
Senator Mikulski. Thank you. I am here this morning wearing
two hats--one, the authorizing committee and one of the
original co-sponsors of the paycheck fairness, but I am also
the appropriator for the EEOC. My problem has been that the
EEOC has been leadership starved, revenue deficient, and
expectations that they have been unable to fulfill, no matter
what the intent of its civil service is there.
So let me get right to my questions. First of all, when I
took over the subcommittee--that is, the appropriations--my
ranking member, Senator Shelby, and I took a look at the EEOC.
And on a bipartisan basis, we held the first oversight hearing.
We were shocked at the backlog, the dysfunction of the call
centers that gave contradictory information, the administration
in shambles, etc. That was in an old regime. Now we have this
regime. Tell me, what is the backlog at the EEOC?
Mr. Ishimaru. The backlog of the EEOC is approaching
100,000, I believe.
Senator Mikulski. One hundred thousand cases. Now, one of
the arguments against our bill that was being discussed here
is, enforce the law on the books.
Mr. Ishimaru. Right.
Senator Mikulski. That is actually a very good position, to
enforce the law that is currently on the books where we know
that. Why is there a backlog? Is it because you don't have the
commissioners, you don't have the resources? What is the
problem? That would be in race, gender, age, which was an
excellent point made by our Georgia colleague? Why do you have
a 100,000 backlog?
Mr. Ishimaru. I think a large reason for the backlog is
that over the last 8 years, we lost 25 percent of our front-
line people. We also created, as you stated, a call center, an
outsourced call center, which I opposed as a member of the
commission.
We have brought that in-house. We are trying to make that
work better so people can get the information they need from
EEOC employees. That is a work in progress. I think we are
making progress.
But the key factor is, I think, in trying to deal with the
backlog is that, thanks to the appropriations that we have been
able to get in 2009 and 2010, we have hired front-line
employees to bring the level of service up, to actually hire
investigators, to hire lawyers, to hire clerical staff to do
the job that needs to be done. Backlog is a tough issue, as I
have found.
Senator Mikulski. Well, jumping in, so over--and again,
this isn't rehashing the last 10 years. What happened there was
the CEO was a good person, but not a good manager.
Mr. Ishimaru. Right.
Senator Mikulski. So that was one problem. The other was
the contracting out of call centers with no oversight or
supervision. And then there was a lack of revenue. Is that
right?
Mr. Ishimaru. Right.
Senator Mikulski. So, yes, we should enforce the laws on
the books, but we need to have--don't you need, No. 1--I mean,
you are doing a great job as an acting director. But don't we
need a director? And isn't one of the reasons for the backlog
is that there are three vacancies on the commission? Can you
make decisions and make adjudications?
Mr. Ishimaru. We are certainly empowered and have been
running the agency. It will be an enormous help to have the
three other members of the commission confirmed.
Senator Mikulski. If those members are confirmed, will that
also provide the leadership to reduce the backlog?
Mr. Ishimaru. I think it is always helpful to have
permanent leadership in place. I think having a permanent chair
will help move the agency toward fulfilling the expectations
that people have.
Senator Mikulski. See, I am observing a pattern here, which
is not only with the EEOC, but a variety of agencies. No. 1,
don't give good management. So we all have had uneven
management in our agencies. Shrink the budget. Reduce the
workforce. Contract it out with no supervision. And then when
the agency starts to sink, say government is a dud and it can't
do the job.
I think you have been given an enormous responsibility. And
even if this law doesn't pass--which I hope it does--if we give
you more responsibility, we have to give you more resources.
But at the same time, you need the resources that you need now,
and I hope I have on this committee for those who will say
enforce the laws on the books, that I will have the support to
do that.
Mr. Ishimaru. Well, I hope so, too, Senator.
Senator Mikulski. I do have it from Senator Shelby, and I
want to be very clear. He has been a very able and an
enormously helpful ally with me on this issue.
Mr. Ishimaru. One thing that we have done as a management
matter over this last year, besides hiring the new people to
come in, we have actually spent the resources to train people.
You have to train new people coming in. You have to train the
people you have onboard to deal with the new laws as well as to
deal with the current developments in the law. That had not
happened for many years, and I think it will pay big benefits
in the upcoming years.
But I think having a permanent chair at the EEOC, and the
person who has been nominated is superb, and we look forward to
having her help lead us to a better level at the EEOC.
Senator Mikulski. Well, and we look forward to having a
real appropriations process.
Thank you.
Senator Dodd [presiding]. Thank you very much, Senator
Mikulski.
Senator Franken.
Statement of Senator Franken
Senator Franken. Thank you, Mr. Chairman.
Thank you, Mr. Chairman, for your testimony today. In their
written testimony, today's witnesses really get into the
details of the various provisions in Federal law and State law
to help right the injustice of unequal pay. And these are
provisions in the Equal Pay Act, provisions under title VII,
and new ones that might be added with the Paycheck Fairness Act
and the Fair Pay Act.
We are looking for ways to ensure that victims of
discrimination have adequate recourse and adequate remedies
available to them if they can prove discrimination. But this
entire discussion assumes one thing, that the aggrieved worker
hasn't signed away all her rights by way of mandatory
arbitration, a mandatory arbitration provision in her
employment contract.
The EEOC is sometimes still able to take action, but the
individual women, victims of sex discrimination can have all
their legal remedies made entirely irrelevant if their employer
forces them into arbitration.
I understand the EEOC has taken a policy position on this
issue, which I would like consent to have submitted into the
record. Is that OK, Mr. Chairman? It is right here.
[The information referred to follows.]
EEOC Notice
1. SUBJECT: Policy Statement on Mandatory Binding Arbitration of
Employment Discrimination Disputes as a Condition of Employment.
2. PURPOSE: This policy statement sets out the Commission's policy
on the mandatory binding arbitration of employment discrimination
disputes imposed as a condition of employment.
3. EFFECTIVE DATE: Upon issuance.
4. EXPIRATION DATE: As an exception to EEOC Order 205.001, Appendix
B, Attachment 4, a(5), this Notice will remain in effect until
rescinded or superseded.
5. ORIGINATOR: Coordination and Guidance Programs, Office of Legal
Counsel.
6. INSTRUCTIONS: File in Volume II of the EEOC Compliance Manual.
7. SUBJECT MATTER: The U.S. Equal Employment Opportunity Commission
(EEOC or Commission), the Federal agency charged with the
interpretation and enforcement of this Nation's employment
discrimination laws, has taken the position that agreements that
mandate binding arbitration of discrimination claims as a condition of
employment are contrary to the fundamental principles evinced in these
laws. EEOC Motions on Alternative Dispute Resolution, Motion 4 (adopted
Apr. 25, 1995), 80 Daily Lab. Rep. (BNA) E-1 (Apr. 26, 1995).\1\ This
policy statement sets out in further detail the basis for the
Commission's position.
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\1\ Although binding arbitration does not, in and of itself,
undermine the purposes of the laws enforced by the EEOC, the Commission
believes that this is the result when it is imposed as a term or
condition of employment.
---------------------------------------------------------------------------
i. background
An increasing number of employers are requiring as a condition of
employment that applicants and employees give up their right to pursue
employment discrimination claims in court and agree to resolve disputes
through binding arbitration. These agreements may be presented in the
form of an employment contract or be included in an employee handbook
or elsewhere. Some employers have even included such agreements in
employment applications. The use of these agreements is not limited to
particular industries, but can be found in various sectors of the
workforce, including, for example, the securities industry, retail,
restaurant and hotel chains, health care, broadcasting, and security
services. Some individuals subject to mandatory arbitration agreements
have challenged the enforceability of these agreements by bringing
employment discrimination actions in the courts. The Commission is not
unmindful of the case law enforcing specific mandatory arbitration
agreements, in particular, the Supreme Court's decision in Gilmer v.
Interstate/Johnson Lane Corp., 500 U.S. 33 (1991).\2\ Nonetheless, for
the reasons stated herein, the Commission believes that such agreements
are inconsistent with the civil rights laws.
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\2\ The Gilmer decision is not dispositive of whether employment
agreements that mandate binding arbitration of discrimination claims
are enforceable. As explicitly noted by the Court, the arbitration
agreement at issue in Gilmer was not contained in an employment
contract. 500 U.S. at 25 n.2. Even if Gilmer had involved an agreement
with an employer, the issue would remain open given the active role of
the legislative branch in shaping the development of employment
discrimination law. See discussion infra at section IV. B.
---------------------------------------------------------------------------
ii. the federal civil rights laws are squarely based in this nation's
history and constitutional framework and are of a singular national
importance
Federal civil rights laws, including the laws prohibiting
discrimination in employment, play a unique role in American
jurisprudence. They flow directly from core Constitutional principles,
and this Nation's history testifies to their necessity and profound
importance. Any analysis of the mandatory arbitration of rights
guaranteed by the employment discrimination laws must, at the outset,
be squarely based in an understanding of the history and purpose of
these laws.
Title VII of the historic Civil Rights Act of 1964, 42 U.S.C.
2000e et seq., was enacted to ensure equal opportunity in employment,
and to secure the fundamental right to equal protection guaranteed by
the 14th amendment to the Constitution.\3\ Congress considered this
national policy against discrimination to be of the ``highest
priority'' (Newman v. Piggie Park Enters., 390 U.S. 400, 402 (1968)),
and of ``paramount importance'' (H.R. Rep. No. 88-914, pt. 2 (1963)
(separate views of Rep. McCulloch et al.)),\4\ reprinted in 1964 Leg.
Hist. at 2123.\5\ The Civil Rights Act of 1964, 42 U.S.C. 2000a et
seq., was intended to conform ``[t]he practice of American democracy .
. . to the spirit which motivated the Founding Fathers of this Nation--
the ideals of freedom, equality, justice, and opportunity.'' H.R. Rep.
No. 88-914, pt. 2 (1963) (separate views of Rep. McCulloch et al.),
reprinted in 1964 Leg. Hist. at 2123. President John F. Kennedy, in
addressing the Nation regarding his intention to introduce a
comprehensive civil rights bill, stated the issue as follows:
\3\ See, e.g., H.R. Rep. No. 88-914, pt. 1 (1963), reprinted in
U.S. Equal Employment Opportunity Commission, Legislative History of
Title VII and XI of the Civil Rights Act of 1964 (``1964 Leg. Hist.'')
at 2016 (the Civil Rights Act of 1964 ``designed primarily to protect
and provide more effective means to enforce . . . civil rights''); H.R.
Rep. No. 88-914, pt. 2 (1963) (separate views of Rep. McCulloch, et
al.), reprinted in 1964 Leg. Hist. at 2122 (``[a] key purpose of the
bill . . . is to secure to all Americans the equal protection of the
laws of the United States and of the several States''); Charles &
Barbara Whalen, The Longest Debate: A legislative history of the 1964
Civil Rights Act 104 (1985) (opening statement of Rep. Celler on House
debate of H.R. 7152: ``The legislation before you seeks only to honor
the constitutional guarantees of equality under the law for all. . . .
[W]hat it does is to place into balance the scales of justice so that
the living force of our Constitution shall apply to all people . .
.''); H.R. Rep. No. 92-238 (1971), reprinted in Senate Committee on
Labor and Public Welfare, Subcommittee on Labor, Legislative History of
the Equal Employment Opportunity Act of 1972 (``1972 Leg. Hist.'') at
63 (1972 amendments to title VII are a ``reaffirmation of our national
policy of equal opportunity in employment'').
\4\ William McCulloch (R-Ohio) was the ranking Republican of
Subcommittee No. 5 of the House Judiciary Committee, to which the civil
rights bill (H.R. 7152) was referred for initial consideration by
Congress. McCulloch was among the individuals responsible for working
out a compromise bill that was ultimately substituted by the full
Judiciary Committee for the bill reported out by Subcommittee No. 5.
His views, which were Joined by six members of Congress, are thus
particularly noteworthy.
\5\ See also Albemarle Paper Co. v. Moody, 422 U.S. 405, 416 (1975)
(The Civil Rights Act of 1964 is a ``complex' legislative design
directed at an historic evil of national proportions'').
We are confronted primarily with a moral issue. It is as old
as the Scriptures and it is as clear as the American
Constitution.
The heart of the question is whether all Americans are to be
afforded equal rights and equal opportunities, whether we are
going to treat our fellow Americans as we want to be treated.
President John F. Kennedy's Radio and Television Report to the American
People on Civil Rights (June 11, 1963), Pub. Papers 468, 469 (1963).\6\
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\6\ Commitment to our national policy to eradicate discrimination
continues today to be of the utmost importance. As President Clinton
stated in his second inaugural address:
Our greatest responsibility is to embrace a new spirit of community
for a new century . . . The challenge of our past remains the challenge
of our future: Will we be one Nation, one people, with one common
destiny, or not? Will we all come together, or come apart?
The divide of race has been America's constant curse. And each new
wave of immigrants gives new targets to old prejudices . . . These
forces have nearly destroyed our Nation in the past. They plague us
still.
President William J. Clinton's Inaugural Address (Jan. 20, 1997),
33 Weekly Comp. Pres. Doc. 61 (Jan. 27, 1997).
Title VII is but one of several Federal employment discrimination
laws enforced by the Commission which are ``part of a wider statutory
scheme to protect employees in the workplace nationwide,'' McKennon v.
Nashville Banner Publ'g Co., 513 U.S. 352, 357 (1995). See the Equal
Pay Act of 1963 (``EPA''), 29 U.S.C. 206(d);. the Age Discrimination
in Employment Act of 1967 (``ADEA''), 29 U.S.C. 621 et seq., and the
Americans with Disabilities Act of 1990 (``ADA''), 42 U.S.C. 12101
et seq. The ADEA was enacted ``as part of an ongoing congressional
effort to eradicate discrimination in the workplace'' and ``reflects a
societal condemnation of invidious bias in employment decisions.''
McKennon, 513 U.S. at 357. The ADA explicitly provides that its purpose
is, in part, to invoke congressional power to enforce the fourteenth
amendment. 29 U.S.C. 12101(b)(4). Upon signing the ADA, President
George Bush remarked that ``the American people have once again given
clear expression to our most basic ideals of freedom and equality.''
President George Bush's Statement on Signing the Americans with
Disabilities Act of 1990 (July 26, 1990), Pub. Papers 1070 (1990 Book
II).
iii. the federal government has the primary responsibility for the
enforcement of the federal employment discrimination laws
The Federal employment discrimination laws implement national
values of the utmost importance through the institution of public and
uniform standards of equal opportunity in the workplace. See text and
notes supra in section II. Congress explicitly entrusted the primary
responsibility for the interpretation, administration, and enforcement
of these standards, and the public values they embody, to the Federal
Government. It did so in three principal ways. First, it created the
Commission, initially giving it authority to investigate and conciliate
claims of discrimination and to interpret the law, see 706(b) and
713 of title VII, 42 U.S.C. 2000e-5(b) and 2000e-12, and
subsequently giving it litigation authority in order to bring cases in
court that it could not administratively resolve, see 706(f)(1) of
title VII, 42 U.S.C. 2000e-5(f)(1). Second, Congress granted certain
enforcement authority to the Department of Justice, principally with
regard to the litigation of cases involving State and local
governments. See 706(f)(1) and 707 of title VII, 42 U.S.C. 2000e-
5(f)(1) and 2000e-6. Third, it established a private right of action to
enable aggrieved individuals to bring their claims directly in the
Federal courts, after first administratively bringing their claims to
the Commission. See 706(f)(1) of title VII, 42 U.S.C. 2000e-
5(f)(1).\7\
---------------------------------------------------------------------------
\7\ Section 107 of the ADA specifically incorporates the powers,
remedies, and procedures set forth in title VII with respect to the
Commission, the Attorney General, and aggrieved individuals. See 42
U.S.C. 12117. Similar enforcement provisions are contained in the
ADEA. See 29 U.S.C. 626 and 628.
---------------------------------------------------------------------------
While providing the States with an enforcement role, see 42 U.S.C.
2000e-5(c) and (d), as well as recognizing the importance of
voluntary compliance by employers, see 42 U.S.C. 2000e-5(b), Congress
emphasized that it is the Federal Government that has ultimate
enforcement responsibility. As Senator Humphrey stated, ``[t]he basic
rights protected by [title VII] are rights which accrue to citizens of
the United States; the Federal Government has the clear obligation to
see that these rights are fully protected.'' 110 Cong. Rec. 12725
(1964). Cf. General Tel. Co. v. EEOC, 446 U.S. 318, 326 (1980) (in
bringing enforcement actions under title VII, the EEOC ``Is guided by
`the overriding public interest in equal employment opportunity . . .
asserted through direct Federal enforcement' '') (quoting 118 Cong.
Rec. 4941 (1972)).
The importance of the Federal Government's role in the enforcement
of the civil rights laws was reaffirmed by Congress in the ADA, which
explicitly provides that its purposes include ``ensur[ing] that the
Federal Government plays a central role in enforcing the standards
established in [the ADA] on behalf of individuals with disabilities.''
42 U.S.C. 12101(b)(3).
iv. within this framework, the federal courts are charged with the
ultimate responsibility for enforcing the discrimination laws
While the Commission is the primary Federal agency responsible for
enforcing the employment discrimination laws, the courts have been
vested with the final responsibility for statutory enforcement through
the construction and interpretation of the statutes, the adjudication
of claims, and the issuance of relief.\8\ See, e.g., Kremer v. Chemical
Constr. Grp., 454 U.S. 461, 479 n.20 (1982) (``Federal courts were
entrusted with ultimate enforcement responsibility'' of title VII); New
York Gaslight Club, Inc. v. Carey, 447 U.S. 54, 64 (1980) (``Of course
the `ultimate authority' to secure compliance with title VII resides in
the Federal courts'').\9\
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\8\ In addition, unlike arbitrators, courts have coercive
authority, such as the contempt power, which they can use to secure
compliance.
\9\ See also H.R. Rep. No. 88-914, pt.2 (1963) (separate views of
Rep. McCulloch et al.), reprinted in 1964 Leg. Hist. at 2150
(explaining that EEOC was not given cease-and-desist powers in the
final House version of the Civil Rights Act of 1964, H.R. 7152, because
it was ``preferred that the ultimate determination of discrimination
rest with the Federal judiciary'').
---------------------------------------------------------------------------
A. The Courts Are Responsible for the Development and Interpretation of
the Law
As the Supreme Court emphasized in Alexander v. Gardner-Denver Co.,
415 U.S. 36, 57 (1974), ``the resolution of statutory or constitutional
issues is a primary responsibility of courts, and judicial construction
has proved especially necessary with respect to title VII, whose broad
language frequently can be given meaning only by reference to public
law concepts.'' This principle applies equally to the other employment
discrimination statutes.
While the statutes set out the basic parameters of the law, many of
the fundamental legal principles in discrimination jurisprudence have
been developed through judicial interpretations and case law precedent.
Absent the role of the courts, there might be no discrimination claims
today based on, for example, the adverse impact of neutral practices
not justified by business necessity, see Griggs v. Duke Power Co., 401
U.S. 424 (1974), or sexual harassment, see Harris v. Forklift Sys.,
Inc., 510 U.S. 17 (1993); Meritor Savings Bank, FSB v. Vinson, 477 U.S.
57 (1986). Yet these two doctrines have proved essential to the effort
to free the workplace from unlawful discrimination, and are broadly
accepted today as key elements of civil rights law.
B. The Public Nature of the Judicial Process Enables the Public, Higher
Courts, and Congress to Ensure That the Discrimination Laws Are
Properly Interpreted and Applied
Through its public nature--manifested through published decisions--
the exercise of judicial authority is subject to public scrutiny and to
systemwide checks and balances designed to ensure uniform expression of
and adherence to statutory principles. When courts fail to interpret or
apply the antidiscrimination laws in accord with the public values
underlying them, they are subject to correction by higher level courts
and by Congress.
These safeguards are not merely theoretical, but have enabled both
the Supreme Court and Congress to play an active and continuing role in
the development of employment discrimination law. Just a few of the
more recent Supreme Court decisions overruling lower court errors
include: Robinson v. Shell Oil Co., 117 S. Ct. 843 (1997) (former
employee may bring a claim for retaliation); O'Connor v. Consolidated
Coin Caterers, Corp., 116 S. Ct. 1307 (1996) (comparator in age
discrimination case need not be under 40); McKennon, 513 U.S. 352
(employer may not use after-acquired evidence to justify
discrimination); and Harris 510 U.S. 17 (no requirement that sexual
harassment plaintiffs prove psychological injury to state a claim).
Congressional action to correct Supreme Court departures from
congressional intent has included, for example, legislative amendments
in response to Court rulings that: pregnancy discrimination is not
necessarily discrimination based on sex (General Elec. Co. v. Gilbert,
429 U.S. 125 (1978), and Nashville Gas Co. v. Satty, 434 U.S. 136
(1977), overruled by Pregnancy Discrimination Act of 1978); that an
employer does not have the burden of persuasion on the business
necessity of an employment practice that has a disparate impact (Wards
Cove Packing Co. v. Atonio, 490 U.S. 642 (1989), overruled by 104
and 105 of the Civil Rights Act of 1991); that an employer avoids
liability by showing that it would have taken the same action absent
any discriminatory motive (Price Waterhouse v. Hopkins, 490 U.S. 228
(1989), overruled, in part, by 107 of the Civil Rights Act of 1991);
that mandatory retirement pursuant to a benefit plan in effect prior to
enactment of the ADEA is not prohibited age discrimination (United Air
Lines, Inc. v. McMann, 434 U.S. 192 (1977), overruled by 1978 ADEA
amendments); and, that age discrimination in fringe benefits is not
unlawful (Public Employees Retirement Sys. of Ohio v. Betts, 492 U.S.
158 (1989), overruled by Older Workers Benefits Protection Act of
1990).
C. The Courts Play a Crucial Role in Preventing and Deterring
Discrimination and in Making Discrimination Victims Whole
The courts also play a critical role in preventing and deterring
violations of the law, as well as providing remedies for discrimination
victims. By establishing precedent, the courts give valuable guidance
to persons and entities covered by the laws regarding their rights and
responsibilities, enhancing voluntary compliance with the laws. By
awarding damages, back pay, and injunctive relief as a matter of public
record, the courts not only compensate victims of discrimination, but
provide notice to the community, in a very tangible way, of the costs
of discrimination. Finally, by issuing public decisions and orders, the
courts also provide notice of the identity of violators of the law and
their conduct. As has been illustrated time and again, the risks of
negative publicity and blemished business reputation can be powerful
influences on behavior.
D. The Private Right of Action With Its Guarantee of Individual Access
to the Courts is Essential to the Statutory Enforcement Scheme
The private right of access to the judicial forum to adjudicate
claims is an essential part of the statutory enforcement scheme. See,
e.g., McKennon, 513 U.S. at 358 (granting a right of action to an
injured employee is ``a vital element'' of title VII, the ADEA, and the
EPA). The courts cannot fulfill their enforcement role if individuals
do not have access to the judicial forum. The Supreme Court has
cautioned that, ``courts should ever be mindful that Congress . . .
thought it necessary to provide a judicial forum for the ultimate
resolution of discriminatory employment claims: It is the duty of
courts to assure the full availability of this forum.'' Gardiner-
Denver, 415 U.S. at 60 n.21.\10\
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\10\ See also 118 Cong. Rec. S7168 (March 6, 1972) (section-by-
section analysis of H.R. 1746, the Equal Opportunity Act of 1972, as
agreed to by the conference committees of each House; analysis of
706(f)(1) provides that, while it is hoped that most cases will be
handled through the EEOC with recourse to a private lawsuit as the
exception, ``as the individual's rights to redress are paramount under
the provisions of title VII, it is necessary that all avenues be left
open for quick and effective relief'').
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Under the enforcement scheme for the Federal employment
discrimination laws, individual litigants act as ``private attorneys
general.'' In bringing a claim in court, the civil rights plaintiff
serves not only her or his private interests, but also serves as ``the
chosen instrument of Congress to vindicate `a policy that Congress
considered of the highest priority.' '' Christiansburg Garment Co. v.
EEOC, 434 U.S. 412, 418 (1978) (quoting Newman v. Piggie Park Enters.,
Inc., 390 U.S. 400, 402 (1968)). See also McKennon, 513 U.S. at 358
(``[t]he private litigant who seeks redress for his or her injuries
vindicates both the deterrence and compensation objectives of the
ADEA'').
v. mandatory arbitration of employment discrimination disputes
``privatizes'' enforcement of the federal employment discrimination
laws, thus undermining public enforcement of the laws
The imposition of mandatory arbitration agreements as a condition
of employment substitutes a private dispute resolution system for the
public justice system intended by Congress to govern the enforcement of
the employment discrimination laws. The private arbitral system differs
in critical ways from the public judicial forum and, when imposed as a
condition of employment, it is structurally biased against applicants
and employees.
A. Mandatory Arbitration has Limitations That Are Inherent and
Therefore Cannot Be Cured By the Improvement of Arbitration
Systems
That arbitration is substantially different from litigation in the
judicial forum is precisely the reason for its use as a form of ADR.
Even the fairest of arbitral mechanisms will differ strikingly from the
judicial forum.
1. The Arbitral Process is Private in Nature and Thus Allows for Little
Public Accountability
The nature of the arbitral process allows--by design--for minimal,
if any, public accountability of arbitrators or arbitral
decisionmaking. Unlike her or his counterparts in the Judiciary, the
arbitrator answers only to the private parties to the dispute, and not
to the public at large. As the Supreme Court has explained:
A proper conception of the arbitrator's function is basic. He
is not a public tribunal imposed upon the parties by superior
authority which the parties are obliged to accept. He has no
general charter to administer justice for a community which
transcends the parties. He is rather part of a system of self-
government created by and confined to the parties. . . .
United Steelworkers of Am. v. Warrior and Gulf Navigation Co., 363 U.S.
574, 581 (1960) (quoting from Shulman, Reason, Contract and Law in
Labor Relations, 68 Harv. L. Rev. 999, 1016 (1955)).
The public plays no role in an arbitrator's selection; s/he is
hired by the private parties to a dispute. Similarly, the arbitrator's
authority is defined and conferred, not by public law, but by private
agreement.\11\ While the courts are charged with giving force to the
public values reflected in the antidiscrimination laws, the arbitrator
proceeds from a far narrower perspective: resolution of the immediate
dispute. As noted by one commentator, [a]djudication is more likely to
do justice than . . . arbitration . . . precisely because it vests the
power of the State in officials who act as trustees for the public; who
are highly visible, and who are committed to reason.'' Owen Fiss, Ou of
Eden, 94 Yale L.J. 1669, 1673 (1985).
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\11\ Article III of the Constitution provides Federal judges with
life tenure and salary protection to safeguard the independence of the
judiciary. No such safeguards apply to the arbitrator. The importance
of these safeguards was stressed in the debates on the 1972 amendments
to title VII. Senator Dominick, in offering an amendment giving the
EEOC the right to file a civil action in lieu of cease-and-desist
powers, explained that the purpose of the amendment was to ``vest
adjudicatory power where it belongs--in impartial judges shielded from
political winds by life tenure.'' 1972 Leg. Hist. at 549. The amendment
was later revised in minor respects and adopted by the Senate.
---------------------------------------------------------------------------
Moreover, because decisions are private, there is little, if any,
public accountability even for employers who have been determined to
have violated the law. The lack of public disclosure not only weakens
deterrence (see discussion supra at 8), but also prevents assessment of
whether practices of individual employers or particular industries are
in need of reform. The disclosure through litigation of incidents, or
practices which violate national policies respecting nondiscrimination
in the workforce is itself important, for the occurrence of violations
may disclose patterns of noncompliance resulting from a misappreciation
of (title VII's) operation or entrenched resistance to its commands,
either of which can be of industry-wide significance.'' McKennon, 513
U.S. at 358-59.
2. Arbitration, By Its Nature, Does Not Allow for the Development of
the law
Arbitral decisions may not be required to be written or reasoned,
and are not made public without the consent of the parties. Judicial
review of arbitral decisions is limited to the narrowest of
grounds.\12\ As a result, arbitration affords no opportunity to build a
jurisprudence through precedent.\13\ Moreover, there is virtually no
opportunity for meaningful scrutiny of arbitral decisionmaking. This
leaves higher courts and Congress unable to act to correct errors in
statutory interpretation. The risks for the vigorous enforcement of the
civil rights laws are profound. See discussion supra at section IV. B.
---------------------------------------------------------------------------
\12\ Under the Federal Arbitration Act, arbitral awards may be
vacated only for procedural impropriety such as corruption, fraud, or
misconduct. 9 U.S.C. 10. Judicially created standards of review allow
an arbitral award to be vacated where it clearly violates a public
policy that is explicit, well-defined, ``dominant'' and ascertainable
from the law, see United Paperworkers lnt'I Union v. Misco., Inc., 484
U.S. 29, 43 (1987), or where it is in ``manifest disregard'' of the
law, see Wilko v. Swan, 346 U.S. 427, 436-37 (1953). The latter
standard of review has been described by one commentator as ``a
virtually insurmountable'' hurdle. See Bret F. Randall, The History,
Application, and Policy of the Judicially Created Standards of Review
for Arbitration Awards, 1992 BYU L. Rev. 759, 767. But cf. Cole v.
Burns Intl Sec. Servs., 105 F.3d 1465, 1486-87 (1997) (in the context
of mandatory employment arbitration of statutory disputes, the court
interprets judicial review under the ``manifest disregard'' standard to
be sufficiently broad to ensure that the law has been properly
interpreted and applied).
\13\ Congress has recognized the inappropriateness of ADR where ``a
definitive or authoritative resolution of the matter is required for
precedential value, and such a proceeding is not likely to be accepted
generally as an authoritative precedent,'' see Alternative Dispute
Resolution Act, 5 U.S.C. 572(b)(1) (providing for use of ADR by
Federal administrative agencies where the parties agree); or where
``the case involves complex or novel legal issues,'' see Judicial
Improvements and Access to Justice Act, 28 U.S.C. 652(c)(2)
(providing for court-annexed arbitration; 652(b)(1) and (2) also
require the parties' consent to arbitrate constitutional or statutory
civil rights claims). Similar findings were made by the U.S. Secretary
of Labor's Task Force on Excellence in State and Local Government
Through Labor-Management Cooperation (``Brock Commission''), which was
charged with examining labor-management cooperation in State and local
government. The Task Force's report, ``Working Together for Public
Service'' (1996) (``Brock Report''), recommended ``Quality Standards
and Key Principles for Effective Alternative Dispute Resolution Systems
for Rights Guaranteed by Public Law and for Other Workplace Disputes''
which include that ``ADR should normally not be used in cases that
represent tests of significant legal principles or class action.''
Brock Report at 82.
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3. Additional Aspects of Arbitration Systems Limit Claimants' Rights in
Important Respects
Arbitration systems, regardless of how fair they may be, limit the
rights of injured individuals in other important ways. To begin with,
the civil rights litigant often has available the choice to have her or
his case heard by a jury of peers, while in the arbitral forum juries
are, by definition, unavailable. Discovery is significantly limited
compared with that available in court and permitted under the Federal
Rules of Civil Procedure. In addition, arbitration systems are not
suitable for resolving class or pattern or practice claims of
discrimination. They may, in fact, protect systemic discriminators by
forcing claims to be adjudicated one at a time, in isolation, without
reference to a broader--and more accurate--view of an employer's
conduct.
B. Mandatory Arbitration Systems Include Structural Biases Against
Discrimination Plaintiffs
In addition to the substantial and inevitable differences between
the arbitral and judicial forums that have already been discussed, when
arbitration of employment disputes is imposed as a condition of
employment, bias inheres against the employee.\14\
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\14\ A survey of employment discrimination arbitration awards in
the securities industry, which requires as a condition of employment
that all brokers resolve employment disputes through arbitration, found
that ``employers stand a greater chance of success in arbitration than
in court before a Jury'' and are subjected to ``smaller'' damage
awards. See Stuart H. Bompey & Andrea H. Stempel, Four Years Later: A
Look at Compulsory Arbitration of Employment Discrimination Claims
After Gilmer v. Interstate/Johnson Lane Corp., 21 Empl. Rel. L.J. 21,
43 (autumn 1995.
---------------------------------------------------------------------------
First, the employer accrues a valuable structural advantage because
it is a ``repeat player.'' The employer is a party to arbitration in
all disputes with its employees. In contrast, the employee is a ``one-
shot player''; s/he is a party to arbitration only in her or his own
dispute with the employer. As a result, the employee is generally less
able to make an informed selection of arbitrators than the employer,
who can better keep track of an arbitrator's record. In addition,
results cannot but be influenced by the fact that the employer, and not
the employee, is a potential source of future business for the
arbitrator.\15\ A recent study of nonunion employment law cases \16\
found that the more frequent a user of arbitration an employer is, the
better the employer fares in arbitration.\17\
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\15\ See, e.g., Julius G. Getman, Labor Arbitration and Dispute
Resolution, 88 Yale L.J. 916, 936 (1979) (``an arbitrator could improve
his chances of future selection by deciding favorably to institutional
defendants: as a group, they are more likely to have knowledge about
past decisions and more likely to be regularly involved in the
selection process''); Reginald Alleyne, Statutory Discrimination
Claims: Rights ``Waived'' and Lost in the Arbitration Forum, 13 Hofstra
Lab. L.J. 381, 428 (Spring 1996) (``statutory discrimination grievances
relegated to . . . arbitration forums are virtually assured employer-
favored outcomes,'' given ``the manner of selecting, controlling, and
compensating arbitrators, the privacy of the process and how it
catalytically arouses an arbitrator's desire to be acceptable to one
side'').
\16\ Arbitration of labor disputes pursuant to a collective
bargaining agreement is less likely to favor the employer as a repeat-
player because the union, as collective bargaining representative, is
also a repeat-player.
\17\ See Lisa Bingham, ``Employment Arbitration: The effect of
repeat-player status, employee category and gender on arbitration
outcomes,'' (unpublished study on file with the author, an assistant
professor at Indiana U. School of Public & Environmental Affairs).
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In addition, unlike voluntary post-dispute--which must be fair
enough to be attractive to the employee--the employer imposing
mandatory arbitration is free to manipulate the arbitral mechanism to
its benefit. The terms of the private agreement defining the
arbitrator's authority and the arbitral process are characteristically
set by the more powerful party, the very party that the public law
seeks to regulate. We are aware of no examples of employees who insist
on the mandatory arbitration of future statutory employment disputes as
a condition of accepting a job offer--the very suggestion seems far-
fetched. Rather, these agreements are imposed by employers because they
believe them to be in their interest, and they are made possible by the
employer's superior bargaining power. It is thus not surprising that
many employer-mandated arbitration systems fall far short of basic
concepts of fairness. Indeed, the Commission has challenged--by
litigation, amicus curiae participation, or Commissioner charge--
particular mandatory arbitration agreements that include provisions
flagrantly eviscerating core rights and remedies that are available
under the civil rights laws.\18\
---------------------------------------------------------------------------
\18\ Challenged agreements have included provisions that: (1)
impose filing deadlines far shorter than those provided by statute; (2)
limit remedies to ``out-of-pocket'' damages; (3) deny any award of
attorney's fees to the civil rights claimant, should s/he prevail; (4)
wholly deny or limit punitive and liquidated damages; (5) limit back
pay to a time period much shorter than that provided by statute; (6)
wholly deny or limit front pay to a time period far shorter than that
ordered by courts; (7) deny any and all discovery; and (8) allow for
payment by each party of one-half of the costs of arbitration and,
should the employer prevail, require the claimant, in the arbitrator's
discretion, to pay the employer's share of arbitration costs as well.
---------------------------------------------------------------------------
The Commission's conclusions in this regard are consistent with
those of other analyses of mandatory arbitration. The Commission on the
Future of Worker-
Management Relations (the ``Dunlop Commission'') was appointed by the
Secretary of Labor and the Secretary of Commerce to, in part, address
alternative means to resolve workplace disputes. In its Report and
Recommendations (Dec. 1994) (``Dunlop Report''), the Dunlop Commission
found that recent employer experimentation with arbitration has
produced a range of programs that include ``mechanisms that appear to
be of dubious merit for enforcing the public values embedded in our
laws.'' Dunlop Report at 27. In addition, a report by the U.S. General
Accounting Office, surveying private employers' use of ADR mechanisms,
found that existing employer arbitration systems vary greatly and that
``most'' do not conform to standards recommended by the Dunlop
Commission to ensure fairness. See ``Employment Discrimination: Most
Private-Sector Employers Use Alternative Dispute Resolution'' at 15,
HEHS-95-150 (July 1995).
The Dunlop Commission strongly recommended that binding arbitration
agreements not be enforceable as a condition of employment:
The public rights embodied in State and Federal employment
law--such as freedom from discrimination in the workplace . .
.--are an important part of the social and economic protections
of the nation. Employees required to accept binding arbitration
of such disputes would face what for many would be an
inappropriate choice: give up your right to go to court, or
give up your Job.
Dunlop Report at 32. The Brock Commission (see supra n. 13) agreed
with the Dunlop Commission's opposition to mandatory arbitration of
employment disputes and recommended that all employee agreements to
arbitrate be voluntary and post-dispute. Brock Report at 81-82. In
addition, the National Academy of Arbitrators recently issued a
statement opposing mandatory arbitration as a condition of employment
``when it requires waiver of direct access to either a Judicial or
administrative forum for the pursuit of statutory rights.'' See
National Academy of Arbitrators' Statement and Guidelines (adopted May
21, 1997), 103 Daily Lab. Rep. (BNA) E-1 (May 29, 1997).
C. Mandatory Arbitration Agreements Will Adversely Affect the
Commission's Ability to Enforce the Civil Rights Laws
The trend to impose mandatory arbitration agreements as a condition
of employment also poses a significant threat to the EEOC's statutory
responsibility to enforce the Federal employment discrimination laws.
Effective enforcement by the Commission depends in large part on the
initiative of individuals to report instances of discrimination to the
Commission. Although employers may not lawfully deprive individuals of
their statutory right to file employment discrimination charges with
the EEOC or otherwise interfere with individuals' protected
participation in investigations or proceedings under these laws,\19\
employees who are bound by mandatory arbitration agreements may be
unaware that they nonetheless may file an EEOC charge. Moreover,
individuals are likely to be discouraged from coming to the Commission
when they know they will be unable to litigate their claims in
court.\20\ These chilling effects on charge filing undermine the
Commission's enforcement efforts by decreasing channels of information,
limiting the agency's awareness of potential violations of law, and
impeding its ability to investigate possible unlawful actions and
attempt informal resolution.
---------------------------------------------------------------------------
\19\ See ``Enforcement Guidance on non-waivable employee rights
under Equal Employment Opportunity Commission (EEOC) statutes,'' Volt.
III EEOC Compl. Man. (BNA) at N:2329 (Apr. 10, 1997).
\20\ The Commission remains able to bring suit despite the
existence of a mandatory arbitration agreement because it acts ``to
vindicate the public interest in preventing employment
discrimination,'' General Tel., 446 U.S. at 326. Cf. S. Rep. No. 101-
263 (1990), reprinted in, Legislative History of The Older Workers
Benefits Protection Act, at 354 (amendment to ADEA 626(f)(4), which
provides that ``no waiver agreement may affect the Commission's rights
and responsibilities to enforce [the ADEA),'' was intended ``as a clear
statement of support for the principle that the elimination of age
discrimination in the workplace is a matter of public as well as
private interest''). As a practical matter, however, the Commission's
ability to litigate is limited by its available resources.
---------------------------------------------------------------------------
vi. voluntary, post-dispute agreements to arbitrate appropriately
balance the legitimate goals of alternate dispute resolution and the
need to preserve the enforcement framework of the civil rights laws
The Commission is on record in strong support of voluntary
alternative dispute resolution programs that resolve employment
discrimination disputes in a fair and credible manner, and are entered
into after a dispute has arisen. We reaffirm that support here. This
position is based on the recognition that while even the best arbitral
systems do not afford the benefits of the judicial system, well-
designed ADR programs, including binding arbitration, can offer in
particular cases other valuable benefits to civil rights claimants,
such as relative savings in time and expense.\21\ Moreover, we
recognize that the judicial system is not, itself, without drawbacks.
Accordingly, an individual may decide in a particular case to forego
the judicial forum and resolve the case through arbitration. This is
consistent with civil rights enforcement as long as the individual's
decision is freely made after a dispute has arisen.\22\
---------------------------------------------------------------------------
\21\ Despite conventional wisdom to the contrary, the financial
costs of arbitration can be significant and may represent no savings
over litigation in a judicial forum. These costs may include the
arbitrator's fee and expenses; fees charged by the entity providing
arbitration services, which may include filing fees and daily
administrative fees; space rental fees; and court reporter fees.
\22\ The Dunlop Commission similarly supported voluntary forms of
ADR, but based its opposition to mandatory arbitration on the premise
that the avenue of redress for statutory employment rights should be
chosen by the individual rather than dictated by the employer. Dunlop
Report at 33.
---------------------------------------------------------------------------
vii. conclusion
The use of unilaterally imposed agreements mandating binding
arbitration of employment discrimination disputes as a condition of
employment harms both the individual civil rights claimant and the
public interest in eradicating discrimination. Those whom the law seeks
to regulate should not be permitted to exempt themselves from Federal
enforcement of civil rights laws. Nor should they be permitted to
deprive civil rights claimants of the choice to vindicate their
statutory rights in the courts--an avenue of redress determined by
Congress to be essential to enforcement.
processing instructions for the field and headquarters
1. Charges should be taken and processed in conformity with
priority charge processing procedures regardless of whether the
charging party has agreed to arbitrate employment disputes. Field
offices are instructed to closely scrutinize each charge involving an
arbitration agreement to determine whether the agreement was secured
under coercive circumstances (e.g., as a condition of employment). The
Commission will process a charge and bring suit, in appropriate cases,
notwithstanding the charging party's agreement to arbitrate.
2. Pursuant to the statement of priorities in the National
Enforcement Plan, see B(1)(h), the Commission will continue to
challenge the legality of specific agreements. That mandate binding
arbitration of employment discrimination disputes as a condition of
employment. See, e.g., Briefs of the EEOC as Amicus Curiae in Seus v.
John Nuveen & Co., No. 96-CV-5971 (E.D. Pa.) (Br. filed Jan. 11, 1997);
Gibson v. Neighborhood Health Clinics, Inc., No. 96-2652 (7th Cir.)
(Br. filed Sept. 23, 1996); Johnson v. Hubbard Broadcasting, Inc., No.
4-96-107 (D. Minn.) (Br. Filed May 17, 1996); Great Western Mortgage
Corp. v. Peacock, No. 96-5273 (3d Cir.) (Br. filed July 24, 1996).
Gilbert F. Casellas,
Chairman.
Senator Franken. And I can read from it. It says,
``The EEOC has taken the position that agreements
that mandate binding arbitration of discrimination
claims as a condition of employment are contrary to the
fundamental principles evinced in these laws.''
Could you tell us about the EEOC's position and its
relationship to the legislation that we are discussing today?
Mr. Ishimaru. Well, the EEOC has a longstanding policy
against mandatory arbitration, as you pointed out, going back
to 1997. There was talk when I first joined the commission
about repealing that, and I opposed any sort of repeal of our
existing policy. I think it is the right thing to do to oppose
mandatory arbitration.
Senator Franken. In these kinds of matters? I mean, let us
make sure certain----
Mr. Ishimaru. In employment discrimination matters, in
matters under our jurisdiction.
Senator Franken. Sure. Yes.
Mr. Ishimaru. I have opposed that. There was no attempt to
actually bring that up for a vote. So the policy, the
continuing policy of the EEOC is that we oppose mandatory
arbitration, and we stand by the--
Senator Franken. And this has survived over several
administrations with bipartisan composition?
Mr. Ishimaru. Yes.
Senator Franken. You retain that policy, right?
Mr. Ishimaru. There was no effort to repeal the
longstanding policy. Like many of our policies, it will stay on
the books until repealed.
Senator Franken. OK. And can you just explain what the
reasoning behind it is?
Mr. Ishimaru. Well, I think the reasoning behind it is that
we, as an entity, believe that persons aggrieved under the
civil rights laws should have the right to come to the Federal
agency involved, to make the complaint, to pursue resolution of
that through either the administrative process or through the
courts. And they should not be precluded, just as the agency
itself is not precluded, from enforcing the law when it
happens.
As you pointed out----
Senator Franken. Not just before the agency, but they
should be able to go before the courts.
Mr. Ishimaru. Courts. Courts as well.
Senator Franken. Yes.
Mr. Ishimaru. And that is why we oppose this. We believe
civil rights laws stand up on their own and that Congress has
recognized the need for people to be able to vindicate their
rights in whatever forum that they choose.
But you know, as you point out, mandatory arbitration has
taken on a life of its own in recent years. But it has affected
the EEOC far less, and we are not bound by the various rulings
on mandatory arbitration. The courts have been fairly clear on
that.
Senator Franken. Thank you.
And thank you, Mr. Chairman.
Senator Dodd. Thank you very much, Senator.
Senator Mikulski, do you have any additional questions? I
just asked Senator Enzi. He doesn't either.
We would like to leave the record open, if we could? I
think there are several members, including Senator Enzi, and
maybe others who would like to, who were not able to be with us
this morning, to have you respond to some questions in writing,
if you would do that for us?
Mr. Ishimaru. Happy to do that.
Senator Dodd. But you have been very helpful, and again, I
think picking up on what Senator Mikulski has said and I have
said, please extend to your staff and others how much we
appreciate the job they are doing with the resources and
personnel you have at your disposal. And we are very grateful
to you, and Americans need to know how hard people work with
limited resources, limited personnel.
So we thank you.
Mr. Ishimaru. Mr. Chairman, thank you very much. Our staff
does work extremely hard. And as I have learned, as a former
staffer, it is really those people who make the trains run on
time, and I will pass on your kind words back to our staff.
Thanks very much.
Senator Enzi. And I would agree with your words, too. Thank
you very much.
Senator Dodd. Thank you very much.
Our next panel I will introduce very briefly. Heather
Boushey--I hope I pronounced that correctly. Did I pronounce
that correctly, Heather? Heather Boushey is the senior
economist at the Center for American Progress, research focus
on unemployment, social policy, family economic well-being.
Received her doctorate in economics from the New School for
Social Research, her Bachelor of Arts degree from Hampshire
College. Previously served as an economist for the Joint
Economic Committee, the Center for Economic and Policy
Research, and the Economic Policy Institute.
Deborah Brake is a professor of law at the University of
Pittsburgh. She is a nationally recognized expert on gender
discrimination. Before joining the faculty at Pittsburgh,
Professor Brake was senior counsel at the National Women's Law
Center in Washington. She is a graduate of Stanford University
and Harvard Law School, and we thank you, Ms. Brake.
Deborah Frett is the chief executive officer of the
Business and Professional Women's Foundation, an accomplished
executive with over 30 years of experience providing strategic
direction and executive management to associations for profit
and start-up organizations. Prior to joining BPW, Ms. Frett
served as executive director of Senior Navigator, an award-
winning, innovative public service program designed to link
seniors, their families, and caregivers with community-level
health and aging information.
Jan McFetridge? Did I pronounce that correctly?
Ms. McFetridge. Jane.
Senator Dodd. Excuse me. Jane McFetridge. Jane is the
managing partner of Jackson Lewis's Chicago office. She has
broad experience dealing with the Equal Employment Opportunity
Commission and the U.S. Department of Labor, as well as State
and local labor and employment agencies throughout the United
States.
Ms. McFetridge graduated from the University of Illinois,
received her law degree from Northwestern University, and we
welcome you here as well this morning. So thank you for joining
all of us, and we will begin in the order in which I have
introduced you.
Try and take around 5 minutes and all of your statements
and supporting data and information that you think would be
constructive for this hearing will be made part of the record.
Any additional data you want to provide to us later on, I will
make that unanimous consent as well.
And so, we welcome you again, and we will begin with you,
Ms. Boushey.
STATEMENT OF HEATHER BOUSHEY, SENIOR ECONOMIST, CENTER FOR
AMERICAN PROGRESS, WASHINGTON, DC
Ms. Boushey. Thank you. Thank you, Chairman Dodd, Ranking
Member Enzi, and Senator Mikulski, for providing me with the
opportunity to speak to you today.
I welcome this opportunity to argue in favor of equal pay
for women in the workforce as a proven means to strengthen
American families and to grow our middle class.
Women are now half of the workers on U.S. payrolls.
Increases in women's workforce participation and their
increasingly important contributions to their families' income
have been dramatic across racial and class lines, but they are
particularly striking among low-income women who are now
primary breadwinners in two-thirds of their families.
The gender pay gap is not just a women's issue. It is a
family issue that affects the millions of young, old, and
middle-aged Americans who rely on a woman breadwinner or co-
breadwinner for their family.
The Great Recession has made the issue of pay equity even
more urgent, as women are increasingly their families'
breadwinner. Since the Great Recession began, men have
accounted for 7 out of every 10 jobs lost, and now only two-
thirds of adult men hold a job.
This gender disparity in unemployment means that in the
first half of 2009, for example, there were 2 million working
wives supporting an unemployed husband. If these families are
typical, they are living on the wife's lower earnings. Making
sure that every woman earns a fair day's pay is increasingly
important to family economic well-being.
To close the gender pay gap, we must address the
segregation of men and women into different kinds of jobs and
the inflexibility of the workplace to women's greater
responsibilities for family care. For every dollar a man earns,
women earn only 77 cents.
And for specific groups of women, as been discussed earlier
this morning--women of color, disabled workers--the gap with
respect to the wages of white men is larger than for white
women. And this inequity accumulates over a woman's lifetime.
Women lose an average of $434,000 in income over a lifetime due
to the gender pay gap.
It is also a myth that women choose low-paying jobs because
they provide more flexibility. In fact, the empirical evidence
shows that women, and particularly single mothers, are the
least likely to have on-the-job workplace flexibility.
Economists find that about half of the total pay gap can be
explained by differences in the industries and occupations that
men and women work in. Many of the jobs historically held by
women are underpaid relative to men's jobs that require similar
levels of skill. Women's jobs have been undervalued for so
long, we think it is natural. But in fact, this is an ongoing
legacy of past discrimination.
Even if women work in the same jobs as men, however, and
have the same education and experience levels, the same
propensity to be in a union, the same racial and ethnic makeup
as the men they are sitting next to at the workplace, all these
factors, which we can measure, economists simply cannot explain
about 40 percent of the gender pay gap. That gap begins the
moment a woman begins to work and graduates from school.
The American Association of University Women has examined
this pay gap between college-educated men and women among
graduates just a year out of school. They found that even once
you account for all the measurable factors that we think affect
pay--the individual's job, whether that job has a flexible
schedule, the kind of education credentials, including GPA and
the selectivity of the college--they find a 5 percent
unexplainable pay gap among college graduates. That gap only
increases over time.
The two pieces of legislation before your committee today,
the Paycheck Fairness Act and the Fair Pay Act, are critical to
addressing the gender pay gap. In particular, the data
provisions of the Paycheck Fairness Act will not solve the
gender pay gap, but they will allow employees to access the
information they need to understand if their pay is at the
market rate.
This will go a long way toward closing that gap and helping
people understand whether or not their pay is actually at the
market rate. Combined with the provision to give employees an
opportunity to improve their salary negotiation skills, this is
an important step forward toward gender pay equality.
The Paycheck Fairness Act will also increase training,
research, and education to identify and respond to wage
discrimination claims and improve our data collection of pay
information. Without access to aggregate data, the EEOC has no
idea whether there are signs that unfair pay practices are
occurring across firms.
Finally, as I noted earlier, the largest chunk of the
gender pay gap is due to the combined effect of the segregation
of men and women into different industries and occupations. The
Fair Pay Act will require employers to provide equal pay for
jobs that are comparable in skills, efforts, responsibility,
and working conditions.
In these tough economic times, with millions of women
supporting their families, with millions as breadwinners, I
encourage you to do what you can to ensure that they earn a
fair day's pay.
Thank you for your important work on this issue, and I look
forward to your questions.
[The prepared statement of Ms. Boushey follows:]
Prepared Statement of Heather Boushey
Strengthening the Middle Class: Ensuing Equal Pay for Women
summary
The two pieces of legislation now before your committee, the
Paycheck Fairness Act and the Fair Pay Act, are critical to making this
happen. This is important legislation before you today. I cannot stress
how important the issue of fair pay is to women and to their families.
In these tough economic times, with millions of women supporting their
families, I encourage you to do what you can to ensure that they earn a
fair day's pay.
A key way to strengthen the middle class is to ensure equal pay for
women. Most women are in the labor force, yet women continue to earn
less than men even if they have similar educational levels and work in
similar kinds of jobs. The typical full-time, full-year working woman
earns only 77 percent of what her male counterparts make.
To close the gender pay gap, we must address the root causes of
women's lower wages, which includes the segregation of men and women
into different kinds of jobs and the inflexibility of the workplace to
women's greater responsibilities for family care.
The gender pay gap is not just a woman's issue, it is a family
issue. Women are now half of all workers on U.S. payrolls and two-
thirds of mothers bring home at least a quarter of their family's
earnings.
Making sure that every woman earns a fair day's pay is increasingly
important for family economic well-being. In the first 5 months of
2009, there were 2.0 million working wives with an unemployed husband.
Families are indeed experiencing an economic hardship directly because
of the gender pay gap: if these families are typical, then they are
living on the wife's lower earnings and likely to be without health
insurance because the family secured that employer-provided benefit
from his job.
The data provisions of the Paycheck Fairness Act are of utmost
importance in enforcing the law already on the books. The act prohibits
employer from retaliating against employees who share salary
information. This provision will not solve the gender pay gap, but it
will allow employees to access the information they need to understand
if their pay is at the market rate. Combined with the provision to give
employees an opportunity to improve their salary negotiation skills,
this could be a powerful step towards greater pay equity, especially
among men and women in similar jobs within a single firm.
The Paycheck Fairness Act will also increase training, research,
and education to help the Equal Employment Opportunity Commission
identify and respond to wage discrimination claims and improve our data
collection of pay information. Discrimination is something that's hard
to prove at the individual level, but often easy to see in the
aggregate data. Without access to that aggregate data, the EEOC has no
idea whether there are signs that unfair pay practices are occurring.
The Fair Pay Act will require employers to provide equal pay for
jobs that are comparable in skill, efforts, responsibility, and working
conditions. The largest chunk of the gender pay gap is due to the
combined effect of the segregation of men and women into different
industries and occupations. The act delineates a process to evaluate
jobs within a firm and ascertain the actual skills required then
ensures that jobs with similar skills are paid the same, even if one is
predominately held by women and one predominately held by men.
______
Thank you Chairman Harkin and members of the committee for
providing me with the opportunity to speak to you today.
My name is Heather Boushey and I am a senior economist at the
Center for American Progress Action Fund, a non-partisan think tank in
Washington, DC. My area of expertise is the U.S. labor market, with an
emphasis on the interconnections between labor and social policy. I
welcome this opportunity to argue in favor of equal pay for women in
the workforce as a proven means to strengthen American families and
grow our middle class. The two pieces of legislation now before your
committee, the Paycheck Fairness Act and the Fair Pay Act, are critical
to making this happen.
To close the gender pay gap, we must address the root causes of
women's lower wages, which includes the segregation of men and women
into different kinds of jobs and the inflexibility of the workplace to
women's greater responsibilities for family care. There could not be a
more important time to address the issue of gender pay equity. Women
are now half of all workers on U.S. payrolls and two-thirds of mothers
are bringing home at least a quarter of their family's earnings. This
means the gender pay gap is not just a woman's issue, it is a family
issue that affects the millions of young, old and middle-aged Americans
who rely on a woman breadwinner or co-breadwinner in their family.
With the Great Recession leading to many more lay offs among men
than women, millions of women today are supporting their families
through these tough economic times. Making sure that every woman earns
a fair day's pay is increasingly important for family economic well-
being. The Paycheck Fairness Act and the Fair Pay Act address these
specific issues.
As an economist, I'll highlight some of the gender pay issues that
I think are most important with respect to these two pieces of
legislation and then tell you why there could not be a better time to
move forward on them.
women's earnings matter to family well-being now more than ever
First, I want to lay out the issue of the gender pay gap. When we
look back over the 20th century to understand what's happened to
American workers and their families, the movement of women out of the
home and into paid employment stands out as one of the most important
social and economic transformations in our Nation's history. Although
it changed the way we work and live today, our institutions in the 21st
century have yet to fully adapt.
A key way to strengthen the middle class is to ensure equal pay for
women. Most women are in the labor force, yet women continue to earn
less than men even if they have similar educational levels and work in
similar kinds of jobs. The typical full-time, full-year working woman
earns only 77 percent of what her male counterparts make.
In 2008, 4-in-10 mothers were their family's breadwinner--either as
a single, working mother or one who brought home as much or more than
their spouse. This is up from 27.7 percent in 1967.\1\ Women have been
steadily increasing their labor force participation for decades, rising
from 43.3 percent in 1970 to 55.8 percent this February (among women
over age 20). Today, over 70 percent of all mothers work outside the
home.\2\ This increase in women's workforce participation and
contribution to the family income has been dramatic across all racial
and class lines, but is particularly striking among low-income women
who are now primary breadwinners in two-thirds of their families.
---------------------------------------------------------------------------
\1\ Heather Boushey, ``The New Breadwinners,'' in The Shriver
Report: A Woman's Nation Changes Everything, ed. Heather Boushey and
Ann O'Leary (Washington, DC: Center for American Progress, 2009).
\2\ Bureau of Labor Statistics, ``Women in the Labor Force: A
Databook,'' (Washington, DC: U.S. Department of Labor, 2008).
---------------------------------------------------------------------------
The Great Recession, however, has made pay equity even more urgent
because women recently became half of all U.S. payroll workers. This
feat, recorded for the first time in October 2009, sadly was not
because more women were finding more and better paying jobs. Instead,
since December 2007 when the Great recession began, men have accounted
for 7 out of every 10 jobs lost. The reason for this is because half of
all job losses have been in construction or manufacturing--industries
that disproportionately employ men.
These job losses are testament to the current economic malaise. The
share of adult men with a job has never been lower since the U.S.
government began recording employment data in 1948. In February 2010,
it was only 66.6 percent, meaning that only two-thirds of adult men
have a job. This is a remarkably low figure. Prior to this recession,
the share of men with a job had never fallen below 70.5 percent.
This gender disparity in unemployment has real implications for
family economic well-being. In the first 5 months of 2009, there were
2.0 million working wives with an unemployed husband.\3\ If these
families are typical, then they are living on the wife's lower earnings
and likely to be without health insurance because the family secured
that employer-provided benefit from his job. The upshot: In the typical
married-couple family where both spouses work, the wife brings home
less than half--42.2 percent--of the family's earnings, which means
families are indeed experiencing an economic hardship directly because
of the gender pay gap and are dangerously exposed to the financial
pitfalls of a medical emergency.
---------------------------------------------------------------------------
\3\ Heather Boushey, ``Women Breadwinners, Men Unemployed,''
(Washington, DC: Center for American Progress, 2009).
---------------------------------------------------------------------------
Nor are women working outside the home a short-term blip in
response to the recession. It is a long-term trend that shows no signs
of reversing. The reality is that women support families in greater
numbers than ever before. We need to do more to ensure pay equity for
them and for the economic security of their families. The gender pay
gap is not just a women's issue. This is a pressing family issue for
working Americans striving to enter or remain in the middle class.
For many families, having a working wife makes all the difference.
When we look across income distribution in our country, families in the
higher income brackets are more likely to have a working wife and she
puts in more hours than less-well off families. In recent decades, the
families that were upwardly mobile were those who had a working wife.
Recent research by economists at the Boston Federal Reserve shows that
over the 1980s and 1990s, the families that moved up the income ladder
were those who had a working wife. The shift in women's workforce
participation is not simply about women wanting to work but also about
their families' needing them to work.
pay equity: where are we?
Women have not achieved equality in the workplace but they have
made progress. The gender gap has narrowed over time and women now
occupy a far wider range of jobs. Further, women are more likely to be
in positions of power compared to only a few decades ago.
Yet, even with these accomplishments, the gender pay gap among
full-time, full-year workers is now at 23 cents, meaning that for every
dollar a man earns, women earn only 77 cents.\4\ And, for specific
groups of women--such as women of color or disabled workers--the gap
with respect to the wages of white men is larger than for white women.
---------------------------------------------------------------------------
\4\ Census.
---------------------------------------------------------------------------
There are various ways to measure the gender pay gap, but the
overall trends are similar. Figure 1 below shows two different
measures: the gender annual earnings ratio among full-time, full-year
workers and the gender wage ratio among full-time workers. Over time,
both measures show the same trend--the gender gap has narrowed but the
pace of convergence has slowed to a crawl in recent years.\5\
---------------------------------------------------------------------------
\5\ Francine Blau and Lawrence Kahn, ``Swimming Upstream: Trends in
the Gender Wage Differential in the 1980s,'' Journal of Labor Economics
15, no. 1 (1997).
---------------------------------------------------------------------------
The most significant compression in the gender pay gap appeared
during the 1980s, but this was because men's wages fell, rather than
because women's wages rose. This is not an unlikely outcome again in
future years. Given the current economic conditions, with men losing
the majority of jobs during the Great Recession, there is potential for
men's wages to fall relative to women but this is not an acceptable way
to close the gender pay gap.
This inequity in pay accumulates over a woman's lifetime. The
Institute for Women's Policy Research examined worker's employment and
earnings data and found that over a 15-year period prime-age women
workers earn 38 percent of what men earn.\6\ My colleague Jessica Arons
calls the cumulative impact of the gender pay gap over a 40-year period
the ``career wage gap,'' finding that women lose $434,000 in income, on
average, due to the career wage gap.
---------------------------------------------------------------------------
\6\ Heidi Hartmann and Stephen Rose, ``Still a Man's Labor Market:
The Long-Term Earnings Gap,'' (Washington, DC: Institute for Women's
Policy Research, 2004).
---------------------------------------------------------------------------
Women at all education levels lose significant amounts of income
due to the career wage gap, but women with the most education lose the
most in earnings. Women with a college degree or higher lose $713,000
over a 40-year period versus a $270,000 loss for women who did not
finish high school.\7\ The pay gap accumulates for a variety of
reasons, but chief among them is that pay raises are typically given as
a percent of current salary, leaving women further behind each year.
Because almost all employers ask any job applicant for a salary history
when determining their starting salary, women's salary gains are
crimped from the start.
---------------------------------------------------------------------------
\7\ Jessica Arons, ``Lifetime Losses: The Career Wage Gap,''
(Washington, DC: Center for American Progress, 2008).
---------------------------------------------------------------------------
Research also shows that the gap in pay between men and women is
only partially attributable to the decisions that men and women make in
terms of college major, choice of occupation, and work experience. The
first two of these--college major and choice of occupation--can be
considered an honest choice. Women now have access to higher education
and more kinds of jobs than their mothers did. Yet there are many
aspects of women's employment patterns and pay that cannot reasonably
be attributed to choices that can reasonably explain the pay gap.
To better understand the gender pay gap, economists use so-called
regression-adjusted estimates of pay for men and women, controlling for
all measurable productivity-related characteristics of workers. This
method allows us to compare the pay of men and women with similar
characteristics and determine what factors contribute to the pay gap
and what the model cannot explain.
Using regression analysis, labor economists Francine Blau and
Lawrence Kahn found that educational attainment levels lowered the
discrepancy in pay between men and women but also that other
productivity-related factors, such as experience, occupation, and
industry all widened the gap. Overall, nearly a third of the gender pay
gap (27.4 percent) can be explained by differences in occupations, one-
fifth (21.9 percent) can be explained by industry, and 10.5 percent can
be explained by labor force experience.
This means that if women worked in the same jobs as men and had the
same educational and experience levels, same propensity to be in a
union, same racial and ethnic make-up as men--all factors we can
measure--the gender pay ratio would rise from 80 percent to 91 percent
of men's pay levels. In other words, most of gender pay inequity can be
explained by these factors. But, this leaves that final 10 percent gap
in pay between men and women--nearly half, 41.1 percent of the total
pay gap--as not explainable by anything we can measure.
To get at the nub of gender pay inequity, let's first go through
the things Blau and Kahn's work does seem to explain, then discuss the
large ``unexplained'' portion of the gender pay gap. As Blau and Kahn
point out, half (49.3 percent) of the total pay gap can be explained by
differences in the industries and occupations that men and women work
in. Men continue to be more likely to hold jobs as managers and
professionals, transportation or construction workers, or in heavy
manufacturing.
In contrast, women are disproportionately represented in nursing,
teaching, retail sales, and clerical work. While the extent to which
jobs in the U.S. economy, that are segregated by sex, has fallen since
the 1950s--more so for workers with a college degree than for other
workers--there remains a high degree of occupational segregation by
gender (See chart below).
But many of these jobs that were historically held by women are
underpaid, relative to men's jobs that require similar levels of skill.
Political scientist Ellen Frankel Paul, for example, points out that
zookeepers--a traditionally male job--earn more than workers caring for
children--a traditionally female job. It's not that zookeepers have a
much higher level of skills than child care workers, but that our
society values these jobs differently and this is a choice we make. In
her words, ``Are not our children more valuable to society than zoo
animals?'' \8\ Women's jobs have been systemically undervalued for so
long, we think it's natural, but in fact this is an ongoing legacy of
past discrimination.
---------------------------------------------------------------------------
\8\ Ellen Frankel Paul, Equity and Gender: The Comparable Worth
Debate (New Brunswick, NJ: Transaction, 1988).
---------------------------------------------------------------------------
It is also myth that women choose less-paying occupations because
they provide flexibility to better manage work and family. The
empirical evidence shows that mothers are actually less likely to be
employed in jobs that provide greater flexibility. In general, workers
who hold higher positions and are privileged in general (better
educated, white, male) have more access to all kinds of workplace
flexibility. Women are less likely than men to have access to
flexibility, but parents--especially single mothers--are the least
likely to have access to workplace flexibility. In fact, parents are
more likely to have nonstandard shifts and rotating hours, making work/
family balance more difficult to achieve.
Education Narrows the Gap, but Doesn't Close It
As women have taken their careers more seriously, they have worked
hard to get more education. That is paying off in terms of narrowing
the gender pay gap, even if it hasn't fully eliminated it. According to
Blau and Kahn, women's education choices are narrowing the gap by 6.7
percent. Women now are more likely than men to graduate from high
school as well as college. It's worth noting though, that among women
aged 25 to 45 only a quarter have at least a college degree, while
nearly two-thirds have a high school degree, but no 4-year college
degree (and this is similar for men as well).\9\
---------------------------------------------------------------------------
\9\ Author's analysis of the Center for Economic and Policy
Research Extracts of the Current Population Survey Outgoing Rotation
Group Files.
---------------------------------------------------------------------------
An important research finding that flies in the face of women's
educational attainment, however, is that the gender pay gap emerges as
soon as women graduate. The American Association of University Women
examined the pay gap in pay between college-educated men and women and
found that even once they accounted for the measurable factors that
affect pay, such as the individual's job, whether the job boasts a
flexible schedule, the kind of educational credentials they have
(including their grade point average and the selectivity of the college
that they attended),\10\ among graduates just 1 year out of school, a 5
percent unexplainable pay gap remained.
---------------------------------------------------------------------------
\10\ It is worth noting their variables: Occupation, Industry,
Employer sector (e.g., nonprofit), Hours worked per week, Whether
employee worked multiple jobs, Workplace flexibility, ability to
telecommute, Months at employer, Educational attainment (bachelor's and
any graduate, enrollment or completion), Current enrollment status,
Other license or certification, Work-related training, Undergraduate
GPA, Undergraduate major, Ever attended less-than-4-year institution,
Institution sector, Institution selectivity, Gender, Age, Highest
education of either parent, Race/ethnicity, U.S. citizen, Disabled,
Region of residence, Marital status, Has children, Volunteered in past
year.
---------------------------------------------------------------------------
This means that a woman who goes to the same school, gets the same
grades, has the same major, takes the same kind of job with similar
workplace flexibility perks and has the same personal characteristics--
such as marital status, race, and number of children--as her male
colleague earns 5 percent less the first year out of school. Ten years
later, even if she keeps pace with the men around her, this research
found that she'll earn 12 percent less. This is not about the
``choices'' a woman makes because the model compares men and women who
have made nearly identical choices.
Work History Matters, but not as Much as Simply Being Female or a
Caregiver
Differences in men's and women's work histories explain a large
chunk--10.5 percent--of the gender wage gap. But the AAUW study cited
above shows that the gender pay gap emerges right out of college--at a
point in their lives when differences in work experience between them
and their male colleagues do play a large role in determining pay.
At least some of the wage gap between men and women is attributable
to women taking on greater parenting responsibilities and working fewer
hours. Women are more than twice as likely as men to be employed part-
time and since few jobs offer part-time work, the part-time jobs
available tend to pay less than comparable full-time jobs.\11\ But, the
reality is that this cannot fully explain the gap in pay.
---------------------------------------------------------------------------
\11\ Jeffrey B. Wenger, ``The Continuing Problem with Part-Time
Jobs,'' (Washington, DC: Economic Policy Institute, 2001).
---------------------------------------------------------------------------
Indeed, differences in work history are treated differently
depending on whether a woman is a mother or not. In a 2001 paper,
sociologists Michele Budig and Paula England found that interruptions
from work, working part-time, and decreased seniority/experience
explain no more than about one-third of the gap in pay between women
with and without children, and that ``mother-friendly'' job
characteristics explained very little of the gap. They conclude that
two-thirds of the wage gap between mothers and non-mothers must be
either because employed mothers are less productive at work or because
of discrimination against mothers.
A body of new research focuses on the role of the ``maternal wall''
in accounting for at least some--if not most--of the unexplained pay
gap. In groundbreaking work, Cornell University sociologists Shelley
Correll, Stephen Benard, and In Paik used a laboratory experiment to
find out whether being a mother simply means being paid less, all else
equal. They had study participants evaluate application materials for a
pair of job candidates that were designed specifically to be equally
qualified, but one person was identified as a parent and the other was
not.\12\ The two candidates had equal levels of education and work
experience at similarly ranked schools.
---------------------------------------------------------------------------
\12\ The differences were that one resume listed the applicant as
``Parent-Teacher Association coordinator'' and included phrase
``Mother/father to Tom and Emily. Married to John/Karen,'' while the
other listed fundraiser for his/her neighborhood association and
``Married to John/Karen.''
---------------------------------------------------------------------------
Their findings were simply astonishing. The job candidates
identified as mothers were perceived to be less competent, less
promotable, less likely to be recommended for management, less likely
to be recommended for hire, and had lower recommended starting salaries
even though their actual credentials were no different from those of
the non-mothers. The job candidates identified as fathers were not
penalized in the same way, and often saw a boost. Study participants
also held mothers to higher standards than non-mothers (both women
without children and men with or without children) by requiring a
higher score on a management exam and significantly fewer times of
being late to work before being considered hirable or promotable.
The Unexplainable Wage Gap
Women make decisions that have an impact on how much they earn.
They get an education, which raises their pay (but does not close the
gap) and many work part-time or take extended time off to care for
children. What kinds of jobs women seek and what kinds of educational
credentials they acquire affect future earnings: one study found that
95 percent of the gender differential in starting salaries can be
explained by differences in college majors.\13\ Even so, within
occupations, women are typically paid less than their male
colleagues.\14\
---------------------------------------------------------------------------
\13\ Judith A. McDonald and Robert J. Thornton, ``Do New Male and
Female College Graduates Receive Unequal Pay?'', Journal of Human
Resources XLII, no. 1 (2007).; L.A. Morgan, ``Major Matters: A
Comparison of the within-Major Gender Pay Gap across College Majors for
Early-Career Graduates,'' Industrial Relations 47, no. 4 (2008).
\14\ McDonald and Thornton, ``Do New Male and Female College
Graduates Receive Unequal Pay?''. Morgan, ``Major Matters: A Comparison
of the within-Major Gender Pay Gap across College Majors for Early-
Career Graduates.''
---------------------------------------------------------------------------
If time away from employment for caregiving is important to
explaining the gender pay gap, separate from its affect on work
history, then how do we as a society intend to deal with the new
reality of working women? As more women work, more families do not have
a stay-at-home caretaker, which means that both men and women workers
are now more likely to balance a job with care responsibilities--either
for a child or for an elderly or ill family member--and more are
concerned about caregiver discrimination.
Recent polling confirms that these are challenges for both men and
women. The 2008 National Survey Changing Workforce reports that the
majority of fathers (59 percent) in dual-earner families report
experiencing ``some or a lot'' of work/family conflict, as do 45
percent of mothers.\15\ Clearly, we need to find a new way of
addressing how families provide care.
---------------------------------------------------------------------------
\15\ Ellen Galinsky, Kerstin Aumann, and James T. Bond, ``NSCW
2008: Times Are Changing: Gender and Generation at Work and Home,'' in
National Study of the Changing Workforce (New York, NY: Families and
Work Institute, 2009).
---------------------------------------------------------------------------
recommendations
I have a few comments to make on why I think that the Paycheck
Fairness Act and the Fair Pay Act make for good economic policy. First,
as I said at the outset, this is probably the most important time for
families to ensure equal pay for all workers, men and women, including
caregivers. Women are increasingly breadwinners and ensuring they are
paid fairly is good for them and our economy.
The Paycheck Fairness Act
Markets only work when all the participants have full information.
If I don't know how much other economists are paid, I cannot know if my
salary is at the market wage. The Paycheck Fairness Act prohibits
employer from retaliating against employees who share salary
information. This provision will not solve the gender pay gap, but it
will allow employees to access the information they need to understand
if their pay is at the market rate. Combined with the provision to give
employees an opportunity to improve their salary negotiation skills,
this could be a powerful step towards greater pay equity, especially
among men and women in similar jobs within a single firm.
The Paycheck Fairness Act will also increase training, research,
and education to help the Equal Employment Opportunity Commission
identify and respond to wage discrimination claims and improve our data
collection of pay information. Discrimination is something that's hard
to prove at the individual level, but often easy to see in the
aggregate data. If a firm employs a thousand men and a thousand women,
but men are systemically promoted or are paid more in similar jobs,
then this indicates a gender disparity that should be investigated.
Without access to that kind of data, the EEOC has no idea whether there
are signs that unfair pay practices are occurring. The data provisions
of the Paycheck Fairness Act are of utmost importance in enforcing the
law already on the books.
The Fair Pay Act
The Fair Pay Act will require employers to provide equal pay for
jobs that are comparable in skill, efforts, responsibility, and working
conditions. The largest chunk of the gender pay gap is due to the
combined effect of the segregation of men and women into different
industries and occupations.
One of the challenges of our current economy is that many of the
new jobs being created are replacing the work women historically did
inside the home for free and these jobs are clearly undervalued. Child
care workers, for example, are paid much less than school teachers,
even though we are learning more every day about the importance of this
development stage and the key role of the skills of these providers in
nurturing young minds. The Fair Pay Act delineates a process to
evaluate jobs within a firm and ascertain the actual skills required
then ensures that jobs with similar skills are paid the same, even if
one is predominately held by women and one predominately held by men.
This is important legislation before you today. I cannot stress how
important the issue of fair pay is to women and to their families. In
these tough economic times, with millions of women supporting their
families, I encourage you to do what you can to ensure that they earn a
fair day's pay.
Thank you.
References
Arons, Jessica. ``Lifetime Losses: The Career Wage Gap.'' Washington,
DC: Center for American Progress, 2008.
Blau, Francine D., and Lawrence M. Kahn. ``The Gender Pay Gap: Have
Women Gone as Far as They Can?'' Academy of Management Perspectives
(2007).
Blau, Francine, and Lawrence Kahn. ``Swimming Upstream: Trends in the
Gender Wage Differential in the 1980s.'' Journal of Labor Economics
15, no. 1 (1997): 1-42.
Boushey, Heather. ``The New Breadwinners.'' In The Shriver Report: A
Woman's Nation Changes Everything, edited by Heather Boushey and
Ann O'Leary. Washington, DC: Center for American Progress, 2009.
__.``Tag-Team Parenting.'' Washington, DC: Center for Economic and
Policy Research, 2006.
__``Women Breadwinners, Men Unemployed.'' Washington, DC: Center for
American Progress, 2009.
Bradbury, Katherine, and Jane Katz. ``Wive's Work and Family Income
Mobility.'' Boston, MA: Federal Reserve Bank of Boston, 2004.
Bureau of Labor Statistics. ``Women in the Labor Force: A Databook.''
Washington, DC: U.S. Department of Labor, 2008.
Dey, Judy Goldber, and Catherine Hill. ``Behind the Pay Gap.''
Washington, DC: AAUW Foundation, 2007.
England, Paula. ``Gender Inequality in Labor Markets: The Role of
Motherhood and Segregation.'' Social Politics: International
Studies in Gender, State and Society 12, no. 2 (2005): 264-88.
Galinsky, Ellen, Kerstin Aumann, and James T. Bond. ``NSCW 2008: Times
Are Changing: Gender and Generation at Work and Home.'' In National
Study of the Changing Workforce. New York, NY: Families and Work
Institute, 2009.
Golden, Lonnie. ``Flexible Work Schedules: Which Workers Get Them?''
American Behavioral Scientist 44, no. 7 (2001): 1157-78.
Golden, Lonnie, and Barbara Wiens-Tuers. ``Overtime Work and Worker
Well-Being at Work and at Home.'' Paper presented at the Allied
Social Science Association Meetings, Boston, MA, January 2006.
Hartmann, Heidi, and Stephen Rose. ``Still a Man's Labor Market: The
Long-Term Earnings Gap.'' Washington, DC: Institute for Women's
Policy Research, 2004.
McCrate, Elaine. ``Flexible Hours, Workplace Authority, and
Compensating Wage Differentials in the U.S.'' Feminist Economics
11, no. 1 (2005): 11-39.
McDonald, Judith A., and Robert J. Thornton. ``Do New Male and Female
College Graduates Receive Unequal Pay?'' Journal of Human Resources
XLII, no. 1 (2007): 32-48.
Morgan, L.A. ``Major Matters: A Comparison of the within-Major Gender
Pay Gap across College Majors for Early-Career Graduates.''
Industrial Relations 47, no. 4 (2008): 625-50.
Paul, Ellen Frankel. Equity and Gender: The Comparable Worth Debate.
New Brunswick, NJ: Transaction, 1988.
Presser, Harriet B. Working in a 24/7 Economy: Challenges for American
Families. New York: Russell Sage Foundation, 2003.
Wenger, Jeffrey B. ``The Continuing Problem with Part-Time Jobs.''
Washington, DC: Economic Policy Institute, 2001.
Senator Dodd. Thank you, Ms. Boushey. Thank you very much.
Ms. Brake.
STATEMENT OF DEBORAH L. BRAKE, PROFESSOR OF LAW, UNIVERSITY OF
PITTSBURGH, PITTSBURGH, PA
Ms. Brake. Senator Dodd and members of the committee, I
appreciate the opportunity to discuss the need for stronger
discrimination laws to close the longstanding gender wage gap.
This gap exists at every level of earnings, from teacher's
assistants to physicians. Even when all other factors are
accounted for, a substantial portion of the gap remains
attributable to sex.
In considering these issues, it is important to keep in
mind just how high a bar the Equal Pay Act sets for employees
to prove discrimination. A claimant must prove she is paid less
for equal work on jobs the performance of which requires equal
skill, effort, and responsibility, and which are performed
under similar working conditions.
Courts have interpreted this standard strictly. To give
just one example, female vice presidents have failed in court
under this standard because they are responsible for different
aspects of the company's operations than higher-paid male vice
presidents, even when their responsibilities were equally
challenging and the jobs were classified at the same level.
Indeed, it appears that a plaintiff can even lose an Equal
Pay Act case due because she has more responsibility than
higher-paid male peers. The fact of the matter is, it is
extremely difficult to prove that jobs are substantially equal
when we are dealing with nonstandardized, noncommodity jobs,
the kinds of jobs common in the modern economy.
In discussing the strictness of proof required to prove
equal work, I do not mean to endorse this State of the law. In
my view, many of the cases cited in my written testimony take
too narrow an approach. But in considering legislation in this
area, it is important to keep in mind that proving a case under
the Equal Pay Act is no easy matter.
Once an employee proves unequal pay for equal work, the
employer will still prevail if it can prove one of four
affirmative defenses. In recent years, the fourth defense, a
factor other than sex, has become the exception that swallows
the rule.
An early U.S. Supreme Court decision admonished that market
forces--the fact that women's labor brings a lower wage in the
open market--are not a ``factor other than sex.'' But some
lower courts have allowed virtually any nominally gender-
neutral reason to justify unequal pay for equal work.
For example, courts have allowed a man's higher prior
salary to justify paying him more than an equally qualified
woman to do the same work. Courts have also applied the defense
where the man negotiated for his higher pay. Yet such factors
can perpetuate the very discrimination the act was supposed to
combat. Prior salary can reflect unjustified pay gaps in
employee salary history, and differences in negotiation are not
necessarily gender neutral, nor related to job performance.
For complex reasons, men and women tend to differ in their
approach to salary negotiations, and employers respond
differently to them. Recent research has shown significant
gender differences in negotiating salaries. One study found
that among Carnegie Mellon University graduates, 57 percent of
the men, but only 7 percent of the women, negotiated for a
higher starting salary. And those who negotiated received
salaries an average of 7.4 percent higher than those who did
not.
It turns out that women have good reason for not
negotiating. In a follow-up to her acclaimed book, ``Women
Don't Ask,'' Linda Babcock and her fellow researchers found
that sometimes it does hurt to ask. Their research showed that
part of the reason why women don't negotiate is that they
accurately perceive a risk from doing so, a risk that is both
gender specific to women and all too real.
Yet courts blithely accept negotiation as a factor other
than sex, even in cases where women were told their pay was
nonnegotiable. Some courts and the EEOC have taken a more
searching approach, scrutinizing the business reasons and job
relatedness of the factors put forward. The Paycheck Fairness
Act would take sides in this dispute, drawing on the same
standard Congress used when it amended title VII in 1991 and
which courts have applied to other claims since 1971. This
would ensure that women are not paid less for doing the same
job unless there is a job-related reason for doing so.
No Federal law now provides full remedies to victims of
sex-based employment discrimination. The Equal Pay Act provides
only back pay and an equal amount in liquidated damages. Title
VII damages are capped at modest levels, depending on the size
of the employer. However, race discrimination claims under a
separate statute, 42 U.S.C., section 1981, allow for the full
range of remedies, including compensatory and punitive damages
without caps.
This statute has been in place since the reconstruction
era, and we have not seen financial ruin of businesses, nor
out-of-control jury verdicts. In fact, the U.S. Supreme Court
has set a high bar for recovering punitive damages, requiring
egregious misconduct and bad faith. Courts are well-equipped to
limit excessive damage awards with the uniform rules that apply
to civil cases generally. What we have under current law is a
special rule for sex discrimination and a policy judgment that
sex discrimination is not as bad as other kinds of
discrimination.
The Paycheck Fairness Act would fill other holes in the
equal pay laws as well. It would ameliorate the strict same
establishment rule to proving equal pay cases. It would provide
for better access to the information needed to enforce the pay
laws. It would strengthen protections from retaliation, and it
would extend the same class action rules that apply to other
civil lawsuits.
And finally, to the Fair Pay Act, just three short
sentences. Neither title VII nor the Equal Pay Act addresses
the problem of the devaluation of female-dominated jobs that
are equivalent to male-dominated jobs in skill, effort,
responsibility, and work conditions. But research examining pay
scales in cases where such practices have been challenged has
shown that far from deriving from neutral market-based
criteria, the under payment of traditionally female jobs
reflects institutional gender bias.
In other words, predominantly female jobs were paid below
their actual worth precisely because they were held by women.
The Fair Pay Act would bring much-needed scrutiny to these
practices.
Thank you.
[The prepared statement of Ms. Brake follows:]
Prepared Statement of Deborah L. Brake
summary
The gender wage gap continues to suppress the wages of American
women; it is not explained by non-sex based factors; and it is not on a
trajectory that makes it likely to close any time soon.
The standard for proving a violation of the Equal Pay Act is a
burdensome one; to establish a prima facie case under the act,
employees must show that they are paid less than an employee of the
opposite sex for performing substantially equal work, a standard courts
have applied strictly.
The requirement of proving unequal work in the ``same
establishment'' poses a further, unjustified hurdle in Equal Pay Act
claims; the Paycheck Fairness Act takes a more commonsense approach to
this requirement.
The ``factor other than sex'' defense to Equal Pay Act claims has
been given too broad a sweep by some courts, opening the door to pay
differences based on factors such as prior salary or differences in
negotiation that are not tied to the employer's business needs or the
requirements of the job in question, and which can operate to
perpetuate sex-based differences in pay.
Federal employment discrimination laws create a hierarchy of
remedies depending on the type of discrimination involved; racially
based pay discrimination is remediable by make-whole relief, including
uncapped damages, while sex-based pay discrimination is not. Both the
Paycheck Fairness Act and the Fair Pay Act would finally treat sex-
based pay discrimination with the seriousness it deserves, amending the
Equal Pay Act to provide for compensatory and punitive damages.
Neither the Equal Pay Act nor title VII addresses that portion of
the gender-wage gap that is due to occupational segregation and the
devaluation of predominantly female jobs. The Fair Pay Act would
address this problem.
______
Chairman Harkin and members of the Senate Committee on Health,
Education, Labor, and Pensions, I appreciate the opportunity to come
before you today to discuss the inadequacy of existing employment
discrimination laws to close the longstanding gender wage gap that
continues to undermine the ability of women to support their families.
Today more than ever, American women need and deserve strong legal
protections from pay discrimination.
We now have abundant evidence that the gender wage gap persists and
is not on track to close any time soon.\1\ This gap exists at every
level of earnings, from teacher's assistants, where the female median
salary of $15,000 is 75 percent of the male median salary of $20,000,
to physicians, where the female median salary, $88,000, is 63 percent
of the male median salary, $140,000.\2\ As economists debate how much
of the gender wage gap is explained by discrimination, one
incontrovertible truth emerges: even when non sex-based factors are
accounted for--factors such as age, education, years of work, hours
worked, job tenure, occupation and jobs held--a substantial portion of
the gender wage gap remains and is only explainable by sex.\3\ The
bills now under consideration, the Paycheck Fairness Act and the Fair
Pay Act, would help strengthen the ability of our existing employment
discrimination laws to more effectively address the gender wage gap.
---------------------------------------------------------------------------
\1\ See Bureau of Labor Statistics, U.S. Dep't of Labor, Highlights
of Women's Earnings in 2003, at 29 tbl. 12, 31 tbl. 14 (Sept. 2004)
(women's median weekly earnings were 79.5 percent of men's in 2003, and
73.6 percent for college graduates); Michael Selmi, Family Leave and
the Gender Wage Gap, 78 N.C. L. Rev. 707, 715 (2000) (explaining that
most of the progress in narrowing the wage gap since 1970, when it was
59 cents on the dollar, was made in the 1980s, and studies show little
additional progress since 1990).
\2\ See Daniel H. Weinberg, U.S. Dep't of Commerce, Census 2000
Special Reports, Evidence from Census 2000 About Earnings by Detailed
Occupation for Men and Women 7, 12 tbl.5, 13 tbl. 6 (May 2004).
\3\ See, e.g., U.S. Gen. Acct. Office, Women's Earnings: Work
Patterns Partially Explain Difference Between Men's and Women's
Earnings, GAO-04-35 at 2 (Oct. 2003) (examining nationally
representative longitudinal data set and concluding that women in 2000
earned only 80 percent of what men earned after accounting for
education, occupation, hours worked, and time away from the workplace
because of family care responsibilities); Weinberg, supra, at 21
(``There is a substantial gap in median earnings between men and women
that is unexplained, even after controlling for work experience--
education, and occupation.''); Council of Econ. Advisers, Explaining
Trends in the Gender Wage Gap 11 (1998) (concluding that women do not
earn equal pay even when controlling for occupation, age, experience,
and education); Michelle J. Budig, Male Advantage and the Gender
Composition of Jobs: Who Rides the Glass Escalator, 49 Soc. Prob. 258,
269-70 (2002) (explaining that men are advantaged, net of control
factors, in both pay levels and wage growth regardless of the gender
composition of jobs); Selmi, supra, at 719-43 (concurring, reviewing
data); Stephen J. Rose & Heidi I. Hartmann, Inst. for Women's Pol'y
Res., Still a Man's Labor Market: The Long-Term Earnings Gap 9-10
(2004) (differences in men's and women's labor force attachment do not
explain the gap); Bureau of Labor Statistics, supra, at 2, 25 tbl. 9,
26 tbl. 10, 35-36 tbl. 15, 37-36 tbl. 16 (differences in hours worked
do not explain the gap).
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background: the equal pay act sets a very high burden on employees to
prove unequal pay for equal work
Both the Paycheck Fairness Act and the Fair Pay Act would make
changes to the Equal Pay Act of 1963.\4\ In considering these bills, it
is important to understand how the Equal Pay Act applies. Employees
must meet a strict standard to establish a prima facie case of unequal
pay under the act. The Equal Pay Act applies only to unequal pay for
``equal work on jobs the performance of which requires equal skill,
effort, and responsibility, and which are performed under similar
working conditions.'' This turns out to pose a high hurdle for
employees invoking the act. In order to establish a violation, an
employee must first identify a higher-paid comparator of the opposite
sex who performs substantially the same job, as measured by skill,
effort, responsibility and working conditions.\5\ This standard has
been construed strictly, in ways that make it difficult for employees
to identify comparators doing substantially equal work.\6\
---------------------------------------------------------------------------
\4\ 29 U.S.C. 206(d)(1).
\5\ See Corning Glass Works v. Brennan, 417 U.S. 188 (1974); see
generally Harold S. Lewis, Jr., and Elizabeth J. Norman, Employment
Discrimination Law and Practice 7.3 (2d ed. 2004).
\6\ See, e.g., Houck v. Virginia Polytechnic Institute, 10 F.3d
204, 206 (4th Cir. 1993) (requiring plaintiff to compare her pay to
that of an actual male comparator, not a hypothetical male or a
composite of male colleagues, and jobs must be equal on a ``factor by
factor'' basis); Miranda v. B&B Cash Grocery Story, Inc., 975 F.2d
1518, 1526 (11th Cir. 1992) (describing the burden on employees to show
``substantially similar work'' as ``a fairly strict standard'').
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For example in one representative case, the plaintiff, a senior
vice-president of finance, failed to establish a prima facie case under
the Equal Pay Act in comparing her pay to that of the company's other
senior vice-presidents.\7\ The courts' analysis left little room for
meeting the ``substantially equal'' requirement for jobs that are
managerial or executive in nature. The court described the Equal Pay
Act as having greater applicability to ``lower-level workers'' who
perform ``commodity-like work'' than to higher level jobs which are
necessarily more unique.\8\ Likewise, a different court found the jobs
of an insurance company's male vice-presidents different in substance
from the company's only female vice-president, who was paid less than
all of the company's male vice-presidents.\9\ The court ruled that the
jobs involved different responsibilities, even though they shared ``a
common core of substantially similar tasks'' in managing divisions, the
plaintiff managed the largest division, and the company's official
salary administration program ranked all of the vice-presidents
equally.\10\ In fact, it seems a plaintiff can even lose an Equal Pay
Act case due to job differences that give her more responsibility than
her higher-paid male colleagues.\11\
---------------------------------------------------------------------------
\7\ Georgen-Saad v. Texas Mutual Ins. Co., 195 F. Supp.2d 853 (W.D.
Tex. 2002). The comparators were senior vice presidents over other
aspects of the employer's business.
\8\ Id. at 857.
\9\ Stopka v. Alliance of American Insurers, 141 F.3d 681 (7th Cir.
1998).
\10\ Id. at 685-86.
\11\ See Pajic v. Cigna Corp., 56 Fair Empl. Prac. Cas. (BNA) 1624,
1990 U.S. Dist. LEXIS 11588 (E.D. Pa. 1990) (even though male co-
workers were paid more for doing less than the female managers, their
jobs were not similar enough to allow for an EPA claim).
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The degree of similarity required by courts makes it difficult for
women to identify comparators even in jobs that seem very similar.\12\
The strictness with which courts approach the equal work requirement
has led one legal scholar, who conducted an empirical review of all
reported Federal appellate cases decided under the act, to conclude
that the Equal Pay Act as interpreted by the courts is not broad enough
to reach ``non-standardized jobs'' in the modern economy.\13\
---------------------------------------------------------------------------
\12\ See, e.g., Howard v. Lear Corp. EEDS and Interiors, 234 F.3d
1002 (7th Cir. 2000) (female human resources coordinator's job was not
substantially similar to men's human resources jobs where the men's
jobs were in unionized plants with a mix of salaried and hourly workers
and plaintiff 's job was in a nonunionized plant with only salaried
workers); EEOC v. Madison Community Unit School Dist. No. 12, 818 F.2d
577 (7th Cir. 1987) (male and female coaching jobs at the high school
and junior high level were not substantially similar where the jobs
involved coaching different sports with different rules).
\13\ See Deborah Thompson Eisenberg, Shattering the Equal Pay Act's
Glass Ceiling, University of Maryland Legal Studies Research Paper No.
2009-54, 63 S.M.U. L. Rev. 101 (forthcoming, 2010), available at http:/
/ssrn.com/abstract=1521172. This failing is particularly unfortunate
because the gender wage gap for managerial and professional employees
is even greater than it is for employees generally, and the improvement
in this sector has been especially slow. Id. at 108-113; see also Ruben
Bolivar Pagan, Defending the ``Acceptable Business Reason'' Requirement
of the Equal Pay Act: A Response to the Challenges of Wernsing v.
Department of Human Services, 33 J. Corp. Law 1007 (2008) (noting that
the gender wage gap in managerial, professional, and related
occupations has improved by only about 10 percent since the 1960s, and
citing 2007 Department of Labor report finding that in management,
professional, and related occupations, women earn only 73 percent as
much as men).
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In discussing the strictness of how courts approach Equal Pay Act
claims, I do not mean to endorse the cases cited or the overly narrow
approach to job similarity taken--indeed, in my view, many of these
cases are wrongly decided. However, it is important for Congress to
understand a key aspect of the legal background in this area:
establishing a prima facie case under the Equal Pay Act is no easy
matter. It is very difficult for employees to establish a violation of
the act, and the plaintiff who does so has proven that her employer has
paid her less than a man for performing a job that is the same in
virtually all respects.
1. The ``Same Establishment'' Requirement of the Equal Pay Act Further
Narrows the Ability of Employees to Prove Pay Discrimination
Not only must the employee show that the employer paid her less for
performing substantially the same work as a male employee; she and her
male comparator must also work in the ``same establishment.'' \14\ This
can be an obstacle for an employee who seeks to compare her job to a
male employee who does the same work in a different physical
location.\15\ The term ``same establishment'' is not defined in the
Fair Labor Standards Act, but the Supreme Court has interpreted it to
mean ``a distinct physical place of business.'' \16\ In order for
different physical sites to be counted as part of the same
establishment, thereby allowing the use of comparators at different
physical locations, the plaintiff must prove ``unusual circumstances,''
such as the exercise of centralized control in one location over
important aspects of running the entire business.\17\
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\14\ 29 U.S.C. 206(d).
\15\ See, e.g., Thompson v. City of Albuquerque, 950 F. Supp. 1098,
1102 (D. N.M. 1996) (holding that veterinarians at city's animal
services division and zoo did not work at the ``same establishment''
where they are under different city departments); Winther v. City of
Portland, Civ. No. 91-1232-JU, 1992 WL 696529 at *5 (D. Or. July 10,
1992) (holding that although the Portland Fire Bureau and Bureau of
Emergency Communications were integrated with respect to a 911 system,
they were separate establishments because they were administratively
separate and had separate management); EEOC v. State of Del. Dept. of
Health and Social Services, Civ. A. No. 83-412-JRR., 1986 WL 15944 at
*2 (D. Del. Nov. 7, 1986) (holding ``same establishment'' to constitute
only individual medical clinics and not entire system of clinics);
Davis v. Western Elec. Co., No. C-78-65-WS, 1979 WL 15383 (M.D.N.C.
July 6, 1979) (justifying a holding of separate establishments because
of different management, separate personnel system and no rotation
between plants); Gerlach v. Michigan Bell Tel. Co., 448 F.Supp. 1168,
1172 (D. Mich. 1978) (holding the local office to be the relevant
establishment because although Engineering Layout Clerks occasionally
transfer or are loaned to other offices, they are primarily supervised
at local offices); Shultz v. Corning Glass Works, 319 F. Supp. 1161,
1164 (W.D.N.Y. 1970) (finding that two plants that were physically
connected constituted the ``same establishment,'' but a third plant
from which employees do not transfer back and forth did not constitute
the ``same establishment'').
\16\ A.H. Phillips, Inc. v. Walling, 324 U.S. 490, 496 (1945).
\17\ 29 CFR 1620.9(a).
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This showing of unusual circumstances requires proof that the
employer maintains centralized control over decisions such as hiring
employees, setting salaries, and assigning employees to various work
sites.\18\ While a plaintiff who works in a branch office of a company
with one central administration may be able to meet this standard and
identify comparators at other branch offices, many companies are
organized so that different branches exercise control over important
elements of the job relationship at that site, such as hiring, setting
salaries, and job assignments.\19\ As more employers move to a
decentralized structure, this standard is likely to become increasingly
difficult to meet.\20\
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\18\ 29 CFR 1620.9(b).
\19\ Cf. Mulhall, 19 F.3d at 591 (separate locations were part of
``same establishment'' where plaintiff demonstrated ``centralized
control of job descriptions, salary administration and job
assignments'' and project managers at different locations reported to
supervisor in central office); Meeks v. Computer Assocs., Int'l, 15
F.3d 1013, 1017 (11th Cir. 1994) (different physical locations were not
part of the same establishment where local offices made their own
hiring decisions and set specific employee salaries, albeit within a
range defined by central administration); Foster v. Arcata Assocs.,
Inc., 772 F.2d 1453, 1464 (9th Cir. 1985) (physically separate offices
of defense contractor were not part of ``same establishment'' where
offices maintained independent management of projects for different
customers, had separate budgets, and had delegated authority to make
personnel decisions).
\20\ Cf. Katherine V.W. Stone, From Widgets to Digits: Employment
Regulation for the Changing Workplace 165 (2004) (discussing the
decentralization of authority and flattening of hierarchy in the modern
workplace).
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While it makes sense to have different pay scales for employees in
different parts of the country where there are different costs of
living, the current ``same establishment'' requirement goes well beyond
accommodating such regional differences. The Paycheck Fairness Act
would alleviate this problem by allowing the use of comparators who
work for the same employer at different physical locations in the same
county or similar political subdivision of a State, taking a more
commonsense approach to pay inequality among persons who do equal work
for the same employer.
2. The ``Factor Other than Sex'' Defense Excuses Far Too Much Pay
Inequality
Once an employee proves that she was paid less for performing a job
equal to that of a male comparator in the same establishment, the
employer may avoid liability by establishing one of four affirmative
defenses: that the wage disparity is based on (1) a seniority system;
(2) a merit system; (3) a system which measures earnings by quantity or
quality of production; or (4) any factor other than sex. It is the
fourth defense that has become increasingly problematic.
Early in the act's history, the Supreme Court took a searching
approach to this defense, admonishing that a disparity based on market
forces--e.g., the fact that women's labor brings a lower wage in the
open market--was not a ``factor other than sex'' under the act.\21\ In
that case, the Court rejected the employer's defense that male
nightshift workers were paid more because they demanded more money than
the female day shift workers to perform substantially the same
work.\22\ The Court was on firm ground in doing so, since the Equal Pay
Act was enacted precisely to address biases in the market that valued
women's labor less than men's labor.\23\ Despite this auspicious
beginning, lower courts have increasingly opened the door to a broader
``factor other than sex'' defense that accepts virtually any
superficially gender-neutral explanation for paying women less.
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\21\ Corning Glass Works v. Brennan, 417 U.S. 188 (1974). Cf. City
of Los Angeles Dept. of Water & Power v. Manhart, 435 U.S. 702 (1978)
(indicating that the relative average greater costs of employing one
sex would not qualify as a factor other than sex); County of Washington
v. Gunther, 452 U.S. 161, 170-71 (1981) (in pay discrimination claim
under title VII, which incorporates ``factor other sex'' defense,
describing the fourth defense as applying to ``bona fide'' factors
other than sex).
\22\ The Court allowed that working a nightshift as opposed to a
dayshift might be a factor other than sex that justified a difference
in pay, but in that case the employer had already paid a premium for
all nightshift workers; the difference between the male nightshift
inspectors and female dayshift inspectors had been superimposed on the
existing difference in base pay for night and day workers because of
the company's belief that the male workers would demand more pay.
\23\ Cf. Deborah Thompson Eisenberg, Shattering the Equal Pay Act's
Glass Ceiling, University of Maryland Legal Studies Research Paper No.
2009-54, 63 S.M.U. L. Rev. 101, 138-19 (forthcoming, 2010), available
at http://ssrn.com/abstract=1521172 (employers asserting a market
defense to Equal Pay Act claims usually do not have actual market
supporting their position and instead rely on their own subjective
belief about what the market requires; there is ``no one magic market
rate'' for any particular job; instead, ``[t]here are many human agency
factors that can affect the structure and outcome of market
compensation analysis that can allow subjective judgments and
unconscious biases to affect the results'').
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Over the years, stark differences have emerged in how lower courts
interpret the factor other than sex defense. The courts most skeptical
of equal pay claims have allowed employers to justify pay disparities
based on anything other than explicitly sex-based criteria or
intentional discrimination against women, even if the purportedly
gender-neutral reason is lacking in a solid business justification. For
example, the Seventh Circuit has refused flat-out to undertake any
inquiry into whether there is a business justification or legitimate
business reason for the employer's explanation for the disparity under
the ``factor other than sex'' defense.\24\ That court has described the
defense as ``embrac[ing] an almost limitless number of factors, so long
as they do not involve sex,'' even if they are not `` `related to the
requirements of the particular position in question,' nor . . even . .
. business-related.' '' \25\ Likewise, the Eighth Circuit has pointedly
refused to require an acceptable business reason underlying the
employer's assertion of a factor other than sex.\26\ Contrary to this
view, several circuit courts and the EEOC have taken a more searching
approach to the factor other than sex defense, limiting it to factors
based on legitimate business reasons.\27\ Other courts have yet to take
a clear stand on the question.\28\
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\24\ Wernsing v. Dept. of Human Servs., 427 F.3d 466, 470 (7th Cir.
2005) (``The disagreement between this circuit (plus the Eighth) and
those that require an `acceptable business reason' is established, and
we are not even slightly tempted to change sides''); id. at 468 (``The
statute asks whether the employer has a reason other than sex--not
whether it has a `good' reason.''); see also Fallon v. State of Ill.,
882 F.2d 1206 (7th Cir. 1989) (there is no requirement that a ``factor
other than sex'' be ``related to the requirements of a particular
position in question, nor that it be a `business-related' reason.'')
(citation omitted); see also Boriss v. Addison Farmers Ins. Co., 1993
WL 284331 (N.D. Ill. 1993) (male employees' different qualifications
could be a ``factor other than sex'' even if those qualifications were
not related to the job at issue).
\25\ Dey v. Colt Constr. & Dev. Co., 28 F.3d 1446, 1462 (7th Cir.
1994); see also Fallon v. State of Ill., 882 F.2d 1206, 1211 (7th Cir.
1989) (suggesting that even a practice with a discriminatory effect
might qualify as a ``factor other than sex'').
\26\ Taylor v. White, 321 F.3d 710 (8th Cir. 2003) (stating that
``the wisdom or reasonableness'' of the factor other than sex is
irrelevant). The Court of Federal Claims has also aligned itself with
the Seventh and Eighth Circuits on this question. Behm v. United
States, 68 Fed. Cl. 395, 400 (Fed. Cl. 2005).
\27\ See Aldrich v. Randolph Cent. Sch. Dist., 963 F.2d 520, 526
(2d Cir. 1992) (requiring a ``bona fide business-related reason'');
EEOC v. J.C. Penney Co., 843 F.2d 249, 253 (6th Cir. 1992) (stating
that the defense ``does not include literally any other factor, but a
factor that, at a minimum, was adopted for a legitimate business
reason''); Kouba v. Allstate Ins. Co., 691 F.2d 873, 876 (9th Cir.
1982) (factor must be based on ``an acceptable business reason'');
Glenn v. General Motors Corp., 841 F.2d 1567, 1571 (factor other than
sex defense applies ``when the disparity results from the unique
characteristics of the same job; from an individual's experience,
training, or ability; or from special exigent circumstances connected
with the business''). See also EEOC Compliance Manual, 10-IV(F)(2),
Dec. 5, 2000 available at http://www.eeoc.gov/policy/docs/
compensation.html (requiring employer to ``show that the factor is
related to job requirements or otherwise is beneficial to the
employer's business'' and that it is ``used reasonably in light of the
employer's stated business purpose as well as its other practices.'').
\28\ Ruben Bolivar Pagan, Defending the ``Acceptable Business
Reason'' Requirement of the Equal Pay Act: A Response to the Challenges
of Wernsing v. Department of Human Services, 33 Journal of Corporate
Law 1007 (Summer 2008) (identifying the First, Third, Fourth, Fifth,
Tenth and D.C. Circuits as ``yet to consider whether the EPA's `factor
other than sex' exception contains an implicit `acceptable business
reason' requirement'' and recommending that all circuits join majority
view to require an acceptable business reason).
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The allowance of any non-sex-based factor to justify a wage
disparity, however unconnected to the job at issue or unrelated to the
needs of the business, has the potential to eviscerate the protections
of the Equal Pay Act. As the Second Circuit recognized, ``[w]ithout a
job-relatedness requirement, the factor-other-than-sex defense would
provide a gaping loophole in the statute through which many pretexts
for discrimination would be sanctioned.'' \29\ It would allow employers
to rely on factors that are sex-linked and perpetuate the suppression
of women's wages, without regard to the responsibilities of the jobs or
the qualifications of the employees who fill them.\30\
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\29\ Aldrich, 963 F.2d at 525.
\30\ Cf. Engelman v. Nat'l Broadcasting Co., Inc., 1996 WL 76107,
at *7 (SDNY Feb. 22, 1996)) (warning that without a legitimate business
justification required for the ``factor other than sex'' defense, an
employer could rely on sex-linked factors such as height and weight
even if those qualities were unrelated to the job in question).
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One area in which this dispute over the scope of the defense plays
out is the question of whether employees' prior salaries may be used to
justify a current pay disparity for employees doing equal work. Some
courts allow this as a ``factor other than sex'' without further
scrutiny. For example, the Seventh Circuit allows employers to base pay
differentials on prior salary without any further justification.\31\
Some courts even in those circuits that do require an acceptable
business reason have expressed blanket approval of the use of prior
salary without any inquiry into whether that differential is related to
the skills and responsibilities needed to do the present job, or
whether prior salaries reflect any differences in the skills and
qualifications of the employees in those jobs.\32\ Other courts have
been more circumspect about reliance on prior salary to justify a
present salary differential, requiring the employer to show that its
reliance on prior salary was justified by sufficient business
reasons.\33\ These courts have recognized that reliance on prior salary
to set current pay risks perpetuating ongoing pay discrimination
against women, since women on average earn less than men.
---------------------------------------------------------------------------
\31\ Wernsing v. Dept. of Human Servs., 427 F.3d 466 (7th Cir.
2005). See also Brinkley v. Harbour Recreation Club, 180 F.3d 598, 617
& n.14 (4th Cir. 1999) (stating that salary history can be a ``factor
other than sex,'' and declining to decide whether to super-impose a
``job-relatedness requirement'' on this defense, while noting a split
in the circuits over whether to do so).
\32\ See, e.g., Sparrock v. NYP Holdings, Inc., 2008 WL 744733, *15
(S.D.N.Y. Mar. 4, 2008) (``matching an employee's former salary has
been found to be a factor other than sex justifying wage
differential''); Drury v. Waterfront Media, Inc., 2007 WL 737486, *4
(S.D.N.Y. Mar. 8, 2007) (paying male employee hiring salary to lure him
away from prior employer was a factor other than sex); Engelmann v.
National Broadcasting Co., Inc., 1996 WL 76107, *10 (S.N.D.Y. Feb. 22,
1996) (also approving salary-matching of employee's salary with a
previous employer as a factor other than sex).
\33\ See, e.g., Irby v. Bittick, 44 F.3d 949, 955 (11th Cir. 1995)
(rejecting reliance on prior salary alone; prior salary must be
connected to experience to justify a present salary disparity); Glenn
v. General Motors Corp., 841 F.2d 1567 (11th Cir. 1988) (rejecting as a
``factor other than sex'' employer's decision to pay male clerks more
because they transferred from higher paying positions); cf. Kouba v.
Allstate, 691 F.2d 873, 878 (9th Cir. 1982) (employer must show
reliance on prior salary justified by business reasons particular to
the employer's business). The EEOC also places a higher burden on
employers relying on prior salary to justify a pay differential. See
EEOC Compliance Manual, 10-IV(F)(2)(g), Dec. 5, 2000, available at
http://www.eeoc.gov/policy/docs/compensation.html (stating that
``[p]rior salary cannot, by itself, justify a compensation disparity,''
and requiring employer to ``prove that sex was not a factor in its
consideration of prior salary, and that other factors were also
considered,'' for example, by showing employer ``(1) determined that
the prior salary accurately reflected the employee's ability based on
his or her job-related qualifications; and (2) considered the prior
salary, but did not rely solely on it in setting the employee's current
salary'').
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The Paycheck Fairness Act would take sides in this dispute,
ensuring that gender gaps in pay are not simply perpetuated by
employers who set starting salaries based on employees' prior pay.
Employers would have to prove that the differential in prior salary was
not itself sex-based, and was job-related for the job in question and
consistent with business necessity. This is an eminently fair standard
and necessary to the vitality of the Equal Pay Act. Employers should
not reflexively incorporate differences in prior salary when they hire
male and female employees with similar experience and qualifications to
do the same job. Otherwise, the Equal Pay Act will become little more
than a rubber-stamp of the very wage disparities it was enacted to
address.\34\
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\34\ Indeed, because of historic wage patterns and male wage
earners' continuing comparative strength in the market, adopting
salary-matching or differences in prior salary as ``a factor other than
sex'' is practically a recipe for perpetuating the gender wage gap
indefinitely. See Jeffrey Lax, Do Employer Requests for Salary History
Discriminate Against Women? 58 Labor Law Journal 47 (2007) (employers
frequently use prior salary to set the wages of new employees, a
practice which perpetuates women's lower earnings relative to men;
therefore, urging Congress to close the loophole that allows employers
to invoke such a reason as a factor other than sex); Jeanne M. Hamburg,
When Prior Pay Isn't Equal Pay: A Proposed Standard for the
Identification of ``Factors Other Than Sex'' Under the Equal Pay Act,
89 Colum. L. Rev. 1085 (1989) (arguing for judicial skepticism toward
use prior salary as a factor other than sex).
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Another issue on which the dispute over the scope of the defense
has emerged is the role of salary negotiations in justifying a pay
differential under the ``factor other than sex'' defense. Courts
generally have allowed employers to rely on differences in how
employees negotiate their salary to support pay disparities under the
defense.\35\ However, a wealth of recent research suggests cause for
concern about interpreting the defense so broadly.
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\35\ See Christine Elzer, Wheeling, Dealing, and the Glass Ceiling:
Why the Gender Difference in Salary Negotiations is Not a ``Factor
Other Than Sex'' Under the Equal Pay Act, 10 Geo. J. Gender & Law 1,
10-12 (2009) (stating that of the eight published decisions that
address negotiation as a factor other than sex, only one, Futran v.
Ring Radio Co., 501 F. Supp. 734 (N.D. Ga. 1980), has rejected it as a
factor other than sex, and that case also involved direct evidence of
discriminatory intent); id. at 10, 13-19 (citing and discussing the
cases that have permitted employers to consider salary negotiation as a
factor other than sex). See also Day v. Bethlehem Center Sch. Dist.,
No. 07-159, 2008 WL 2036903 (W.D. Pa. May 9, 2008) (``Although
Plaintiffs present a compelling argument as to why the Defendant's
factor other than sex, i.e., negotiation, fails as a matter of law,
they do not cite any cases directly on point that support their
position.'').
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For complex reasons, men and women tend to differ in their approach
to salary negotiations, and, importantly, employers tend to differ in
how they respond to the men and women who do attempt to negotiate their
salary. Behavioral researchers Linda Babcock and Sara Laschever, widely
recognized experts in the field of gender differences in negotiation,
found that among Carnegie Mellon University graduates, 57 percent of
the men, but only 7 percent of the women, negotiated for a higher
starting salary.\36\ The applicants who negotiated received salaries
that were an average of 7.4 percent higher than those who did not
negotiate--a difference that corresponded almost exactly to the gap in
the male and female graduates' starting salaries. Their subsequent
research replicated these findings, and corroborated other research
finding that men are significantly more likely than women to negotiate
higher salaries.\37\
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\36\ Linda Babcock & Sara Laschever, Women Don't Ask: Negotiation
and the Gender Divide 1-2 (2003).
\37\ Id.; Elzer, 10 Geo. J. Gender & L. at 4-9 (describing social
science research on the gender divide in negotiations).
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These findings must be evaluated in light of complementary research
suggesting that women face a greater likelihood of being penalized by
employers when they do attempt to negotiate salary. As Babcock and her
fellow researchers found, ``sometimes it hurts to ask.'' \38\ In a
series of experiments, they found that men and women triggered
different reactions when they attempted to negotiate for more money.
Women who used identical ``scripts'' as men to ask for more money were
penalized by male evaluators, who were then less inclined to work with
the women who had asked for more money. Their research suggests that
women are less likely to negotiate salary at least in part because they
accurately perceive a risk from negotiating, a risk that is both
gender-specific and all too real.\39\
---------------------------------------------------------------------------
\38\ Hannah Riley Bowles, Linda Babcock, & Lei Lai, Social
Incentives for Gender Differences in the Propensity to Initiate
Negotiations: Sometimes It Does Hurt to Ask, 103 Organizational Behav.
& Hum. Decision Processes 84 (2007).
\39\ Id. at 88-100; see also M.E. Wade, Women and Salary
Negotiation: The Costs of Self-Advocacy, 25 Psychology of Women Q. 65
(2001); Elzer, 10 Geo. J. Gender & L. at 7-9 (describing this research
in greater detail).
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Given this reality, an employer who uses differences in negotiation
to justify a disparity in paying men and women for equal work should
have the burden to prove that this difference is not itself based on
sex. In several of the cases in which courts have allowed employers to
rely on negotiation to justify a pay disparity, the employer reacted
differently to the men and women who tried to negotiate, rewarding men
for negotiating while treating women's salaries as non-negotiable.\40\
Moreover, employers should shoulder a substantial burden to justify pay
disparities stemming from differences in salary negotiation by male and
female employees who have similar qualifications and are hired to do
equal work.\41\ At a minimum, employers should have to demonstrate that
the difference is related to the job in question and consistent with
business necessity.
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\40\ See Elzer, 10 Geo. J. Gender & L. at 20 (citing cases).
\41\ Cf. Charles B. Craver, ``If Women Don't Ask: Implications for
Bargaining Encounters, the Equal Pay Act, and title VII, 102 Mich. L.
Rev. 1104, 1116 (2004) (arguing that an employer who succumbs to a male
applicant's entreaties for more money than it pays a woman to do
substantially equal work presents ``the exact situation the enactment
was designed to proscribe--the willingness of females to work for less
based upon the `outmoded belief that a man . . . should be paid more
than a woman, even though his duties are the same.' '') (citation
omitted).
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The Paycheck Fairness Act would help close what has become a gaping
loophole in the Equal Pay Act's promise of a nondiscriminatory wage.
The bill would limit the ``factor other than sex'' defense to ensure
that an employer's reason for paying women less is a bona fide one,
such as differences in education, training or experience, that it is
not based upon or derived from a sex-based differential in
compensation, and that it is job-related and consistent with business
necessity. This language is borrowed from title VII's disparate impact
framework, under which facially neutral practices that disadvantage
workers based on sex, race, color, religion or national origin must be
shown to be job-related and consistent with business necessity. This
standard has been the law in title VII cases since 1971, when Griggs v.
Duke Power Co. was decided, and was later codified in the Civil Rights
Act of 1991, and courts have a wealth of experience applying this
standard in a way that is fair to both employees and employers. The
other three existing defenses to Equal Pay Act claims would continue to
apply unchanged, excusing pay differentials that are based on merit,
seniority, or quantity or quality of production.
3. Existing Federal Laws Provide Inadequate Remedies for Gender-Based
Pay Discrimination
Currently, employment discrimination law sets up a hierarchy of
remedies for employees who experience different kinds of pay
discrimination. Although full and uncapped remedies are available to
victims of pay discrimination on the basis of race, no Federal statute
provides complete remedies to women who are paid less because of their
sex. Under the Equal Pay Act, an employee may recover only the amount
of her unlawfully withheld wages (up to 2 years' back pay, or 3 years'
back pay for ``willful'' violations) and an equal amount in
``liquidated damages.'' \42\ Title VII of the Civil Rights Act of 1964
also prohibits discrimination in compensation, and a woman who wins a
title VII pay discrimination claim may obtain somewhat better relief
under that statute, since title VII authorizes compensatory and
punitive damages. However, here too her relief will be cut short. Title
VII caps damages at very modest levels. For example, in Lilly
Ledbetter's case against Goodyear, the jury awarded over $3.5 million
for Goodyear's egregious discrimination. However, the trial court was
forced to cap Ms. Ledbetter's damages at $300,000, the statutory limit
for combined compensatory and punitive damages applicable to large
employers such as Goodyear.\43\ As a result, the jury's award was
reduced to $360,000, the maximum allowable combined compensatory and
punitive damages, plus an award of $60,000 in back pay--a relatively
small sum considering the seriousness of Goodyear's misconduct, the
deterrent value of such an award against a company like Goodyear, and
the longstanding harm of the pay discrimination that continues to this
day to follow Ms. Ledbetter into her retirement in the form of a lower
pension.
---------------------------------------------------------------------------
\42\ 29 U.S.C. 216.
\43\ The limit for smaller employers is even lower, set at $50,000
for employers with fewer than 100 employees, $100,000 for employers
with 101-200 employees, $200,000 for employers with 200-500 employees,
and $300,000 for all employers with more than 500 employees.
---------------------------------------------------------------------------
In contrast, a claim for pay discrimination on the basis of race is
actionable under a different statute, 42 U.S.C. 1981, which bars race
discrimination in the making and enforcement of contracts, including
employment contracts. A successful pay discrimination claimant under
section 1981 receives the full panoply of legal remedies, including
uncapped compensatory and punitive damages.
This inequity in remedies, for discrimination Congress has declared
unlawful, is not justified by any principle of fairness or justice.
Moreover, it puts employees in a position of having to finely parse
their claims into either sex- or race-based claims, with significant
consequences for how the claim is categorized. Women of color face a
particular bind. A woman of color who is underpaid compared to white
male employees would be better off categorizing her claim as one based
on race rather than sex, even though the discrimination may combine
elements of both, or fit better as a gender claim. The employer, on the
other hand, may be able to limit its remedies if it can convincingly
argue that she was paid less because of her gender and not because of
her race, thereby restricting her to the much more limited remedies
available under the Equal Pay Act and title VII. The law should not
take such a rigid approach to these categories, nor should it place a
lower priority on eradicating pay discrimination based on gender.
I am aware that some opponents of amending the Equal Pay Act to
authorize compensatory and punitive damages have called the law a
``strict liability'' statute, not deserving of a damages remedy. I
strongly take issue with this characterization. The Equal Pay Act is
not a ``strict liability'' law in any legally correct sense of that
term. Strict liability was developed in tort law to allocate
responsibility for harm in certain instances notwithstanding the
absence of a breach of the duty of care owed by the defendant. The idea
behind it is that some endeavors (such as harboring wild animals or
working with extremely hazardous materials) are so inherently dangerous
that defendants should be responsible for any harm they cause even if
they are not negligent or otherwise at fault.
The liability scheme established by the Equal Pay Act could not be
further from a no-fault, strict liability rule. As explained above, an
employer is liable under the act only if the plaintiff succeeds in
establishing the very difficult burden of proving that she was paid
less than a man for performing substantially the same work, and then
only if the defendant fails to prove that the pay disparity was
justified by one of four affirmative defenses, including a factor other
than sex. In other words, the plaintiff who wins an Equal Pay Act claim
has been paid less for doing substantially the same job as a man
because of her sex. Critics of the Paycheck Fairness Act who call the
Equal Pay Act a ``strict liability'' law base their claim on the
argument that the Equal Pay Act, unlike title VII, does not require
proof of intentional discrimination. However, they make far too much of
this difference. Both statutes are asking the same fundamental question
in such claims, whether an employee was paid less because of her sex,
and proof of an Equal Pay Act violation almost always establishes a
title VII violation as well, without any additional evidence of
discriminatory motive.\44\ When a plaintiff wins a claim under the
Equal Pay Act, she has proven that she is paid less than a man for
performing substantially similar work and the employer has failed to
show a sufficient justification for the disparity. This is anything but
a ``no fault'' liability scheme, and the employee who proves such
discrimination should be entitled to a complete remedy under the law.
---------------------------------------------------------------------------
\44\ In many courts, proof of an Equal Pay Act violation also
establishes a title VII violation per se because proof that the
plaintiff was paid less for substantially equal work also proves that
she was paid less because of sex in violation of title VII. Other
courts apply title VII's distinct proof model to pay discrimination
claims, with the ultimate inquiry being whether the plaintiff
established intentional discrimination. See Lewis & Norman, 7.15.
Even in this latter set of courts, however, the same evidence that
establishes an Equal Pay Act violation will also generally establish a
title VII violation; however, it is possible, in theory, that a
plaintiff bringing both claims in such a court might win under the
Equal Pay Act, but lose under title VII because of the different
allocations of the burden of proof on the question of whether the lower
pay was because of sex. See Fallon v. Illinois, 882 F.2d 1206, 1217
(7th Cir. 1989) (``It is possible that a plaintiff could fail to meet
its burden of proving a title VII violation, and at the same time the
employer could fail to carry its burden of proving an affirmative
defense under the Equal Pay Act.'').
---------------------------------------------------------------------------
4. The Existence of Title VII Does Not Alleviate the Need for a
Strengthened Equal Pay Act
Although there is a fair amount of overlap between title VII and
the Equal Pay Act, as discussed above, the existence of title VII in no
way alleviates the need for a strengthened Equal Pay Act. As an initial
matter, some employees will only have access to the Equal Pay Act and
not to title VII due to differences in the scope and procedures of the
two statutes.\45\ Moreover, even if an employee proceeded under title
VII instead of the Equal Pay Act, the same defenses that apply to the
Equal Pay Act, including the ``factor other than sex'' defense, also
apply to title VII under the so-called ``Bennett Amendment.'' \46\
Accordingly, title VII incorporates the same problems discussed above
with respect to the ``factor other than sex'' defense. Finally, as
discussed above, title VII also provides inadequate remedies to victims
of discrimination because of its cap on damages.
---------------------------------------------------------------------------
\45\ See generally Harold S. Lewis, Jr., and Elizabeth J. Norman,
Employment Discrimination Law and Practice, 7.2 (2d ed. 2004)
(explaining that, unlike title VII, the Equal Pay Act is triggered by
an employer's connection to commerce, with limited exceptions for a few
very specific industries, and not by the number of employees); id. at
7.21 (explaining that the EPA has a longer statute of limitations--2
years, or 3 years for a violation that is willful--as compared to title
VII's much shorter limitations period).
\46\ 42 U.S.C. 2000e-2(h).
---------------------------------------------------------------------------
5. Better Access to Salary Information is Crucial to the Effective
Enforcement of the Equal Pay Laws
Access to salary information is crucial for both individual
employees and government enforcement agencies in order to effectively
enforce the guarantees of the equal pay laws. Without salary
information, employees have no way of knowing if they are paid a
discriminatory wage. Employers rarely disclose workers' salaries and
workplace norms often discourage frank and open conversations among
employees about salaries. Lilly Ledbetter's case is typical in this
respect. She worked for Goodyear for many years, unaware that she was
paid less than the lowest-paid male manager until she received an
anonymous note disclosing her colleagues' pay. Goodyear's policy of pay
secrecy was calculated to keep her and other employees in the dark.
Many employers have similar policies and informal practices
discouraging the sharing of such information.\47\ Currently, both
employees and the relevant Federal enforcement agencies lack access to
the salary information they need to effectively enforce Federal pay
discrimination laws. Both the Paycheck Fairness Act and the Fair Pay
Act would improve access to the pay information that is necessary for
both individual and government enforcement of the laws.
---------------------------------------------------------------------------
\47\ See Leonard Bierman & Rafael Gely, Love, Sex and Politics?
Sure. Salary? No Way: Workplace Social Norms and the Law, 25 Berkeley
J. Emp. & Labor L. 167, 168, 171 (2004) (noting that one-third of U.S.
private sector employers have policies prohibiting employees from
discussing salaries and that many more communicate informally an
expectation of confidentiality with respect to employee salaries).
---------------------------------------------------------------------------
6. The Fair Pay Act is Needed to Address an Aspect of the Gender Wage
Gap Left Out of Both Title VII and the Equal Pay Act: The
Effects of Occupational Segregation and the Devaluation of
Women's Labor
The Fair Pay Act would address an aspect of the gender wage gap
that existing law does not: the devaluation of jobs predominantly held
by women. Neither title VII nor the Equal Pay Act meaningfully
addresses this problem. As noted above, occupational segregation does
not fully explain the gap in men's and women's earnings; a substantial
wage gap exists even controlling for occupation and job held. But some
portion of the gap is attributable to the lower levels of pay drawn by
workers in female-dominated occupations compared to workers in
predominantly male occupations performing of work of equivalent skill,
effort and responsibility. Because the Equal Pay Act applies only if
male and female employees are paid differently to do substantially the
same jobs, it has no application in this setting. While title VII
encompasses a broader set of claims than the Equal Pay Act, it too has
a very limited applicability to the suppression of women's wages due to
occupational segregation.
In theory, title VII provides a remedy for employees whose wages
are suppressed because they work in jobs predominantly filled by women.
To succeed on such a claim, however, the plaintiffs must prove that the
employer paid those jobs less precisely because they were held by
women, that is, because of intentional discrimination. The leading case
is County of Washington v. Gunther,\48\ in which female prison guards
(who guarded female prisoners) claimed pay discrimination because they
were paid less than male prison guards (who guarded male prisoners),
even though the lower court had found these jobs not to be similar
enough for the Equal Pay Act. The plaintiffs argued that the
underpayment of the women violated title VII, and relied on a pay
equity study commissioned by the county which had thoroughly analyzed
the jobs and recommended that the women guards earn 95 percent of what
the male guards earned. The county did not implement this
recommendation and continued to pay the women guards substantially
less, a decision that the plaintiffs attributed to discriminatory
intent. The Supreme Court allowed the plaintiffs to proceed on this
claim under title VII, but reiterated the requirement that they prove
intentional discrimination underlying the decision to pay them less.
---------------------------------------------------------------------------
\48\ County of Washington v. Gunther, 452 U.S. 161 (1981).
---------------------------------------------------------------------------
In practice, this is a nearly insurmountable hurdle.\49\ For
example, in one of the more well-known, large-scale pay discrimination
challenges to be brought under title VII, AFSCME v. Washington
State,\50\ female State employees lost their title VII challenge to the
State's practice of paying substantially lower salaries for jobs
predominantly held by women. The plaintiffs failed to show that the
State's failure to implement the recommendations of a pay equity study
it had commissioned amounted to a discriminatory intent.
---------------------------------------------------------------------------
\49\ See, e.g., E.E.O.C. v. Sears Roebuck & Co., 839 F.2d 302, 340-
42 (7th Cir. 1988) (stressing the ``limited scope'' of Gunther and
holding that only ``clear and straightforward'' evidence of
discriminatory intent would suffice to make out a title VII pay
discrimination claim not based on equal work); Plemer v. Parsons-
Gilbane, 713 F.2d 1127, 1133 (5th Cir. 1983) (in a title VII claim for
pay discrimination not involving equal work, plaintiffs must show a
``transparently sex-
biased system for wage determination'' or ``direct evidence'' of
discriminatory intent).
\50\ 770 F.2d 1401 (9th Cir. 1985).
---------------------------------------------------------------------------
And yet, the absence of a demonstrable discriminatory intent in
these and similar cases should not be taken to mean that pay
differentials between male-dominated and female-dominated jobs
involving equivalent work are based on gender-neutral, unbiased market
criteria. An analysis of the underlying data in the AFSCME case by two
sociologists who study large organizations found that the State's pay
scales did not passively reflect market wages, but stemmed from a
discretionary and subtle sex-stereotyping of jobs that linked the pay
of certain women's jobs to benchmarks comprised of other women's jobs,
instead of comparing them to more highly paid and more objectively
similar male-dominated jobs. The resulting pay differential reflected a
sex-stereotyping of jobs and the lesser political clout of women
workers in the State's very political and subjective pay-setting
process.\51\
---------------------------------------------------------------------------
\51\ See Martha Chamallas, The Market Excuse, 68 U. Chicago L. Rev.
579 (2001) (reviewing Robert L. Nelson and William P. Bridges,
Legalizing Gender Inequality: Courts, Markets and Unequal Pay for Women
in America (1999)).
---------------------------------------------------------------------------
In a similar case, female clerical workers lost their title VII
case against a public university because the court found that the lower
pay for those jobs compared to male-dominated jobs requiring a similar
level of skill was not based on a demonstrable discriminatory
intent.\52\ However, the same organizational sociologists cited above
found, after scouring the records in the case, that the university had
rejected a consulting firm's recommendations to close this pay gap
because of institutional bias favoring the male workers. In particular,
the male workers were more confrontational in their dealings with the
university while the clerical workers were more patient and
cooperative. As a result, organizational politics and institutional
bias led the university to ``give selective attention to the demands of
workers in predominantly male jobs,'' resulting in their higher
pay.\53\ Current law does not reach this kind of institutionalized
gender bias. The Fair Pay Act would bring much-needed scrutiny to these
kinds of discriminatory practices.
---------------------------------------------------------------------------
\52\ Christensen v. Iowa, 563 F.2d 353 (8th Cir. 1977).
\53\ Chamallas at 587 (quoting Nelson and Bridges at 166).
---------------------------------------------------------------------------
In conclusion, it is heartening to see this committee turn its
attention to the important issue of pay equity. Both the Paycheck
Fairness Act and the Fair Pay Act would go a long way toward
strengthening the ability of existing Federal discrimination laws to
ensure that all American workers are paid a nondiscriminatory wage
without regard to gender, race, national origin or religion.
Senator Dodd. Thank you very much, Ms. Brake.
Ms. Frett.
STATEMENT OF DEBORAH L. FRETT, CHIEF EXECUTIVE OFFICER,
BUSINESS AND PROFESSIONAL WOMEN'S FOUNDATION, WASHINGTON, DC
Ms. Frett. Chairman Dodd, Ranking Member Enzi,
distinguished members of the committee, and my fellow
panelists, thank you for this opportunity to testify today on
behalf of the Business and Professional Women's Foundation in
support of equal pay for women and the Paycheck Fairness Act.
Business and Professional Women's Foundation partners with
women, employers, and policymakers to create successful
workplaces that practice and embrace diversity, equity, and
work-life balance. We have a network of supporters, which
includes both employers and employees across the country. And
both our employee and employer members support pay equity
because they know it is good for business and workers.
We submitted written remarks for you, which you all have.
Today, I would just like to highlight a few key points.
One of the most significant trends of the past 50 years has
been the movement of women into the paid labor force and the
growth of women-owned businesses. Women now make up half of the
U.S. workforce, and women-owned firms represent 30 percent of
all U.S. businesses. But despite all these gains, the Census
Bureau reports that, on average, full-time working women only
earn 77 cents to every dollar earned by men.
And things are even worse for African-American and Latino
women who earn an average of 10 to 20 percent less than their
Caucasian female colleagues. This wage gap is not simply a
result of women's education levels or personal choices and
hurts working women, their families, employers, and the economy
now and in the future.
According to a World Economic Forum study released this
week, the gender gap is costing companies profits and the
Nation a significant amount in economic growth. Additionally,
wage discrimination lowers a woman's total lifetime earnings
and reduces benefits from Social Security and retirement plans,
inhibiting the ability to save not only for retirement, but for
other lifetime goals, such as buying a home and paying for a
college education.
The Paycheck Fairness Act will empower women to negotiate
for equal pay, create incentives for employers to follow the
law, and strengthen Federal outreach, training, and enforcement
efforts. Investing in policies that attract women is simply
good for business. Companies that hire and retain more women
gain a competitive edge, show stronger financial performance,
and are able to access a larger pool of talent.
Simply put, equitable pay practices improve the bottom line
and result in improved employee retention, positive human
capital outcomes, and a much more productive workforce. In
fact, the World Economic Forum's research estimates that
closing the employment gender gap could increase the U.S. gross
domestic product by up to 9 percent.
Women business owners know that hiring women and paying
them equally is good for business. A quest for fair pay is
often the reason women leave an employer to start their own
company. Business owners like Debra Ruh support the Paycheck
Fairness Act. Ms. Ruh owns TecAccess in Rockville, VA. She told
BPW Foundation it would never occur to her to pay a woman less
than a man. It would be short-sighted and bad for business
because she would lose out on a creative, innovative, and loyal
workforce.
It is supremely unfair to business owners like Debra Ruh,
who are doing right by their employees, to have to compete on
an unfair playing field against companies that discriminate and
pay their women workers less. The current system creates a
competitive advantage for discriminatory employers, and that is
just not fair.
Now, businesses have nothing to fear from this bill. Under
the Paycheck Fairness Act, businesses will still be allowed to
pay their employees differently based on merit, quantity or
quality of production, seniority, education, training,
experience, or cost-of-living.
The clarification of the establishment requirement for
comparing wages will help businesses because it will be more
clear and consistent. There is funding for education programs,
technical assistance for employers, and negotiation training to
educate and empower women and girls. Employers that do right by
their employees will be recognized by the Department of Labor.
The premise that this bill will bankrupt employers through
an explosion of litigation and damages awards is just not true.
As long as employers are paying equal pay for equal work, they
have nothing to fear. And employers will not have to pay
damages if the pay disparity was unintentional.
Businesses with written policies and a transparent
evaluation process will find compliance easy and litigation
less. The Paycheck Fairness Act's approach would ensure that
women can obtain the same remedies as those subject to
discrimination on the basis of race or national origin.
Businesses already operate under these regulations. So there is
nothing new for them to understand or learn.
In conclusion, BPW Foundation believes in a three-pronged
approach to creating a successful workplace. Legislation, like
the Paycheck Fairness Act and Fair Pay Act, partnering with
businesses to proactively implement and update their own
workplaces.
As Senator Dodd pointed out, the military is a business
with clear pay equity policies. Military pay is published
annually in a table available for all to see. BPW Foundation
has conducted ground-breaking research on this unique cohort of
women as they transition from active duty to the civilian
workforce.
What we have found out is that among the women veterans we
surveyed, 72.3 percent said the one thing that was very
important to them in a civilian job was fair compensation.
Isn't it noteworthy and a rather sad commentary that women
veterans start to experience unequal pay practices when they
transition to the civilian workforce?
We also believe in the final prong being empowering women
through education. In fact, BPW Foundation's Red to Green
Project, which trains women in jobs for the green economy, has
Climb Wyoming as one of the benefactors. We must ensure that
all careers can be pursued equally by all genders.
Pay equity is important to Business and Professional
Women's Foundation because it is important to the well-being of
working women, their families, and workplaces. The Paycheck
Fairness Act will help to rebuild the workforce and transform
workplaces into those that work for women, their families, and
employers.
Thank you.
[The prepared statement of Ms. Frett follows:]
Prepared Statement of Deborah L. Frett
Pay Equity is Good for Business and Good for Working Women
summary
Business and Professional Women's Foundation partners with women,
employers and policymakers to create successful workplaces that
practice and embrace diversity, equity and work-life balance. We have a
network of supporters which includes both employers and employees
across the country and both our employee and employer members support
pay equity because they know it's good for business and workers.
One of the most significant trends of the past 50 years has been
the movement of women into the paid labor force and the growth of
women-owned businesses. Women now make up half of the U.S. workforce
and women-owned firms represent 30 percent of all U.S. businesses. But
despite all these gains, the Census Bureau reports that, on average,
full-time working women earn only 77 cents to every dollar earned by
men. This wage gap is not simply a result of women's education levels
or personal choices and hurts working women and employers today and in
the future.
The Paycheck Fairness Act and the Fair Pay Act will empower women
to negotiate for equal pay, create incentives for employers to follow
the law, and strengthen federal outreach, training and enforcement
efforts.
Investing in policies that attract women is simply good for
business. Companies that hire and retain more women gain a competitive
edge, show stronger financial performance and are able to access a
larger pool of talent. Equitable pay practices result in improved
employee retention, positive human capital outcomes and a more
productive workforce. Women business owners know that hiring women and
paying them equally is good for business. The current system is unfair
to those employers who treat their employees fairly because it creates
a competitive advantage for discriminatory employers.
Business has nothing to fear from the Paycheck Fairness Act.
Under the Paycheck Fairness Act, businesses will still be
allowed to pay their employees differently based on merit, quantity or
quality of production, seniority, education, training, experience or
cost of living.
The clarification of the ``establishment'' requirement for
comparing wages will help businesses because it is clear and
consistent.
There is funding for education programs, technical
assistance for employers and negotiation training to educate and
empower women and girls.
Employers that do right by their employees will be
recognized by Department and Labor.
As long as employers are paying equal pay for equal work, they have
nothing to fear. Businesses with clearly written policies and practices
which are implemented as well as a proactive review of the wages of
existing employees will find compliance easy.
BPW Foundation believes in a three-pronged approach to creating a
successful workplace.
1. Legislation like the Paycheck Fairness Act and the Fair Pay Act;
2. Partnering with businesses to proactively implement and update
their own workplace policies; and
3. Empowering women through education.
Pay equity is important to Business and Professional Women's
Foundation because it is important to the well-being of working women,
their families and workplaces. The Paycheck Fairness Act and the Fair
Pay Act will help to rebuild the workforce and transform workplaces
into those that ``work'' for women, their families and employers.
______
introduction
Chairman Harkin, Ranking Member Enzi and distinguished members of
the committee, thank you for this opportunity to testify today on
behalf of Business and Professional Women's Foundation in support of
equal pay for women and the Paycheck Fairness Act (S. 182) and the Fair
Pay Act (S. 904).
Business and Professional Women's Foundation (BPW Foundation)
partners with women, employers and policymakers to create successful
workplaces that practice and embrace diversity, equity and work-life
balance. Through our groundbreaking research and our unique role as a
convener of employers and employees, BPW Foundation leads the way in
developing and advocating for policies and programs that ``work'' for
both women and businesses. A successful workplace is one where women
can succeed and businesses can profit.
BPW Foundation has a network of supporters that includes both
employers and employees in every community across the country. Both our
employee and employer members support pay equity because they know it's
good for business and workers.
seventy-seven cents on the dollar
Forty-seven years after President John F. Kennedy signed the Equal
Pay Act ensuring ``equal pay for equal work,'' the Census Bureau
reports that in 2008, on average, full-time working women earn 77 cents
to every dollar earned by men annually. At the time of the Equal Pay
Act's passage in 1963, women earned 59 cents to every dollar earned by
men, but progress has slowed and the gender wage gap closed by less
than a penny between 2007 and 2008. Things are even worse for women of
color. In 2009, the ratio of women's to men's weekly earnings was 80.2
percent, but African-American women on average only earned 68.9 percent
for every dollar earned by a white male per week, and Hispanic/Latina
women only 60.2 cents.\1\
---------------------------------------------------------------------------
\1\ Institute for Women's Policy Research Fact Sheet. The Gender
Wage Gap: 2009. March 2010. http://www.iwpr.org/pdf/C350.pdf. Annual
data for 2009 is not yet available.
---------------------------------------------------------------------------
This wage gap is not simply a result of women's education levels or
personal choices.\2\ A 2003 Government Accountability Office study
concluded that even after accounting for ``choices'' such as work
patterns and education, women earn an average of 80 cents for every
dollar that men earn.\3\ Moreover, the Government Accountability Office
has found that women with children earn about 2.5 percent less than
women without children, while men with children enjoy an earnings boost
of 2.1 percent, compared with men without children. So mothers pay a
penalty for their choices while fathers receive a bonus.
---------------------------------------------------------------------------
\2\ U.S. Department of Education, National Center for Education
Statistics, Baccalaureate and Beyond Longitudinal Study, 1993/2003;
Bureau of Labor Statistics, Employment Status of Women by Presence and
Age of Youngest Child, Marital Status, Race, and Hispanic of Latino
Ethnicity, 2004, http://www.bls.gov/cps/wlf-table6-2005.pdf.
\3\ General Accounting Office, Women's Earnings: Works Patterns
Partially Explain Difference Between Men's and Women's Wages, GAO-04-
35, October 2003, http://www.gao.gov/new.items/d0435.pdf.
---------------------------------------------------------------------------
This persistent wage gap not only impacts the current economic
security of women and their families; it directly affects the future
financial security of many U.S. families. Women lose an average of
$434,000 in income over a 40-year career due to the gender wage gap.\4\
Wage discrimination lowers total lifetime earnings, reducing women's
benefits from Social Security and pension plans and inhibiting their
ability to save not only for retirement but for other lifetime goals
such as buying a home and paying for a college education.
---------------------------------------------------------------------------
\4\ Jessica Arons, Lifetime Losses: The Career Wage Gap, Center for
American Progress Action Fund, December 2008, http://
www.americanprogressaction.org/issues/2008/pdf/equal_pay
.pdf.
---------------------------------------------------------------------------
Although enforcement of the Equal Pay Act as well as other civil
rights laws has helped to narrow the wage gap, significant disparities
remain and need to be addressed. Senators, although the gap has
narrowed, it is now time for you to weigh in with your votes to help to
continue to close the gap. This issue is still vital to both the growth
and economic health of businesses but also the growth and economic
health of individual women. The Paycheck Fairness Act (S. 182) and the
Fair Pay Act (S. 904) will strengthen the Equal Pay Act in ways
necessary to guarantee that women workers are not shortchanged solely
because of their gender.
The Lilly Ledbetter Fair Pay Act, signed into law on January 23,
2009, ensured that victims of discrimination have fair access to the
courts. Passage of the Lilly Ledbetter Fair Pay Act in the first days
of the 111th Congress was clear recognition that wage discrimination is
still a very real problem in the United States, but additional changes
are still needed to close the persistent gap between men's and women's
wages.
pay equity is good for business
One of the most significant trends of the past 50 years has been
the movement of women into the paid labor force and the growth of
women-owned businesses. Women now make up half of the U.S. workforce
and are projected to account for 49 percent of the increase in total
labor force growth between 2006 and 2016.\5\ Women-owned firms
represent 30 percent of all U.S. businesses and between 1997 and 2004
the number of women-owned firms increased by 17 percent nationwide--
twice the rate of all firms.\6\
---------------------------------------------------------------------------
\5\ U.S. Department of Labor, Bureau of Labor Statistics,
Employment and Earnings, 2008 Annual Averages and the Monthly Labor
Review, November 2007.
\6\ Ibid.
---------------------------------------------------------------------------
Investing in policies that attract women is simply good for
business. Companies that hire and retain more women gain a competitive
edge. These companies show stronger financial performance and are able
to draw from a broader pool of talent in an era of talent shortages.
The jobs of the future are going to call for more education, more
critical thinking and more compassion--all skills women have in
abundance. Research shows a correlation between high numbers of female
senior executives and stronger financial performance. According to
McKinsey and Company research, companies worldwide with the highest
scores on nine key dimensions of organization--from leadership and
direction to accountability and motivation--are likely to have higher
operating margins than their lower ranked counterparts. Among the
companies for which information on the gender of senior managers was
available, those with three or more women on their senior-management
teams scored higher on all nine organizational criteria than did
companies with no senior-level women.\7\ Companies that have moved
successfully to increase the hiring, retention and promotion of female
executives tend to perform better financially.
---------------------------------------------------------------------------
\7\ Ibid.
---------------------------------------------------------------------------
Pay equity is good for business and will result in improved
employee retention, positive human capital outcomes, and a more
productive work force. In addition to talent, acquisition gender
diversity helps companies meet business goals. One European Commission
study showed that 58 percent of companies with diversity programs
reported higher productivity as a result of improved employee
motivation and efficiency, and 62 percent said that the programs helped
attract and retain highly talented people.\8\
---------------------------------------------------------------------------
\8\ Ibid.
---------------------------------------------------------------------------
Women business owners know that hiring women and paying them
equally is good for business. A quest for fair pay is often the reason
highly skilled women leave an employer to start their own companies.
Business owners like Debra Ruh support the Paycheck Fairness Act. Ms.
Ruh owns TecAccess in Rockville, VA. TecAccess is a consulting firm
that helps companies update their web and information technology
systems in order to reach and better serve people with disabilities.
Like many women business owners, Ms. Ruh struck out on her own so that
she could run a business her way. She told BPW Foundation it would
never occur to her to pay a woman less than a man; it would be short-
sighted and bad for business--she would lose out on a creative,
innovative and loyal workforce. It would be supremely unfair to
business owners like Debra Ruh who are doing right by their employees
to have to compete on an unfair playing field against companies that
discriminate and pay their women workers less.
Ms. Ruh could not be here today because she is busy running her
business, but she wanted me to tell her story.
``I created my business because people with disabilities do
not have equal access to employment. It is sad that after so
many years in the workforce, women still do not get paid the
same as their male counterparts. If we can't pay women equal
pay, it causes all other minority groups to become more and
more disenfranchised. It is hard to believe that today, women
are not paid fair and equal wages compared to their male peers.
Many countries look to the United States to lead the way with
civil rights and it is time to pay women what they deserve.
Please support the Paycheck Fairness Act.''
Many employers recognize that eliminating pay differentials makes
good business sense and can help with competitiveness, worker retention
and productivity. Another such employer is business owner Heather
Jernberg, a partner at Boreas Group, a management consulting firm that
specializes in technology planning for utility companies in Denver, CO.
The Boreas Group is 7-years old and nets over $1 million a year. Ms.
Jernberg supports the Paycheck Fairness Act.
``I believe that all workers have a right to know what their
peers are earning, in order to negotiate the best possible
salary for themselves. By prohibiting employer retaliation,
women and men will be able to research wages without fear of
recrimination at their company. I have worked for organizations
where my salary was published in the local paper and companies
where I risked being fired for discussing my paycheck with co-
workers. I prefer full disclosure of wage information.''
paycheck fairness act (s. 182)
The Paycheck Fairness Act will update and strengthen the Equal Pay
Act, closing loop holes and improving the law's effectiveness. The
Equal Pay Act of 1963 has not lived up to its promise to provide
``equal pay for equal work.'' The Paycheck Fairness Act would take
meaningful steps to empower women to negotiate for equal pay, create
incentives for employers to follow the law and strengthen Federal
outreach and enforcement efforts. BPW Foundation has been fighting for
equal pay for women for over 90 years and supports the Paycheck
Fairness Act because it is a common-sense approach to closing the gap
between men's and women's wages.
The Paycheck Fairness Act will:
clarify the justifiable reasons for wage disparities and
what ``establishment'' means when comparing wages;
prohibit retaliation for disclosing wages;
increase training, data collection and education on the
gender wage gap; and
develop voluntary guidelines for employers and recognize
model employers.
Under the Paycheck Fairness Act, businesses will still be allowed
to reward employees with merit and performance-related increases. Wage
differentials based on merit, quantity or quality of production,
seniority, education, training or experience are still allowed under
the law. However, if a business wants to pay men and women doing the
same job differently, there must be a business reason for doing so.
Discrimination based on factors that are used as substitutes for gender
such as a male worker's stronger salary negotiation skills or an
assumption that women will work for less would not be allowed.
The clarification of the ``establishment'' requirement will help
businesses. Currently, courts in different jurisdictions have
interpreted the establishment requirement in the Equal Pay Act
differently which has led to unpredictability. Some courts have defined
the term ``establishment'' narrowly to mean only employees in the same
building. The Paycheck Fairness Act clarifies that a comparison between
employees to determine fair wages need not be between employees in the
same physical place of business. The Paycheck Fairness Act allows
plaintiffs to compare their pay to individuals doing the same job at a
location within the same county, parish or similar geographic
jurisdiction.
The Paycheck Fairness Act addresses the causes of the wage gap
along with the results. This legislation would provide funding for
education programs, employer guidelines and technical assistance as
well as recognition of good practices by employers. In addition, there
is a competitive grant program to develop salary negotiation training
for women and girls. The Paycheck Fairness Act also recognizes that
there are many employers doing right by their employees and establishes
a recognition program through the Department of Labor for those
employers.
Employers in violation of the Equal Pay Act receive an unfair
advantage. The current system is unfair to those employers who treat
their employees fairly because it creates a competitive advantage for
discriminatory employers. Currently, it is worthwhile for some
businesses to pay a woman less than her male counterparts, and gamble
that she won't sue for back wages in the future. If she doesn't sue,
the employer keeps the ``savings''; if she does, the employer only has
to pay 2 years of back pay. This encourages discriminatory pay.
Employers will NOT have to pay damages if the pay disparity was
unintentional. Punitive damages are only awarded if the plaintiff can
demonstrate that the employer acted with malice or reckless
indifference.
Employers are allowed to pay workers at some work sites more
because the cost of living is higher in that location. Under the
Paycheck Fairness Act, employers can justify wage disparity based on
objective and identifiable differences in the cost of living. The
Paycheck Fairness Act clarifies that a plaintiff can only compare her
pay to that of an individual doing the same job at a location within
the same county.
The Paycheck Fairness Act does not impose onerous data collection.
The Paycheck Fairness Act would require the Equal Employment
Opportunity Commission to develop regulations directing employers to
collect gender wage data which they already collect for race and
national origin in compliance with title VII.
business has nothing to fear
The Paycheck Fairness Act will not bankrupt employers through an
explosion of court cases, class-action lawsuits and damages awards as
long as they are paying equal pay for equal work. Businesses which have
clearly written policies and practices and proactively review the wages
of existing employees will find compliance with the Paycheck Fairness
Act easy. Development and adoption of formal, written pay equity
policies are crucial to addressing the gender wage gap. Such policies
lay the groundwork for unbiased compensation systems and provide
metrics for analyzing salaries to identify disparities.
The Paycheck Fairness Act would ensure that women can obtain the
same remedies as those subject to discrimination on the basis of race
or national origin. The Paycheck Fairness Act extends to victims of
sex-based discrimination the same standards for class action lawsuits
and the same options for damages that are currently available in cases
of race-based or national origin discrimination. The Equal Pay Act does
not currently allow the award of compensatory or punitive damages.
Currently, women who have been unfairly paid less than their male
counterparts are only entitled to recover 2 years of their unpaid
wages. Those subject to race and national origin discrimination are
eligible for compensatory or punitive damages and are not subject to
damages caps. Women and men who endure sex-based wage discrimination
should be entitled to the same remedies as those available in race and
national origin cases. These are regulations familiar to business and
with which they are already complying.
There are protections for business in existing law. There are
limits on improperly high verdicts. Punitive damages are only awarded
if the employer intentionally discriminated and acted with ``malice or
reckless indifference to the plaintiff 's federally protected rights.''
In addition, there are protections for business against excessive
damages awards in the legal process. If a judge feels a jury award is
excessive, the judge can reduce or vacate the amount. Finally, there
are constitutional limitations on the amount of punitive damages that a
plaintiff can receive.
fair pay act (s. 904)
The persistent gap between men's and women's wages requires a many
pronged approach. That is why BPW Foundation also supports the Fair Pay
Act (S. 904). The Fair Pay Act would require equal pay for equivalent
jobs--jobs that are comparable in skill, effort, responsibility and
working conditions. This ``equivalent'' requirement is not present in
the Paycheck Fairness Act. The Paycheck Fairness Act does not address
``comparable worth'' or apply any such guidelines to employers.
The Fair Pay Act would also require employers to disclose pay
scales and pay rates, but not individual salary information, for all
job categories at a given company. Providing information will prevent
costly litigation and encourage informed pay discussions between
employees and employers. Right now, women who suspect pay
discrimination must file a lawsuit and go into a drawn out legal
discovery process to find out whether they make less than the man
beside them. With pay statistics readily available, this expensive
process could be avoided. The number of lawsuits would surely decrease
if employees could see up front that they were being treated fairly.
eliminating the wage gap is good for families and for business
Making the workplace a level ``paying'' field is good for women,
their families and business. If the wage gap were eliminated, annual
family income would increase by $4,000. Single mothers would take home
an average of 17 percent more; single women, 13.4 percent; and married
women, 6 percent in income if they were paid fairly.\9\ Additionally,
society loses out on tax revenue and purchasing power from women who
are not paid a fair wage.
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\9\ AFL-CIO & Institute for Women's Policy Research, Equal Pay for
Working Families: National and State Data on Pay Gap and its Costs,
1999. http://www.iwpr.org/pdf/C343.pdf.
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BPW Foundation believes in a three-pronged approach to creating a
successful workplace.
1. Legislation like the Paycheck Fairness Act and the Fair Pay Act;
2. Working with businesses to proactively implement and update
their own workplace policies; and
3. Empowering women through education.
Pay equity is important to BPW Foundation because it is important
to the well-being of working women, their families and workplaces. The
Paycheck Fairness Act will move us along the road toward successful
workplaces for employers and employees.
Thank you.
Senator Dodd. Thank you very, very much. Appreciate it.
Ms. McFetridge, thank you.
STATEMENT OF JANE M. McFETRIDGE, ESQ., PARTNER, JACKSON LEWIS
LLP, CHICAGO, IL
Ms. McFetridge. Mr. Chairman and members of the committee,
thank you for this opportunity to testify here today.
I represent employers in claims of employment
discrimination. My firm represents thousands of employers who
will be severely impacted should the Paycheck Fairness Act
become law.
For the last 30 years, I have been an active member of the
U.S. workforce, and for more than 20 of those years, I have
represented companies in labor and employment disputes. I am an
employer myself. I am also a working mother of two daughters,
one of whom is in college and, hopefully, will be joining the
workforce herself in the near future.
The Paycheck Fairness Act is theoretically designed to help
people like me and to lay a better foundation for my daughters
and women of their generation. If I thought for a moment that
the act would help women generally or, more specifically, my
daughters and their peers, I would not be here testifying
today.
The Paycheck Fairness Act will very negatively impact
businesses in this country and the people who comprise them,
including women, for a number of reasons. First, the act would
provide unlimited punitive and compensatory damages for any
size business. In effect, the act proposes a legal and
regulatory schematic akin to what is currently in effect in
California, pursuant to that State's laws, which provide for
unlimited damages in discrimination cases.
One does not need to be a practitioner of labor and
employment law, or even a lawyer, to take note of the problems
this has caused in California. California has many, many times
more litigation of this nature than any other State in the
country. And the cost of doing business there is significantly
higher than in other locations.
Indeed, I have clients who have made the affirmative
decision not to do business in California for this very reason,
even though the State has large markets that would otherwise
readily lend themselves to their business models.
The act also provides for opt-out class actions. When
coupled with unlimited damages, there would be a watershed of
this type of extraordinarily oppressive and expensive
litigation. Historically, damages caps have been effective to
both deter frivolous lawsuits and to protect employers,
especially small businesses, from financial ruin as a result of
unusually large awards. The pending legislation has no such
constraints and thus has the potential to cripple companies,
particularly smaller businesses.
The result is untenable in light of President Obama's
recent statements about small businesses being one of the
biggest drivers of employment that we have, as well as recent
efforts by Congress to spur job creation through a variety of
record-setting costly stimulus and job creation initiatives. In
the midst of this financial crisis, we should be encouraging
small businesses to expand, not making it more difficult for
them to operate and survive.
Second, the act proposes extraordinarily complex changes to
affirmative defenses available to employers in claims of this
nature. It will take years of costly litigation to sort out
what is meant by these new affirmative defenses with our courts
serving as super human resources departments, a role they have
long decried.
In the meantime, employers are left with little guidance as
to how to conduct their businesses under this new paradigm.
Small businesses may not have a human resources professional,
let alone a compensation expert or an in-house counsel. Such
businesses are not going to be in a position to determine if
their pay practices comply with the new affirmative defense
parameters.
As a practical matter, there is simply no way an employer
will be able to demonstrate that each and every pay
determination it makes is consistent with business necessity.
There may be dozens or hundreds of factors that go into
determining an employee's compensation--some objective and some
subjective, and all of which are legitimate nondiscriminatory
bases.
Consider, for example, jobs that require personal
interaction, like a waitress or a salesperson. Under title VII,
employers may consider unquantifiable qualities, such as a
friendly disposition or positive attitude. This is also true
currently under the Equal Pay Act. Under the Paycheck Fairness
Act, however, pay differentials based upon such immeasurable
qualities may be impermissible.
Consider also a company, for instance, a retail
establishment, that has made the decision to give hiring
preferential for entry-level sales positions to applicants with
college degrees, even though a salesperson probably doesn't
need a college degree to do that particular job.
Under the proposed legislation, the company's
nondiscriminatory preference for college graduates could be
challenged as not consistent with business necessity. In this
scenario, it is the government and not the business owner who
would be making decisions about how businesses should run.
The fact that there is an unexplained gender wage gap,
which, by many calculations, is as little as 5 percent, does
not mean that the differential is attributable to
discrimination, as proponents of the Paycheck Fairness Act
suggest. Rather, it means only what it states, that there is an
unexplained differential.
The pay differential has steadily improved over the last 40
years, and there is no reason to believe that the current legal
landscape, which has ushered in this change, will not continue
to address the issues that remain, particularly with robust
diversity initiatives and training programs, such as that
discussed by Senator Enzi, that enable women to assume higher-
paying nontraditional positions.
A review of EEOC statistics further demonstrates the point.
In 2009, the EEOC found reasonable cause in only 4.6 percent of
the EPA charges and 5 percent of the title VII sex
discrimination charges that it received, demonstrating the vast
majority of employees who filed charges do not have valid
claims. Moreover, in claims where the EEOC found a basis to
proceed, successful parties received over $126 million in
compensation, proof positive that the EEOC is already
identifying and compensating the true victims of pay
discrimination.
The Paycheck Fairness Act would not only discourage
employers from creating new jobs. It may force them to
eliminate existing jobs if large components of their operating
budgets are diverted from payroll to defending unnecessary
litigation prompted by the passage of this legislation.
I have heard proponents of this suggest that baseless
claims would be readily dismissed. Anyone suggesting that has
not personally been involved with litigation of this nature. I
know firsthand that baseless claims can take years to resolve,
years during which companies spend thousands and thousands of
dollars responding to discovery, diverting personnel to assist
the lawyers with the litigation, and paying their outside
counsel.
And I should also note that many of the people involved
with that litigation are women themselves, either in managerial
roles or as witnesses. Many companies just throw in the towel
early on to avoid these protracted costs and disruptions.
Creating greater incentives for baseless litigation will only
increase the problem.
At its core, the Paycheck Fairness Act will cause confusion
in the workplace and in the courts. It will take years of
expensive litigation to understand and define its terms. The
plaintiffs' bar will benefit. My firm, and me personally, may
well benefit. My daughters and working women across the
country, however, will not.
Though we are not quite at the finish line, our existing
legal framework, including title VII and the EPA and the Lilly
Ledbetter Act, has proven successful in narrowing the wage gap.
It would be ill-advised to disrupt this framework with
legislation that will do nothing but impede the ability of
American companies to compete in the global marketplace.
Thank you.
[The prepared statement of Ms. McFetridge follows:]
Prepared Statement of Jane M. McFetridge, Esq.
Mr. Chairman and members of the committee, thank you for this
opportunity to testify on S. 182, the Paycheck Fairness Act. My name is
Jane McFetridge. I am a Partner at Jackson Lewis LLP, where I manage
the firm's Chicago office.\1\ Jackson Lewis is a national law firm of
over 600 lawyers in 45 offices, all of whom are dedicated exclusively
to the practice of labor and employment law. For over 20 years, I have
represented employers in all types of employment discrimination
litigation, including class actions, collective actions, and multi-
plaintiff lawsuits brought both by private parties and by the Equal
Employment Opportunity Commission. I also routinely counsel businesses,
from very small to extremely large, on a wide variety of human
resources and employment law-related issues and concerns, and have
spoken and written frequently on employment law topics in this subject
area. I have extensive experience dealing with the Equal Employment
Opportunity Commission and the U.S. Department of Labor, as well as
State and local labor and employment agencies throughout the United
States.
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\1\ The views expressed herein are my own.
---------------------------------------------------------------------------
You have asked me to speak about the Paycheck Fairness Act. As you
might expect, given my background and my area of practice, I have some
strong opinions on this topic. Those opinions are informed not just by
experience as an employment litigator, but as a working mother who has
been an active participant in the U.S. workforce for the last 30 years.
I am the mother of two daughters. One is in college now and will
hopefully join the workforce soon, and the other is a few years behind.
If I believed the Paycheck Fairness Act would advance the goal of
eradicating gender discrimination in the workplace, I would ardently
support the measure--not just for myself and others like me, but for my
two daughters and women of their generation. However, based upon my own
personal experience, as well as my legal work representing employers,
it is my unequivocal belief that passage of the Paycheck Fairness Act
is not the solution.
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.
Numerous studies demonstrate that women have made vast strides in
the workforce since enactment of the Equal Pay Act of 1963 and Title
VII of the Civil Rights Act of 1964.
Though we are not quite at the finish line, the existing legal
framework has proven successful in narrowing the wage gap and
compensating victims of unlawful discrimination. It would be ill
advised to disrupt that framework with onerous legislation that will do
nothing but impede the ability of American companies to compete in the
global marketplace, and serve no real ameliorative or beneficial
purpose, other than to increase financial opportunities for both the
plaintiffs' and defense bar.
current protections against gender-based pay discrimination
While women have not always enjoyed the same wages for the same
work as men, great inroads have been made over the past 45 years to
bring about pay equality between the sexes. Most notably, Congress has
passed two comprehensive pieces of legislation--the Equal Pay Act of
1963 (``EPA'') and Title VII of the Civil Rights Act of 1964 (``title
VII'')--which strike at the heart of gender-based pay discrimination.
In addition to the EPA and title VII, which will be discussed in more
detail below, many States also have their own laws that prohibit
employers from discriminating against women. For instance, my home
State of Illinois has passed both the Illinois Equal Pay Act and the
Illinois Human Rights Act, both of which prohibit Illinois employers--
many of whom are not covered by the Federal EPA or title VII--from
discriminating on the basis of sex with respect to compensation.
Additionally, Executive Order 11246, enforced by the Office of Federal
Contract Compliance Programs (``OFCCP''), prohibits Federal contractors
and subcontractors from discriminating in employment decisions on the
basis of sex. This legislative and executive framework, when taken in
conjunction with voluntarily-implemented diversity initiatives and
training programs, provides sufficient assurances that we as a country
are well on our way to addressing any remaining pay disparity that may
exist between the sexes as a result of unlawful discrimination.
Mechanics of the EPA.--Enacted by Congress in 1963, the EPA
provides that no employer may pay a female employee less than a male
employee for ``substantially equal'' work. To present a prima facie
case of discrimination under the EPA, a plaintiff must show that an
employer pays workers of one sex more than workers of the opposite sex
for jobs substantially equal in skill, effort, and responsibility,
assuming those jobs are performed under similar working conditions
within the same establishment. Where this is the case, an employer will
be held liable unless it can demonstrate that the differential results
from: (i) a seniority system; (ii) a merit system; (iii) a system which
measures earnings by quantity or quality of production; or (iv) any
factor other than sex.\2\ Critically, there is no requirement that a
plaintiff prove any discriminatory intent or animus on the part of her
employer in order to recover.\3\
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\2\ 29 U.S.C. 206(d)(1).
\3\ See 29 U.S.C. 206(d)(1) (making clear that the only relevant
inquiry is whether the alleged pay disparity resulted from ``any factor
other than sex''); Mickelson v. New York Life Ins. Co., 460 F.3d 1304,
1310-11 (10th Cir. 2006).
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Successful plaintiffs may recover back pay, front pay (if unlawful
retaliation is proven), prejudgment interest, attorneys' fees and
costs.\4\ Moreover, where willfulness is shown, an additional amount
equal to the back pay found to be due and owing may be awarded as
liquidated damages, and the defendant may also be fined up to $10,000
and imprisoned for up to 6 months.\5\
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\4\ 29 U.S.C. 216(b).
\5\ Id.; 29 U.S.C. 216(a).
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Since 1979, the EPA has been enforced by the Equal Employment
Opportunity Commission (the ``EEOC''), which may bring its own suits to
enforce the law.\6\
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\6\ In 1986, the EEOC issued detailed regulations entitled ``EEOC's
Interpretations of the Equal Pay Act,'' 29 CFR 1620, as amended. In
2006, additional regulations were issued, 29 CFR 1621, as amended.
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Mechanics of Title VII.--Similarly, title VII also prohibits
compensation discrimination on the basis of enumerated protected
characteristics--including sex.\7\ An employee may assert a claim for
gender-based pay discrimination by filing a charge of discrimination
with the EEOC and later bringing a lawsuit in Federal court upon
receipt of her notice of right to sue (regardless of whether the EEOC
finds ``cause'' for concluding that discrimination occurred). Employees
need not be represented by counsel to participate in the EEOC
processes, including the investigation of their charge. Indeed, as the
U.S. Supreme Court has reiterated, title VII ``sets up a `remedial
scheme in which lay persons, rather than lawyers, are expected to
initiate the process.' '' \8\ An attorney may also not be necessary at
the litigation stage should the EEOC determine to file suit on the
employee's behalf.
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\7\ 42 U. S. C. 2000e-2(a).
\8\ Federal Express Corp. v. Holowecki, 128 S. Ct. 1147, 1158 (Feb.
27, 2008).
---------------------------------------------------------------------------
Plaintiffs alleging gender-based pay discrimination in violation of
title VII may do so by either showing disparate treatment or disparate
impact. Generally, in a disparate treatment case, the McDonnell Douglas
burden-shifting analysis applies. A plaintiff must first establish a
prima facie case of pay discrimination. The burden then shifts to the
employer to offer evidence of a legitimate, non-discriminatory reason
for the pay differential. If the defendant meets this burden of
production, the burden then shifts back to the plaintiff to prove by a
preponderance of the evidence that the employer's explanation is a
pretext for unlawful sex discrimination.
In contrast, in a typical title VII disparate impact case, a
plaintiff must first identify a specific policy or practice with a
statistically significant adverse impact on women; the plaintiff need
not allege any discriminatory intent. Once the plaintiff has made this
showing, the burden then shifts to the employer to produce evidence
that the policy or action was ``job-related for the position in
question and consistent with business necessity.'' \9\ Ultimately, the
plaintiff may still prevail if she can prove that the employer refused
to adopt ``an available alternative employment practice that has less
disparate impact and serves the employer's legitimate needs.'' \10\
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\9\ 42 U. S. C. 2000e-2(k)(1)(A)(i).
\10\ Ricci v. DeStefano, 129 S. Ct. 2658, 2673 (June 29, 2009)
(referencing 42 U.S.C. 2000e-2(k)(1)(A)(ii) and (C)).
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Historically, an employer found guilty of pay discrimination under
title VII was subject to injunctive relief, as well as back and front
pay. When Congress passed the Civil Rights Act of 1991, however, it
made compensatory and punitive relief available in cases involving
unlawful intentional discrimination.\11\ To receive punitive damages,
which are subject to a statutory cap, the complaining party must show
that ``the respondent engaged in a discriminatory practice . . . with
malice or with reckless indifference to the federally protected rights
of an aggrieved individual.'' \12\
---------------------------------------------------------------------------
\11\ 42 U.S.C. 1981a(a)(1).
\12\ 42 U.S.C. 1981a(b)(1).
---------------------------------------------------------------------------
the existing legal framework is working and there is no evidence the
wage gap today, such as it is, stems from employer discrimination
Proponents of S. 182 oft-cite that, despite the existing legal
framework, women continue to make only 77 percent of men's wages. Not
only is this figure overly simplistic in that it is based on the median
earnings of men and women as compiled by the U.S. Census Bureau, but
the statistic is bandied about as if it were an automatic indication of
employers' discrimination against women. This is simply not the case.
During the past three decades, women have made notable gains in the
workforce and in pay equity, including significant gains in real
earnings, increased labor force participation, advances in educational
attainment, and employment growth in higher paying occupations. Indeed,
the U.S. Department of Labor (``DOL'') has recognized that while the
median usual weekly earnings for women working full-time in 1970 was
only 62.1 percent of those for men, the raw wage gap had shrunk from
37.9 percent to just 21.5 percent by 2007.\13\
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\13\ U.S. Department of Labor, Foreword to Consad Research
Corporation, An Analysis Of Reasons For The Disparity In Wages Between
Men And Women, at 1 (Jan. 12, 2009).
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Moreover, there are observable differences in the workforce
attributes of men and women that account for much of the remaining wage
gap. According to a January 2009 report prepared for the DOL by CONSAD
Research Corp., these variables include:
A greater percentage of women than men work part-time,
which tends to pay less than full-time work.
A greater percentage of women than men tend to leave the
labor force for child birth, or to care for their children or elderly
relatives. Part of the wage gap is explained by the percentage of women
who were not in the labor force during previous years, the number of
children in the home, and the age of women.
Women, especially working mothers, tend to value ``family
friendly'' employment policies more than men, and are often willing to
accept a lower paying job in return for such policies. Part of the wage
gap is therefore explained by industry and occupation, particularly,
the percentage of women who work in a particular industry and
occupation.\14\
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\14\ Id. at -1-2.
After adjusting for these non-discriminatory variables, the
adjusted gender wage gap is between 4.8 and 7.1 percent, and some, or
all, of the remaining differential may be explained by factors not
included in the CONSAD study due to data limitations.\15\ For instance,
the CONSAD study focused on wages rather than total compensation.\16\
Research indicates that women may value non-wage benefits more than men
do, and consequently choose to take a greater part of their
compensation in fringe benefits, such as health insurance.\17\
Furthermore, the fact that there is an unexplained gender wage gap does
not mean that the differential is attributable to discrimination, as
proponents of the Paycheck Fairness Act suggest. Rather it means only
what it states--that there is an unexplained differential.
---------------------------------------------------------------------------
\15\ Id. at 1.
\16\ Id. at 2.
\17\ Id.
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Similarly, according to a study of the Federal workforce conducted
by the U.S. Government Accountability Office (the ``GAO''), ``all but
about 7 cents of the [wage] gap can be explained by differences in
measurable factors such as the occupations of men and women and, to a
lesser extent, other factors such as education levels and years of
Federal experience.'' \18\ ``[F]actors for which we lacked data or are
difficult to measure, such as experience outside the Federal
Government, may account for some or all of the remaining pay gap.''
\19\ Even looking at the ``raw'' data, the wage gap in the Federal
workforce declined from 28 percent in 1988 to 11 percent in 2007.\20\
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\18\ United States Government Accountability Office, Women's Pay:
Converging Characteristics of Men And Women in the Federal Workforce
Help Explain the Narrowing Pay Gap, at 2 (Apr. 28, 2009) (Statement of
Andrew Sherrill, Director, Education, Workforce, and Income Security
Issues, Before the Joint Economic Committee, U.S. Congress).
\19\ Id.
\20\ Id.
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It is my firm belief that any wage gap between men and women is
unacceptable. However, it is important that we talk about real numbers
and not the misleading ``raw wage gap'' proponents of the Paycheck
Fairness Act repeatedly point to. Employers cannot control their
employees' educational and career choices. Nor can employers interfere
with an employee's choice to enter or leave the workforce, or work a
part or flex-time schedule, in order to care for her family. All an
employer can do is pay two similarly-situated employees the same salary
regardless of gender. That is what the law requires. Based on the
results of the CONSAD and GAO studies, this is also what most employers
appear to be doing. As the DOL stated in its Foreword to the CONSAD
report, ``[T]he raw wage gap should not be used as the basis to justify
corrective action. Indeed, there may be nothing to correct. The
differences in raw wages may be almost entirely the result of
individual choices being made by both male and female workers.'' \21\
---------------------------------------------------------------------------
\21\ U.S. Department of Labor, supra note 13, at 2.
---------------------------------------------------------------------------
the existing legal framework protects victims of unfair pay
discrimination
This is not to say that employers do not occasionally,
intentionally or otherwise, make discriminatory pay decisions based on
gender. When this occurs, both the EPA and title VII, as well as
commensurate State and local laws, provide multiple avenues for women
to pursue claims of unequal pay for equal work, including directly
bringing a lawsuit on their own behalf, filing a charge with the EEOC,
having the EEOC bring a lawsuit on their behalf, or bringing a
collective action or class action on behalf of similarly-situated
employees.
Multiple forms of redress are available to plaintiffs.--From an
employee's perspective, the EPA may be the most favorable and lenient
of the statutes with respect to both the ease of pursuing a claim
against an employer (without the need to first exhaust administrative
remedies) and the relatively low standard for establishing liability
(what amounts to strict liability). However, an employee may also
choose to bring a title VII claim in order to recover punitive and
compensatory damages (as opposed to back pay and liquidated damages) or
in order to institute an opt-out class action. Indeed, it is not
uncommon for women alleging pay discrimination to bring parallel claims
under both the EPA and title VII, as well as under State and local
antidiscrimination laws, to ensure that they receive the fullest
protection of the law. When parallel claims are brought, plaintiffs may
recover under both statutes for the same period of time provided they
do not receive duplicative recovery for the same ``injury.'' As such,
they may recover back pay, front pay, compensatory damages, liquidated
damage, punitive damages, and injunctive relief. As more fully
illustrated in the chart attached as Appendix 1, the passage of the
Paycheck Fairness Act will not increase the protections afforded to
women allegedly suffering pay discrimination.
Plaintiffs are taking advantage of existing statutes.--Proponents
of the Paycheck Fairness Act may point to EEOC and employment
litigation statistics to demonstrate that women are still victims of
unlawful compensation discrimination. What these statistics prove to
me, however, is that the average employee is well aware of her right to
be free of discrimination in the workforce, and readily seeks redress
when she feels her rights have been violated.\22\ Indeed, according to
the Statistical Abstract of the United States 2010, there were 13,036
employment cases commenced and 15,452 cases pending in U.S. District
Courts in 2008.\23\ There are thousands more pending in State courts
throughout the country.
---------------------------------------------------------------------------
\22\ Kevin M. Clermont & Stuart J. Schwab, How Employment
Discrimination Plaintiffs Fare in Federal Court, Journal Of Empirical
Legal Studies 429 (2004); See United States Courts Judicial Facts And
Figures, available at http://www.uscourts.gov/judicial
factsfigures/2008/all2008judicialfactsfigures.pdf (last visited Mar. 4,
2010).
\23\ U.S. District Courts--Civil Cases Commenced and Pending: 2000
to 2008, available at http://www.census.gov/compendia/statab/2010/
tables/10s0323.pdf (last visited Mar. 3, 2010).
---------------------------------------------------------------------------
At the administrative level, charge receipt statistics also remain
strong. In 2009, the EEOC received a total of 942 charges under the
EPA.\24\ The EEOC found ``reasonable cause'' in only 4.6 percent of the
charges, and successful parties received approximately $4.8 million in
compensation.\25\ In addition to EPA charges, in 2009, the EEOC
received 28,028 title VII sex discrimination charges generally, but
found ``reasonable cause'' in only 5 percent of the charges, with
successful parties receiving $121.5 million in compensation.\26\ These
statistics demonstrate that the EEOC identifies and obtains
compensation for true victims of pay discrimination. The statistics
also demonstrate, however, that the vast majority of charges lack
merit, as shown in the statistically small number of cause findings
made by the EEOC after they have thoroughly investigated and evaluated
the charging party's allegations of discrimination. Passage of the
Paycheck Fairness Act would only encourage additional frivolous
charges.
---------------------------------------------------------------------------
\24\ EEOC Equal Pay Act Charges, available at http://www.eeoc.gov/
eeoc/statistics/enforcement/epa.cfm (last visited Mar. 5, 2010).
\25\ Id.
\26\ EEOC Sex-Based Charges, available at http://
www.eeoc.govieeocistatistics/enforcement/sex.cfm (last visited Mar. 5,
2010).
---------------------------------------------------------------------------
Moreover, class-actions continue to serve as an aggressive
mechanism for both vindicating the rights of victims of pay
discrimination and incentivizing employers to root out any vestiges of
such discrimination. For example:
In 2004, Boeing Co. agreed to pay up to $72.5 million to
settle a sex-discrimination lawsuit filed on behalf of 29,000 current
and former female employees at its Seattle area facilities. Under the
settlement, Boeing also agreed to monitor salaries and overtime
assignments, and to conduct annual performance reviews, in an effort to
hold managers responsible for how they make salary and overtime
decisions. The settlement affected non-executive salaried and hourly
female workers, from janitors to first-level managers.\27\
---------------------------------------------------------------------------
\27\ Beck v. Boeing, 2004 U.S. Dist. LEXIS 27622 (W.D. Wash. April
4, 2004).
---------------------------------------------------------------------------
In July 2007, a Federal district court in New York
certified a class of female sales employees at Novartis Pharmaceuticals
in a $200 million lawsuit against the company. Among other evidence
presented to the court, statistical evidence revealed that female
employees were paid approximately $75 per month less than their male
counterparts.\28\
---------------------------------------------------------------------------
\28\ Velez v. Novartis Pharms. Corp., 244 F.R.D. 243 (S.D.N.Y. July
31, 2007).
---------------------------------------------------------------------------
In July 2009, a Federal district court in Texas
preliminarily approved a $9.1 million settlement of a sex
discrimination class action against Dell Inc. alleging that the company
systematically discriminated against female employees in pay,
promotions, terminations, and other terms and conditions of employment.
In addition to the monetary award, the settlement agreement requires
Dell to hire a labor economist to analyze existing compensation
practices and recommend pay equity adjustments for current female
employees. Dell is also required to hire an industrial psychologist to
assist in policy formation regarding compensation, performance
evaluations, hiring, promotions, and assignments.\29\
---------------------------------------------------------------------------
\29\ Hubley et al. v. Dell Inc., No. 08-cv-00804 (W.D. Tex.).
---------------------------------------------------------------------------
In the historic Wal-Mart v. Dukes gender discrimination
class action, the U.S. Court of Appeals for the Ninth Circuit affirmed
a lower court's decision to certify a class of over 1.5 million past
and present employees spread across 3,400 stores and positions
throughout the country.\30\ In February 2009, the Ninth Circuit agreed
to an en banc rehearing. Several days before oral argument, on March
19, 2009, the EEOC submitted an amicus curiae brief to the Ninth
Circuit, taking the position that class-wide punitive damages can be
determined by a jury in title VII pattern or practice cases and back
pay determinations may be made without individualized hearings when
appropriate. The EEOC's decision to file an amicus brief in the Wal-
Mart case is no doubt connected to its aggressive pursuit of potential
systemic discrimination cases.
---------------------------------------------------------------------------
\30\ Dukes v. Wal-Mart, Inc., 509 F.3d 1168 (9th Cir. Dec. 11,
2007).
Given the media attention paid to such lawsuits, employers fully
understand the seriousness of pay discrimination, and are keenly aware
that any failure to take steps to eliminate unjustified pay disparities
between men and women may lead to a tarnished reputation, significant
financial expense in the form of legal fees and awards, the loss of
valued employees, and the potential for judicial intervention in their
business practices. The passage of the Paycheck Fairness Act will
contribute nothing to employers' existing commitment to gender pay
parity. What it will do, however, is place further stress on an already
struggling business community, which is suffering through the worst
economic crisis since the Great Depression.
rather than amend the epa, the paycheck fairness act would create a new
law more burdensome than all existing federal anti-discrimination
legislation
By eliminating the EPA's ``any factor other than sex'' defense, the
Paycheck Fairness Act would fundamentally change the EPA, contradict
existing title VII precedent, and place an enormous drain on judicial
resources.--The Paycheck Fairness Act seeks to replace the EPA's any
factor other than sex'' defense with a much more demanding ``business
necessity'' requirement. Eliminating the EPA's ``any factor other than
sex'' defense could essentially prohibit companies from making the
kinds of individual pay decisions that are currently permissible under
both the EPA and title VII, such as determinations based upon prior
education and experience. As a result, employers could lose their
ability to attract and retain the best talent by way of market-based
incentives, and judges and courts across the country could be called
upon to serve as ``super-human resource departments,'' scrutinizing the
reasoning behind pay decisions that have nothing to do with gender.
Courts routinely denounce this role for good reason.
Under the EPA, employers are prohibited from paying women less than
men for performing the same or ``substantially equal'' work in the same
``establishment'' unless the differential results from: ``(i) a
seniority system; (ii) a merit system; (iii) a system which measures
earnings by quantity or quality of production; or (iv) . . . any . . .
factor other than sex.'' \31\ If passed, the Paycheck Fairness Act
would essentially eliminate the EPA's long-standing ``any . . . factor
other than sex'' defense. Instead, employers would have to demonstrate
that any pay differential is based on a ``bona fide factor other than
sex, such as education, training, or experience'' and, among other
requirements, is ``consistent with business necessity.'' The defense
would be inapplicable if the plaintiff demonstrates that ``an
alternative employment practice exists that would serve the same
business purpose.'' If the employer fails to meet its evidentiary
burden, it would be strictly liable for the pay disparity without any
showing of intentional discrimination.
---------------------------------------------------------------------------
\31\ 29 U.S.C. 206(d)(1).
---------------------------------------------------------------------------
To understand the significance of this change, consider a common
``factor other than sex'': mergers and acquisitions. When one company
acquires another, it absorbs differing pay scales, often times
resulting in pay disparities that are wholly unconnected to sex.
However, under the Paycheck Fairness Act's ``business necessity''
requirement, employers would arguably have to undertake a prompt review
of these differing pay scales upon consolidation and normalize the
disparities by elevating the lower salaries to the higher-paid salary
(as the EPA does not allow employers to reduce salaries in response to
a pay disparity).
Consider another, more routine example: a male store manager at a
supermarket is paid more than a female store manager because he holds a
college degree. Such a disparity could be illegal under the Paycheck
Fairness Act if a court finds that enhanced compensation for
supermarket managers with college degrees is not ``consistent with
business necessity.'' \32\ Further, the female manager could argue that
a program instituted by the supermarket where store managers without
college degrees are taught the same skills they would have learned in
college would serve the same business purpose. Even if the supermarket
could ultimately prevail in a lawsuit, it may eliminate the ``college
degree incentive'' and equalize pay just to avoid costly litigation.
---------------------------------------------------------------------------
\32\ If the Paycheck Fairness Act is enacted, litigation
interpreting the legislation's ``business necessity'' requirement will
likely ensue. Courts will be forced to assess ``business necessity''--
finally being forced to assume the mantle of a ``super human resources
department'' they have so long and consistently decried.
---------------------------------------------------------------------------
The Paycheck Fairness Act could jettison an existing body of case
law in which courts have said that, under title VII, employers can
consider subjective factors in employment decisions so long as they are
not discriminatory. Consider, for example, jobs that require frequent
personal interaction. Under title VII, employers may consider
unquantifiable qualities like a friendly disposition or positive
attitude. As the U.S. Court of Appeals for the Eleventh Circuit has
explained, ``It is inconceivable that Congress intended anti-
discrimination statutes to deprive an employer of the ability to rely
on important criteria in its employment decisions merely because those
criteria are only capable of subjective evaluation.'' \33\
``[S]ubjective reasons,'' the Court said, ``are not the red-headed
stepchildren of proffered nondiscriminatory explanations for employment
decisions.'' \34\ ``Traits such as `common sense, good judgment,
originality, ambition, loyalty, and tact,' often must be assessed
primarily in a subjective fashion.'' . . . \35\ Under the Paycheck
Fairness Act, however, pay differentials based upon such immeasurable
qualities may not be deemed ``consistent with business necessity.''
---------------------------------------------------------------------------
\33\ Chapman v. A.I. Transport, 229 F.3d 1012, 1034 (11th Cir.
2000) (en banc). See also Sengupta v. Morrison-Knudsen Co., 804 F.2d
1072, 1075 (9th Cir. 1986).
\34\ Id.
\35\ Id.
---------------------------------------------------------------------------
In addition to challenging subjective determinations, the Paycheck
Fairness Act could even be interpreted as prohibiting employers from
considering factors such as educational and professional experience in
occupations that may not strictly require a degree or prior experience.
Without the ability to make pay decisions based on such factors, U.S.
companies would be forced to standardize compensation to the detriment
of both male and female employees. The inevitable result may be a
gradual decline toward mediocrity as prospective employees have no
incentive to make the types of investments that would otherwise allow
them to excel at a particular job, and advance within an organization
or their chosen field.
Further, replacing the EPA's ``any factor other than sex'' defense
with a ``business necessity'' requirement would place an enormous drain
on judicial resources, turning courts into ``super-human resource
departments''--a role they consistently eschew.\36\ Unlike the ``any
factor other than sex'' defense, the ``business necessity'' test could
result in drawn out litigation regarding what is and is not consistent
with business necessity and whether there is an alternative employment
practice that would serve the same business purpose. It would be much
more difficult for employers to prevail on summary judgment as almost
every case will involve a factual dispute regarding the business
necessity behind any pay differential.
---------------------------------------------------------------------------
\36\ See, e.g., Byrnie v. Town of Cromwell Bd. of Educ., 243 F.3d
93, 106 (2d Cir. Mar. 15, 2001) (``we are not a super-personnel
department''); Pinkerton v. Colo. DOT, 563 F.3d 1052, 1066 (10th Cir.
Apr. 16, 2009) (``court should not `act as a super personnel department
that second guesses employers' business judgments' '' (internal
citations omitted)); Rojas v. Florida, 285 F.3d 1339, 1342 (11th Cir.
Mar. 22, 2002) (refusing to determine ``whether a business decision is
wise or nice or accurate''); Lewis v. Two's Comp., 2008 U.S. Dist.
LEXIS 109030, at *14 (S.D.N.Y. Mar. 16, 2008)[I]t is not the province
of the Court to sit as a super-human resources department; a company is
legally entitled to make bad [nondiscriminatory] employment
decisions''); Framularo v. Bd. of Educ., 549 F. Supp. 2d 181, 187 (D.
Conn. Apr. 30, 2008) (same); Smith v. Home Depot U.S.A., Inc., 1999
U.S. Dist. LEXIS 22207, at *17 (N.D. Ga. Mar. 3, 1999) (``it is not the
court's province `to second guess an employer's business judgment'
'')(internal citations omitted); Tutman v. WBBM-TV/CBS Inc., 1999 U.S.
Dist. LEXIS 5103, at *31 (N.D. III. Mar. 30, 1999) (``[t]he Court is
not here to second guess [the company's] hiring and firing
decisions'').
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Ultimately, courts will be responsible for making the very type of
business judgments that they have denounced time and time again. As one
Federal court explained, ``[t]he Court is not here to second guess [a
company's] hiring and firing decisions.'' \37\ Passing legislation that
would divert judicial resources for the purpose of scrutinizing market-
based pay determinations that have nothing to do with sex
discrimination is not only bad law, it is also bad policy.
---------------------------------------------------------------------------
\37\ Tutman, 1999 U.S. Dist. LEXIS 5103, at *31.
---------------------------------------------------------------------------
The Paycheck Fairness Act would expand the EPA's definition of
``same establishment,'' imposing an unfair burden on employers with
operations in certain counties.--The proposed legislation would amend
the EPA to define ``establishment'' as ``workplaces located in the same
county or similar political subdivision of a State.'' Because the EPA
requires equal pay for men and women who perform ``substantially
equal'' work in the same ``establishment,'' the Paycheck Fairness Act
would require some employers to look beyond individual worksites and
ensure that employees who perform similar work in different locations
are paid the same. Though this change may have little effect on
employers with operations in counties--such as New York County--
comprised entirely of an urban population (or a suburban population),
it would have an enormous effect on employers with operations in
counties encompassing both urban and suburban communities.
My hometown of Chicago, for example, is located in Cook County. The
population of Cook County is larger than 29 individual States \38\ and
encompasses both the city of Chicago and collar communities up to an
hour and a half outside city limits, and even further from Chicago's
central business area (the ``Loop''). The cost of living is
significantly higher in Chicago than in the surrounding suburbs; so,
too, is the average salary. If the Paycheck Fairness Act were to become
law, employers with operations in Cook County would be required to pay
similar employees the same salary regardless of whether they worked in
the Loop or in a remote collar community.
---------------------------------------------------------------------------
\38\ Wikipedia, Cook County, IL, http://en.wikipedia.org/wiki/
Cook_County_Illinois (last visited Feb. 26, 2010).
---------------------------------------------------------------------------
Expanding the EPA's definition of ``establishment'' could also lead
to unnecessary litigation involving employers with their main corporate
headquarters located within the same county as non-corporate
facilities. For instance, a company with its main corporate
headquarters in midtown Manhattan and a remote distribution site
elsewhere may pay employees who work at the corporate headquarters
higher salaries because those positions are more demanding and integral
to the company. Although a court may ultimately determine that the
corporate positions are not ``substantially equal'' to the non-
corporate positions, this is one more issue employers will have to
address in litigation. Consider also a company that wants to
incentivize or reward employees who agree to work in less desirable
neighborhoods or work less desirable shifts--for instance, a bank
teller working in an area with a greater history of hold ups, or a data
entry clerk working the ``graveyard'' shift. The EPA could eliminate a
company's ability to make such decisions. For all these reasons, EPA
claims should be limited to the ``same establishment.''
The Paycheck Fairness Act would add unlimited compensatory and
punitive damages to an employer's exposure, despite congressional
efforts to limit such damages in title VII cases.--Whereas the EPA
currently provides for equitable relief, such as back pay awards, the
Paycheck Fairness Act seeks to add compensatory and punitive damages to
the types of recovery available to EPA litigants. Though S. 182 (unlike
former versions of the Paycheck Fairness Act) would require a showing
of ``malice or reckless indifference'' before subjecting employers to
punitive damages, the proposed legislation--which places no limit on
compensatory and punitive damages--would still expose employers to
frivolous lawsuits and enormous verdicts. And, unlike title VII, it
makes no attempt to ameliorate the size of available damages for
smaller employers, who are arguably less capable of surviving such an
award, or the cost of the litigation itself. In addition, employers
could still be liable for compensatory damages without any showing of
intentional discrimination.
When Congress added compensatory and punitive damages to the relief
available in title VII disparate treatment cases through passage of the
Civil Rights Act of 1991, it was careful to include a statutory cap on
such damages.\39\ That cap is set at $50,000 to $300,000 total for
compensatory and punitive damages, depending on the employer's size. As
the U.S. Court of Appeals for the Second Circuit has pointed out, a
review of the act's legislative history reveals that ``the purpose of
the cap is to deter frivolous lawsuits and protect employers from
financial ruin as a result of unusually large awards.'' \40\ Without
such a cap, the Paycheck Fairness Act will be a bonanza for plaintiffs'
attorneys, and will subject small businesses to much greater
comparative risk. This result is untenable in light of President
Obama's recent statements that small businesses are ``one of the
biggest drivers of employment that we have,'' as well as recent efforts
by Congress to spur job creation via a $15 billion jobs bill.\41\ In
the midst of this financial crisis, we should be encouraging small
businesses to expand, not making it more difficult for them to operate
and survive.
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\39\ Congress did not make compensatory and punitive damages
available in title VII disparate impact cases, in which employers are
held to a ``business necessity'' defense similar to that proposed by
the Paycheck Fairness Act.
\40\ Luciano v. Olsten Corp., 110 F.3d 210, 221 (2d Cir. Mar. 21,
1997) (referencing 137 Cong. Rec. S15472 (1991) (statement of Sen.
Dole); 137 Cong. Rec. S15478-79 (1991) (statement of Sen. Bumpers)).
\41\ Obama Vows to Help Small Businesses, CNN Politics.com, Mar.
16, 2009, available at http://www.cnn.com/2009/POLITICS/03/16/
obama.small.business/index.html (last visited Mar. 7, 2010); Hiring
Incentives to Restore Employment Act, H.R. 2847, 111th Cong. (2010);
Carl Hulse, Senate Approves $15 Billion Job Bills, N.Y. Times, Feb. 24,
2010, available at http://www.nytimes.com/2010/02/25/us/politics/
25jobs.html (last visited Mar. 7, 2010).
---------------------------------------------------------------------------
The Paycheck Fairness Act would impose title II's class action
mechanism on the EPA, which has always been governed by the FLSA's
procedural rules.--The Paycheck Fairness Act would specifically allow
for ``opt-out'' class actions under Rule 23 of the Federal Rules of
Civil Procedure--a right already provided to women who sue their
employers for pay discrimination under title VII. Unlike title VII, the
EPA is governed by the FLSA's procedural rules, which require
plaintiffs to ``opt-in'' to a class action by giving consent in
writing. The distinction between the two provisions is important, as
class size is likely to be much larger with an opt-out certification
where employees need not affirmatively decide to join the case.
Title VII cases--which provide for ``opt-out'' class actions--are
procedurally different from EPA cases precisely because they have
different pleading requirements. The EPA is and always has been part of
the FLSA, which, unlike title VII, specifically provides for ``opt-in''
class actions. Allowing ``opt-out'' class actions under a law that
makes it very difficult for employers to defend legitimate decisions
while exposing them to unlimited punitive damages serves only one
purpose: it encourages plaintiffs' attorneys to bring class action
lawsuits against employers who may be forced to settle even when they
did nothing wrong, or face financial ruin from the extraordinary costs
associated with litigation of this nature.
The Paycheck Fairness Act would not require the OFCCP to use
multiple regression analysis when investigating potential
discrimination.--The proposed legislation would direct the EEOC to
collect pay information from employers and impose obligations on the
OFCCP for performing compensation discrimination analyses. Among other
things, the OFCCP would be directed to use the ``full range of
investigatory tools'' to determine the presence of potential
discrimination in Federal contractors' compensation systems. This would
include the ``pay grade methodology,'' which the OFCCP rejected in
2006, likening that approach to the discredited legal theory of
comparable worth. Among other problems, the pay grade methodology
assumes all individuals in the same pay ``band'' are similarly
situated. Instead, the OFCCP has been using multiple regression
analyses--which generally allows the OFCCP to consider the impact of
variables, such as years of work experience, education, and past
performance--to determine the presence of potential discrimination.
Under the Paycheck Fairness Act, the OFCCP would no longer need to
perform multiple regression analysis to identify potential compensation
discrimination and could instead rely on the flawed pay grade
methodology. As a result, the OFCCP would likely bring more actions
against employers based on inadequate and faulty data. Despite the fact
that the data is inaccurate, employers would be forced to spend money
defending themselves while the OFCCP wastes its own resources pursuing
employers that have done nothing wrong. Given the OFCCP's own
recognition that multiple regression analysis is a superior method for
identifying discrimination, Congress should not force the agency to use
an inferior--and discredited--method.
The Paycheck Fairness Act would also reintroduce another
discredited tool: the OFCCP equal opportunity survey. Again, requiring
the OFCCP to use a method it has rejected will impose an unnecessary
burden on both the OFCCP and Federal contractors, many of whom are
small businesses who lack formal human resource departments, while
doing nothing to reduce discrimination.
The Paycheck Fairness Act would require the EEOC to collect
employer wage data information, raising confidentiality issues that
will need to be resolved.--As drafted, the Paycheck Fairness Act would
require the EEOC to issue regulations providing for collection of pay
information data from employers ``as described by the sex, race, and
national origin of employees.'' Though S. 182 directs the EEOC to
``consider factors including the imposition of burdens on employers,
the frequency of required data collection reports (including which
employers should be required to prepare reports), [and] appropriate
protections for maintaining data confidentiality . . . '' nothing in
the proposed legislation prohibits the EEOC from disclosing such data,
including to competitors and trial lawyers. If the Paycheck Fairness
Act becomes law, private employers may be required to provide extensive
information to the EEOC with little assurance that the information will
be protected from disclosure to the public, or to competitors.
The Paycheck Fairness Act would encourage frivolous litigation by
prohibiting employers from retaliating against employees who share
salary information.--Although the National Labor Relations Act already
protects employees who share salary information with co-workers, the
Paycheck Fairness Act would provide broader protection. Employers and
courts are already besieged by retaliation claims that often lack
merit; adding another cause of action to rectify a problem that does
not exist will only lead to unnecessary litigation and additional
wasted resources.
In all of my 20-plus years of employment law experience, I have
never encountered a situation where an employer terminated--or even
disciplined--an employee for communicating with co-workers regarding
his or her salary. That is not to say that it does not happen but, in
my experience, it would be extremely rare. And there is nothing in the
extant laws that would keep someone penalized in this fashion from
raising that theory under the current statutory structure. If the
Paycheck Fairness Act becomes law, however, every employee who has
previously communicated with co-workers regarding his or her pay and is
later disciplined or terminated for a completely unrelated reason will
consider pursuing a retaliation claim. Though most employers would
ultimately prevail by demonstrating that the employment decision was
unrelated to the employee's sharing salary information, companies will
be forced to spend money and devote resources to defending these
frivolous lawsuits.
Our Nation's courts are already inundated with retaliation claims,
which often go hand in hand with employment discrimination claims. In
2009, the EEOC received 28,948 retaliation charges filed under title
VII alone, encompassing over 31 percent of all charges filed with the
EEOC.\42\ Just 10 years earlier, title VII retaliation charges
accounted for only 23.1 percent of all charges filed with the EEOC.\43\
Creating a new retaliation cause of action for something that hardly
ever happens will only further burden courts with needless litigation.
---------------------------------------------------------------------------
\42\ EEOC Charge Statistics FY 1997 Through FY 2009, available at
http://www.eeoc.gov/eeoc/ statistics/enforcement/charges.cfm (last
visited Mar. 8, 2010).
\43\ Id.
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the fair pay act of 2009
The Fair Pay Act would amend the EPA by extending its coverage to
claims of race and national origin discrimination and broaden the
statute's requirement that the plaintiff show different pay for equal
work and instead require only ``equivalent'' work. Similar to the
Paycheck Fairness Act, the Fair Pay Act would expose employers to
punitive and compensatory damages. It would also require all employers
to keep records of the methods they use to set employee wages and
provide yearly reports to the EEOC describing their workforce by
position and salary, as well as gender, race, and ethnicity. The Fair
Pay Act is unnecessary and harmful for many of the same reasons that
the Paycheck Fairness Act is unnecessary and harmful. In addition, the
Fair Pay Act--which is premised on the rejected theory of ``comparable
worth''--would require employers to provide the same pay for very
different jobs. Comparable worth legislation will impose massive
recordkeeping and reporting costs on employers, while doing nothing to
deter discrimination.
conclusion
Discrimination on the basis of sex is abhorrent. Pay differentials
stemming from discriminatory practices clearly must be remedied, but
our existing legal framework adequately provides protection.
My firm represents thousands of employers. Our 600-plus attorneys
counsel our clients about how to ensure a workplace free of
discrimination. Our clients affirmatively want that advice and embrace
it for many positive reasons, among them the fact that effective human
resources policies are a key competitive factor in the success of any
organization.
The legislation before you will cause confusion in the workplace,
and in the courts. It will take years and years of expensive litigation
to understand and define its terms. The plaintiffs' bar will benefit.
My firm may benefit as well.
But the U.S. workforce will not benefit. Passing a law which upends
the current employment discrimination paradigm, and creates costly
uncertainty in the marketplace, will do nothing to help this country
emerge from its current economic crisis. The proposed legislation will
certainly not bring down our unemployment rate, nor will it remedy
gender-based discrimination, especially since the vast majority of
employers today embrace equal employment as an essential component of
their core values. The small rate of EEOC for cause findings certainly
supports this conclusion.
Women have come a long way in the workplace. I am but one of
millions of examples of that fact. And I am confident my daughters will
prosper and make even more progress during their lives. They do not
need this legislation to help them achieve their goals and dreams. Let
them be evaluated based on what they do and not who they are. We ask
for no more and should demand no less. Our laws today provide us with
that dignity.
Appendix 1
--------------------------------------------------------------------------------------------------------------------------------------------------------
Exhaustion of
Employees Statute of administrative Compensatory Punitive Class actions Affirmative
covered limitations remedies damages damages allowed defenses
--------------------------------------------------------------------------------------------------------------------------------------------------------
Title VII.................... 15 or more...... 300 days to file Required........ Capped*......... Capped*........ Opt-out........ Disparate
administrative Treatment:
charge with the Legitimate,
EEOC. nondiscriminat
ory reason for
pay
differential;
Disparate
Impact: Job-
related and
consistent
with business
necessity and
no alternative
employment
practice
exists.
EPA.......................... 2 or more....... 2 years; 3 years Not required.... Back Pay........ Liquidated Opt-in......... Seniority
if willful/ Damages (equal system; merit
intentional. to back pay) system;
if willful measure
violation. earnings by
quantity or
quality of
production; a
differential
based on any
factor other
than sex.
PFA.......................... 2 or more....... 2 years; 3 years Not required.... Uncapped........ Uncapped....... Opt-out........ Seniority
if willful/ system; merit
intentional. system;
measure
earnings by
quantity or
quality of
production;
bona fide
factor other
than sex if
business
necessity
demands it and
no alternative
employment
practice
exists.
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Title VII limits damage awards based on the number of employees the employer had during the current or preceding calendar year. The sum amount of
compensatory and punitive damages that may be awarded is dependent on the number of employees as shown below:
------------------------------------------------------------------------
No. of Employees Damage Cap
------------------------------------------------------------------------
15-100................................................. $50,000
101-200................................................ $100,000
201-500................................................ $200,000
500-plus............................................... $300,000
------------------------------------------------------------------------
Senator Dodd. Thank you very much.
Did you support the Lilly Ledbetter legislation?
Ms. McFetridge. Did I support it?
Senator Dodd. Yes.
Ms. McFetridge. That is a good question. I supported
components of it.
Senator Dodd. Everybody supported components of it. Did you
support the bill?
Ms. McFetridge. No, I did not.
Senator Dodd. OK. Let me jump back here and just--because
one of the questions raised and one of the points that has been
raised is the notion of the cumulative effect, and it struck me
as well. I mean, it begins sort of a self-fulfilling prophecy,
as I am trying to understand this, where you start at a certain
level and there is a discrimination at that, at the earliest
level, then it has a way of carrying forward based on previous
jobs. At least that is the point, Ms. Boushey, I thought--I
think several of you made that.
I wonder if you might sort of expand that a little bit. You
talk about the cumulative effects of the wage gap on women over
the course of a career or retirement. Congresswoman DeLauro
talked about women over the age of 70 are the poorest sector of
our society. Again, some reflection, I think, of over the years
of the discrimination that has occurred in wages and salaries.
But you might want to address that a little more thoroughly and
fully, if you would?
Ms. Boushey. Certainly. I think that that is one of the
critical issues, that the pay gap not only starts the moment a
woman graduates from school and enters the labor market, but
that it is aggravated over time and accumulates over time.
To throw a few numbers at you, first off, I think that the
study that we have seen many economists do, but in particular a
very recent one that the American Association of University
Women did, economists have worked very hard to look at all the
things that we can measure--the kind of job you have, the kind
of education you have, where you got your degree. And once you
take all of that into account, it is very hard to not notice
that there still is a pay gap.
And this 5 percentage point gap that occurs among men and
women fresh out of college from similar schools and all of that
really does sort of--that is the starting point. But then as
some of my colleagues up here on the panel have talked about
this morning, one of the things that happens as a woman goes
through her career is that you are asked at every job, ``Well,
how much did you make at your last job?'' And then that
exacerbates the pay gap.
So if women start off at a lower level, even if they switch
jobs, which is one of the ways that young people especially
experience the biggest jumps in pay is when they switch jobs,
and they are asked what their salary history is, if a firm
doesn't want to equalize that internally but uses that to
perpetuate inequality, then women are stuck on a lower path
moving forward.
Research at the Center for American Progress has found that
that leads to a career pay gap of about $434,000 in income on
average. But that this gap is larger for women with the most
education. So for women with a college degree or more, they
lose over $700,000 over a lifetime.
And I want to stress this isn't just about women and their
purchasing power. This is about families. Four in ten mothers
in America right now are their family's primary breadwinner.
This gap is affecting their family's well-being. And this
accumulation over time affects their retirement security. It
affects their ability to save to put their kid through college
and all the other things that we think are important for
families.
Senator Dodd. Let me ask you, Ms. Brake, if I can, Ms.
McFetridge raised a couple of points. And if I don't State this
accurately, Ms. McFetridge, you can re-frame the question, if
you want. But her point, I think, was, well, look, you have
Title VII of the Civil Rights Act. We have the Equal Pay Act.
These are working pretty well. They are not perfect yet, but we
are moving along. Things are getting better.
If you take some of the proposals that I supported when I
was here that Mike Enzi has talked about in terms of these
workforce issues, combine that, getting our economy moving
again, these seem all to be getting us in the right direction.
Why don't we just let well enough alone and allow these acts to
continue to work? What is the problem with these two laws in
terms of not being able to close this gap that she has
suggested?
Right? Is that a fair question?
Ms. Brake. Thank you. That is a very good question.
I guess I would disagree with the basic premise that they
are working so well. The pay gap has not been closing at a
steady level such that we can see it close, like a window over
time. In fact, the majority of progress since the 1970s was
made in the 1980s, very little since the 1990s.
And I think that the reason you see so few claims filed
under the Equal Pay Act, as Mr. Ishimaru had noted, a small
percentage, is because the Equal Pay Act is not such a great
vehicle for remedying pay discrimination. As I mention in my
testimony, it is extremely hard to prove the equal work
requirement period. But even if you get past that, the factor
other than sex defense is enormously broad. The courts are
applying it as the exception that swallows the rule. And again,
I can't emphasize this enough. You have very limited remedies
under the Equal Pay Act.
Unlike most legal claims, you are limited to the wrongfully
withheld wages, plus an equal amount in so-called liquidated
damages. And not only does that not fully remedy the victims of
pay discrimination who have these costs throughout the course
of their working lives once they start, it also doesn't put a
sufficient incentive on employers to really look at these
things.
And so, you have a case with an employer like Goodyear in
the Lilly Ledbetter case who, for years and years and years,
allowed her to be the lowest-paid manager, earning lower than
any of the lowest-paid male managers, even when she had more
seniority and higher job performance. And unfortunately, that
goes on far too often.
I would say that the remedies need to be strengthened
certainly in the Equal Pay Act, and title VII is no panacea
either. So I am delighted that this committee is looking at
these things to make these laws more effective.
Senator Dodd. Some have pointed out that in the 1980s we
saw the gap really begin to close and, therefore, further
evidence that, actually, existing laws are beginning to work.
And yet it seems to me that during the 1980s, what we saw and
since then is, of course, the men's wages declined as well or
didn't increase at all. Is that a fair description of what
occurred, or is it a better reflection, in fact, that the wage
gap has been closing?
Ms. Brake. Well, I would defer to Ms. Boushey on the
particulars of that. I know that it hasn't been closing since
the 1990s.
Ms. Boushey. Certainly. And when it did close the sharpest,
it was during the 1980s, when men's wages were falling. So
while we had the Equal Pay Act and there were these legal
remedies, a large piece of closing of the gap was because of
the decline in male wages that made it look like there was
progress for women when, in fact, it was men sort of falling
behind.
I think, looking forward, this is something that I, as an
economist, am very concerned about. With men losing so many
jobs in this recession, we may see some movement forward in the
gender pay gap. But that is illusive because it well may be
because men's wages are again falling rather women are actually
catching up.
Senator Dodd. Let me just ask one question of Deborah
Frett, and then I want to give you, Ms. McFetridge, a chance to
respond. And then I will jump to Mike on this thing.
One of the arguments in opposition to the bill is that the
Paycheck Fairness Act would unduly block businesses from making
salary decisions based on market forces. What is your view on
that?
Ms. Frett. I disagree with that. I think that the Paycheck
Fairness Act will not impede businesses being able to use a
variety of mechanisms in order to evaluate their salaries. We
have been working with a number of employers in a number of
industry groups, and one of them in particular being the women
in cable television.
They have had a program for about 7 years now where they
are focusing on pay equity and making sure that they are
disclosing the salaries so everybody in the companies are aware
of, in various programming or operators and such, what each one
is being paid. But they are also doing market analysis with
that in terms of the bands for those salaries and looking at
other markets and comparing.
So I think you can have both in terms of that. But the
Paycheck Fairness Act will not prohibit businesses from taking
into consideration market factors.
Senator Dodd. Ms. McFetridge, do you want to answer? Having
raised your name here, I will give you a chance to respond.
Ms. McFetridge. Yes. I obviously disagree. I have a
completely different point of view. The proposed affirmative
defenses are very, very complicated. And having lived in this
area of law for the last 20 years and represented employers, I
can tell you that over that period of time, the McDonnell
Douglas burden-shifting analysis, for instance, has developed,
but it has taken a long time for people to understand and be
able to apply that effectively.
And if you look at the types of changes to the affirmative
defenses that we are talking about here, these are not easy
concepts to grasp. Most employers in this country are not
Goodyears. Most employers--and I hearken back to what the
acting chair of the EEOC said about most employers wanting to
do the right thing. Most employers do want to do the right
thing, but most employers are relatively small. They don't have
the resources to make this sort of analytical assessment.
Let us look for a second at what is being discussed here.
They want to change ``any factor other than sex'' to ``a bona
fide factor other than sex.'' Well, what is ``bona fide?'' OK.
I mean, I think most of us in this room might have some idea of
what that means in sort of general lay terms, but what does it
mean in a legal sense? It will take years to ferret that out.
Furthermore, business necessity. What is business
necessity? Do we want the government deciding what is business
necessity? Isn't that for the business owner to decide?
And then the employers themselves cannot use the
affirmative defense unless they can show that it is--if the
plaintiff demonstrates that this goal, whatever it is that they
are trying to achieve, could have been achieved--they could
have achieved the same purpose without gender differential.
These are very complicated things, and they aren't easy to
apply, and it will affect how employers set pay decisions.
There are many, many different factors that go into a pay
decision. I gave the example of a salesperson. I mean, there
are intangible things that people look at when they hire
people.
Senator Dodd. Well, I appreciate that, and I thank you. I
wanted to give you the chance to respond to all this.
Let me just say respectfully that, having been around here
over the last 35 years, and where a lot of these documents are
based both on issues involving disabilities, other areas of
discrimination in our country, many of the same arguments have
been made in the past. How these things are subjective tests
and hard to apply and open up to a lot of litigation.
And had we lived with those over the years, I think we
would be a very different country today. So, my concern would
be while I don't underestimate your point here, and we need to
deal with that as legislators as we write language here, too
often those are the arguments raised as barriers to achieving
that fairness in terms of equal opportunity. And so, I
appreciate your point.
Senator Enzi.
Senator Enzi. Thank you, Mr. Chairman.
In listening to this, it has occurred to me that having
been in business, that there are a lot of questions that you
can't ask somebody who is a potential employee. Maybe we ought
to add to that list that you can't ask them what they made on
their previous job.
I am still convinced that a lot of the gap is due to
occupational segregation that exists, not due to an employer,
but the decisions that are made by an employee and often while
they are still a student. They make a lot of decisions that are
heavily influenced by their teachers, their school environment,
family environment, peers, experiences that they have had. And
I think it leads them into some directions where they are going
to make less money.
Ms. Boushey, in your testimony, you cite research
acknowledging that one-third of the pay gap can be explained by
occupational choice, one-fifth by industry, and a tenth by
career experience, which leaves I think you said a 10 percent
gap. Am I correct to assume that this research would compare,
for example, a man and a woman who graduated from medical
school in the same year, began working as doctors, and didn't
take any breaks in their career?
Ms. Boushey. Well, the particular numbers you are citing
were from one study that wouldn't have looked at that level of
detail, but there is a lot of research that looks at that level
of detail, and some of it is cited here, where economists have
looked at people graduating from similar kinds of schools,
making similar decisions.
I mean, I think your point about the decisions that men and
women make is very important. We all make decisions about our
career paths, and we know that women have not made the same
kinds of decisions in terms of sciences that certainly does
play a role in the overall gender gap in our society.
But when economists look at the pay gap, we try to account
for those differences in decisions, and you still see a
difference. Women and men making the same choices, you are
still seeing a pay gap between those people that are making
similar kinds of choices. And that is where the problem is.
Senator Enzi. So you are saying that some of those
categories would make a difference if one became a radiologist
and one became a family practitioner, and if one worked in a
large practice and one worked in a small practice, or one
worked in a city practice or one worked in a rural practice? Is
it possible that the portion of the pay gap that is not
explained by occupation or tenure is attributed to different
specialties and where they work, how urban/rural it is?
Ms. Boushey. Certainly, some of it would be, but not nearly
the majority of it. So you can take it down as fine as you
want, but even when you take it down to as fine as we can
measure, you still see unexplainable gaps in men's and women's
pay.
But the second issue is the differences between a
radiologist and a family practitioner. Men and women tend to go
into different kinds of fields, and there is a question about
how we value those different fields, which is really more about
the Fair Pay Act than issues that the Paycheck Fairness Act is
looking at.
Senator Enzi. Thank you.
When I first got married, my wife and I started a shoe
store in Gillette, WY. And a few years later, I got elected
mayor. It was supposed to be a part-time job. It turned out to
be a full-time job. So my wife ran the store. She not only ran
the store, she added two more stores. And it was going very
well. When I finished being mayor, I told her I was ready to
come back to work, and she said, ``Why?''
[Laughter.]
And she had a real good point. So that is when my
accounting career began.
So I know the talent that women have. They are more
organized. They are better schedulers. So there shouldn't be
that gap, and it is no surprise to me that there are more
women's businesses that are being started and that the men are
the ones being laid off when we have a decrease in employment.
Ms. Frett, you mentioned the phenomenal growth for women-
owned firms in recent years, and I am pleased with that. Do you
believe that women-owned firms are less likely to be sued for
discriminatory pay disparities?
Ms. Frett. Based on what we hear and the research that we
have done related to our members, all of our members are
talking about making sure that they have disclosure on their
pay policies. And so, I would think, based on hearing that from
them in terms of their kinds of practices around equal pay and
disclosure and transparency, that there would be a reduction in
terms of legislation risk.
Senator Enzi. OK. Ms. McFetridge, some of today's witnesses
have argued that should the Paycheck Fairness Act become law,
meritless lawsuits would not be a concern for employers because
they would be easily dismissed by the courts. Given your 20
years of experience defending against claims, do you think that
is a true assertion?
Ms. McFetridge. Perhaps more than anything I have said here
today, I couldn't disagree with that more. I have lived this
for 20 years, over 20 years now, and I will tell you that while
there are some lawsuits that certainly have valid basis, and we
typically counsel our clients in those situations to settle the
case and address the issues that gave rise to the lawsuit, many
of these claims are specious to begin with.
That is not to say that discrimination doesn't exist and
that there isn't a societal cost associated with it. But what
it does mean is that businesses lose otherwise good employees
when that happens and they move on to alternative, different
jobs.
What you do see happening, the cost associated with
litigation of this nature is directly--first of all, the
quantity of litigation is directly related to the available
remedies. The higher the remedies, the more likely you are to
get litigation. That is demonstrated by what has happened in
California, and it is certainly demonstrated by what has been
happening with wage and hour class actions across the country.
So the greater the available remedy, the more likely you
are to get litigation. And the costs associated with this are
astronomical in both financial and human terms. It is
devastating to the people that are involved with the defense of
these lawsuits, many of whom--I would say that in at least 90
to 95 percent of my lawsuits, I have company representatives,
people who are actively involved in the litigation that are
women themselves. People are distracted from their business
purpose. They are personally upset. They are invested in the
litigation itself, and it costs them thousands and thousands of
dollars.
Frequently--there were questions earlier to the acting
director of the EEOC about whether the threat of litigation
will force people, whether it is intimidating. It would force
people to settle cases that they wouldn't otherwise settle. I
can't tell you how many times that people have just thrown in
the towel when they have a very defensible case just to avoid
incurring additional legal costs, disruption to their business,
and that sort of thing.
It is absolutely without a doubt--I am absolutely positive
it will increase litigation. It will benefit me because I am
involved with that litigation, but it won't benefit women.
Senator Enzi. Thank you. It reminds me of the old West,
where when one attorney came to town, they starved to death.
When there were two, they did pretty well.
I will go back to Ms. Frett because I appreciate your
testimony on the growth of women-owned firms and encourage that
entrepreneurship and know that that has some significant
advantages for women.
You noted a number of studies showing that companies with
women executives and diversity programs in place are more
productive, efficient, and generally successful. Given this,
isn't it in business's best interest to take those steps? Do
most businesses do what is in their best interest?
Ms. Frett. I think we are finding that a lot of employers
are doing the right thing. They see a lot of advantages in
terms of making sure that their employees are paid equally for
equal work and a lot of the work-life balance issues, and they
know this because they want to continue to recruit and retain
employees.
If you look at the women becoming more and more of that
workforce or that pool of talent that they are going to be
looking at, they need to be doing that. Their bottom line is
going to improve because of that.
The other thing we need to be aware of is to make sure we
understand that the primary purchaser of goods and services or
decisionmakers in terms of goods and services are primarily
women. So that customer loyalty is a big factor in terms of how
successful a business is going to be.
So that is why the Business and Professional Women's
Foundation looks at it as a three-pronged approach. It is
legislation, but it is also education in terms of employers and
education in terms of women.
Senator Enzi. Thank you.
I want to thank all of you for your testimony. It has been
very helpful. I have more than used my time here, but I have a
lot of questions left. So I hope that you will allow me to
submit some written questions to you so I can get more answers
for doing it right?
Ms. Frett. Absolutely.
Senator Enzi. Thank you.
Senator Dodd. We will certainly do that, Mike.
And we will leave the record open for 10 days. I believe
that is adequate, but if you need more time, we will make more
time available.
It was very, very helpful and just excellent testimony as
well. I think you witnessed earlier on, we had a lot of members
showing up. But the way these committee hearings go with other
schedules and the busyness around here, people can't stay for
as much as they would like. But that should not be any
reflection of lack of interest in the subject matter that
exists.
So we thank all of you for coming here this morning, and we
will ask you to respond to the questions when they are
submitted as quickly as you possibly can for the record. Thank
you all for being here.
The committee will stand adjourned.
[Additional material follows.]
ADDITIONAL MATERIAL
Prepared Statement of Senator Murray
Thank you, Chairman Harkin for holding this important
hearing.
As families across the country continue to struggle in
these tough economic conditions, I am working hard to support
programs that will get our economy moving again and get our
workers back on the job. We still have a long way to go, but I
am confident that the steps we have taken have begun to move us
down the path to recovery. But as we work to create jobs, we
must also remain committed to ensuring that all of our workers
benefit equally from equal work.
Despite years of progress, our country has still not yet
completely eliminated discrimination and unfairness in the
workplace. There have been improvements, but we are still not
yet at the point where our daughters can expect to earn the
same amount over their lifetime as our sons. And that has got
to change.
On average, women earn just 78 cents for every dollar paid
to their male co-workers. This pay discrimination has real and
harmful impacts on families and for our Nation as a whole. It
hurts an individual's ability to earn a living and save for
retirement, care for her children, and contribute fully to
society.
Yet it's so deeply ingrained in our society that many jobs
dominated by women pay less than jobs dominated by men--even
when the work they do is almost the same.
That's why I was such a strong supporter of the Lily
Ledbetter Fair Pay Act that restored a worker's ability to
fight for her rights in court. The law reversed the extremely
damaging 2007 U.S. Supreme Court decision, Ledbetter v.
Goodyear, and clarifies that each time an employee is paid less
than her co-workers for doing the same job, that unfair
paycheck is a violation of the law that can then be challenged
in court.
This was a great step forward for economic equality. But
it's not enough. We need to keep fighting against
discrimination in the workplace.
I co-sponsored S. 182, the Paycheck Fairness Act, which
gives America's working women additional support to fight for
equal pay. It takes critical steps to empower women to
negotiate for equal pay, closes loopholes that courts have
created in the law, creates strong incentives for employers to
obey the laws that are in place, and strengthens Federal
outreach and enforcement efforts.
I also co-sponsored S. 904, the Fair Pay Act. This bill
requires employers to provide equal pay for jobs that are
comparable in skill, effort, responsibility, and working
conditions. It will give workers the information they need to
determine whether female-dominated jobs are being under-valued,
and it provides a remedy for workers who are victims of such
systemic discrimination.
Now that we have passed the Lily Ledbetter Fair Pay Act
that gives women the ability to challenge discrimination in
court, we need to give them more tools to understand and fight
for equal pay for equal work.
The Paycheck Fairness Act and the Fair Pay Act will not end
discrimination in America. And they will not fix the wage gap
immediately. But they are steps in the right direction, and I
am committed to pushing hard for their passage.
Prepared Statement of Senator Brown
Mr. Chairman, thank you for holding this important hearing.
And thank you, as well as Congresswoman DeLauro and
Commissioner Ishimaru, for your service and dedication to
social and economic justice.
I want to also thank our expert witnesses for their
testimony today.
Some people in Washington never want to talk about issues
like the minimum wage, or workplace safety, or pay equity.
And, during an economic crisis like the one we are in, they
especially try to distract policymakers from examining these
issues so important to our Nation's middle class.
They insist that now, when we're focused on economic
recovery, is not the time to talk about fair pay.
And you can bet your bottom dollar that when our economy is
fully recovered, they will again insist it's the wrong time to
talk about pay equity, because any change in wages could rock
the boat.
So when is the right time to talk about pay equity?
The answer is that as long as there are unfair disparities
in pay, it is always the right time to talk about pay equity.
And as a matter of fact, no time is better than the present.
That's because the negative effects of unjustifiable pay
disparities amplify the economic hardship for struggling
Americans.
If you look at the foreclosure crisis, you know that women
are disproportionately at risk, since women are 32 percent more
likely than men to have subprime mortgages.
Existing pay disparities for women exacerbate the economic
strain on women and on households run by women, since women
earn only 77 cents for every dollar earned by men.
Women have significantly fewer savings to fall back on
during times of economic hardship. Non-married women have a net
worth 48 percent lower than non-married men, and women are less
likely than men to participate in employer-sponsored retirement
savings programs.
That's disturbing, but not surprising, given that they
typically don't receive the same pay for the same work. You
can't squeeze blood from a stone, and you can't squeeze savings
from wages that barely cover your month-to-month expenses.
Women are less likely than men to participate in employer-
sponsored retirement savings programs, largely because their
lower pay levels make it far harder to put money aside for
retirement.
While the Equal Pay Act established that women should be
paid equally for doing the exact same jobs as men, we still see
widespread discrimination when comparing the pay scales of jobs
traditionally held by men vs. jobs traditionally held by women.
We need to stop and ask why a parking meter reader is worth
less than an electrical meter reader, or why a child care
worker is worth less than a maintenance worker.
It's not hard to find excuses for ignoring difficult social
issues like pay inequity . . . it's not hard to point to our
economic challenges and say the timing is wrong.
But our job is not to take the easy way out. It's to
promote the best interests of Americans, women and men alike.
I want to again thank our witnesses and Chairman Harkin for
holding this very timely hearing. And I look forward to our
discussion.
Prepared Statement of Senator Bennet
I would like to thank Chairman Harkin and Ranking Member
Enzi for holding this important hearing. The persistent pay gap
between male and female workers is unacceptable. Through this
forum, we can convene various stakeholders and figure out what
policy solutions are fair to American workers.
According to the U.S. Census Bureau, women who work full-
time earn, on average, only $0.78 for every dollar men earn. In
Colorado, women are paid $0.80 for every dollar men earn. This
is $0.02 above the national average. This wage gap persists at
all levels of education. Women in Colorado with a high school
diploma earned only 67 percent of what men with a high school
diploma earned and only 64 percent of the amount that men with
a bachelor's degree were paid. On average, the Census reports
that women have lower earnings than men ($24,146 compared to
$35,875 in 2007) and are more likely to live in poverty (12
percent of Colorado women compared to 9 percent of men living
in poverty in 2007).
Correcting these wage disparities is even more important as
women have taken a greater role in our economy and in many
cases are the main source of income for families. From 1980 to
2006, women's income as a share of total family income rose
from 26.7 percent to 35.6 percent. As the role of women in the
workforce has changed and women take on new financial
responsibilities in providing for their homes in the current
recession, these disparities will directly impact the pace and
ability of our economy to recover.
There is no doubt that the current recession is
exacerbating the effect of these wage disparities.
Traditionally male-dominated industries such as construction
have struggled to maintain their workforce, while traditionally
female-dominated industries, such as health care and education,
have remained steady. As more and more households become
dependent on female wages in the current recession, these
disparities will slow the ability of the economy to recover.
Women will have less money to spend and even fewer dollars to
save for the long-term. These trends will affect our ability to
recover economically, and they will also shape what our
economy, once recovered, will look like.
While the Lily Ledbetter Fair Pay Act, which I was a proud
cosponsor of and supported when it passed this Congress, sought
to preserve the rights of victims of pay discrimination to
challenge their wrongful termination, it mostly marked a return
to the status quo prior to an adverse Supreme Court 2007
decision. It did not fundamentally address the continued
disparity in wages.
I am a cosponsor of the Paycheck Fairness Act because I
believe we need to do more to address gender wage disparity. We
need publicly accessible explanations for wage gaps between
male and female workers doing the same work, and there needs to
be a means to remedy discriminatory wage gaps. We also need to
find ways to empower women to be able to better negotiate their
wages.
I look forward to listening to today's panelists dissect
the problem and look forward to hearing their ideas on how to
address wage disparities. This is an important conversation,
and I thank the Chairman for convening it.
Thank you.
Prepared Statement of HR Policy Association
Mr. Chairman and distinguished members of the committee: Thank you
for this opportunity to present HR Policy Association's views on the
Paycheck Fairness Act (H.R. 12/S. 182). HR Policy Association
represents the chief human resource officers of 300 of the largest
corporations in the United States, collectively employing over 12
million employees in the United States, and over 18 million worldwide.
One of HR Policy's principal missions is to ensure that laws and
policies affecting employment relations are sound, practical, and
responsive to the realities of the workplace.
S. 182, the Paycheck Fairness Act (PFA), would significantly amend
the Equal Pay Act (EPA) by allowing unlimited compensatory and punitive
damages, in addition to make whole remedies and liquidated damages, now
authorized for equal pay violations. Furthermore, the proposed
legislation would:
ease restrictions on commencing equal pay class action
lawsuits by requiring participants to ``opt-out'' if they do not wish
to be part of the class;
prohibit payroll confidentiality policies;
mandate the collection of wage data from employers for
disclosure to the general public;
limit legitimate nondiscriminatory defenses an employer
could raise to justify wage differentials in equal pay claims;
permit plaintiffs to bring equal pay claims based on wage
differentials with employees located in different geographic locations
(present law limits comparisons to employees located in the same
establishment); and
allow applicants, as well as employees, to make Equal Pay
Act claims.
Moreover, the bill retains its fundamental flaw of imposing new
mandated costs on employers at a time when the economic recovery is
uncertain at best. In addition, it would impose significant new
administrative burdens on employers. This statement provides a detailed
analysis of the HFA and examines some of the concerns employers would
have in seeking to implement it.
The following HR Policy Association analysis discusses in detail
the proposed legislation.
i. introduction to the paycheck fairness act debate
In his January 2010 State of the Union Address, President Obama
declared that ensuring ``equal pay for an equal day's work'' was a
priority for his Administration.\1\ Some have interpreted this as a
call to move forward with the Paycheck Fairness Act. The President's
words are redundant to those who have been following equal pay issues.
After all, the second piece of legislation President Obama signed in
January 2009 was the ``Lilly Ledbetter Fair Pay Restoration Act,'' \2\
which in his words ``guaranteed equal pay for equal work.'' \3\
Considering that President Obama guaranteed that the Ledbetter Act
solved the equal pay for equal work issue, it begs the question of the
need to proceed with the PFA.
---------------------------------------------------------------------------
\1\ The White House, Office of the Press Secretary, Remarks By The
President In The State of the Union Address, Jan. 27, 2010, at http://
www.whitehouse.gov/the-press-office/remarks-president-state-union-
address.
\2\ Pub. L. 111-2 (2009).
\3\ The White House, Office of the Press Secretary, Remarks By The
President At AFL-CIO Labor Day Picnic, Sept. 7, 2009, at http://
www.whitehouse.gov/the_press_office/Remarks-by-the-President-at-AFL-
CIO-Labor-Day-Picnic/.
---------------------------------------------------------------------------
Moving forward with the PFA has been questioned on all sides. For
example, The Washington Post called for the Senate to ``rethink'' the
PFA legislation.\4\ While the Post supported the passage of the
Ledbetter Fair Pay Restoration Act it warned that passage of the PFA
``risks tilting the scales too far against employers and would remove,
rather than restore, a sense of balance.'' \5\
---------------------------------------------------------------------------
\4\ Two Sides of Fair Pay, The Washington Post, Jan. 15, 2009, A-
18.
\5\ Id.
---------------------------------------------------------------------------
Even so, PFA advocates tout the legislation as a way to give the
Equal Pay Act ``new teeth.'' \6\ Such a statement would lead one to
believe that there is currently little to no protection against wage
discrimination on the basis of gender under Federal law. To the
contrary, both the EPA and Title VII of the Civil Rights Act of 1964
already contain blanket provisions prohibiting gender-based pay
discrimination in the workplace. The EPA provides back pay, plus that
amount doubled, injunctive relief and attorney's fees if an employee
simply shows a wage disparity between themselves and a person of the
opposite gender (intentional or unintentional) so long as the employer
cannot provide a legitimate nondiscriminatory reason for the wage
disparity. Title VII also provides an even broader array of remedies
including compensatory and punitive damages, front pay, back pay, and
attorney's fees and costs if an employee can demonstrate that he or she
is receiving lower wages on the basis of gender because of the
employer's intentional discrimination. In addition, title VII also
provides a more limited array of damages if a plaintiff successfully
demonstrates that an employer's pay practice, decisions or systems are
fair in form but discriminatory in operation (i.e., unintentional
discrimination) under a disparate impact theory of discrimination. Such
remedies include back pay, injunctive relief and attorney's fees and
costs. Indeed, both statutes already provide the plaintiff a broad
array of remedies and damages in challenging an employer's pay
practices, systems or decisions under both intentional and
unintentional theories of discrimination. Thus, the two statutes
provide robust mechanisms for both the government and private
plaintiffs to challenge wage disparities or wage discrimination.
---------------------------------------------------------------------------
\6\ Press Release, U.S. Senator Barbara Mikulski, Mikulski, Dodd
Urge Support for the Paycheck Fairness Act, June 16, 2009, http://
mikulski.senate.gov/Newsroom/PressReleases/record.cfm?id=314516.
---------------------------------------------------------------------------
But, in fact, the underlying motivation for proposing the PFA goes
beyond the legal parameters of discrimination against a protected class
(i.e., gender) and into determining the rate of compensation a company
should pay an individual for the performance of their job based on
theoretical understanding of ``fairness'' which is nearly impossible to
agree upon, much less legislate. The purpose of the legislation is to
provide the courts and plaintiffs, including the Equal Employment
Opportunity Commission (EEOC), the ability to second guess an
employer's pay systems, practices or decision. This would include such
decisions that are based on legitimate nondiscriminatory reasons
causing a wage disparity. In other words, under the PFA it would not
matter if a wage disparity is based on a legitimate nondiscriminatory
reason or factor, if the plaintiff can show that the factor was not
job-related or not necessary for the operation of the business, the
employer loses. Such an intrusion on legitimate management functions is
unprecedented.
Supporters often cite a simplistic raw gender wage gap statistic as
proof that pay discrimination exists today in the American workplace on
a large scale and that the PFA is necessary. For example, this past
June, Senator Barbara Mikulski (D-MD) said in support of the PFA that
women ``still just earn 78 cents for every dollar our male counterpart
makes.'' \7\ However, a recent study commissioned by the Department of
Labor (DOL) casts significant doubt on the accuracy of the 78 cents for
every dollar ``gender wage gap'' statistic.\8\ In fact, the study
determined that ``it can be confidently concluded that, collectively,''
the numerous explanatory factors discussed in the report ``account for
a major portion and, possibly, almost all of the raw gender wage gap.''
\9\
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\7\ Id. The statistics cited by Sen. Mikulski in the statement
comes from a general study conducted by the DOL's Bureau of Labor
Statistics.
\8\ The DOL Study was conducted by CONSAD Research Corporation and
is entitled, ``An Analysis of Reasons for the Disparity in Wages
Between Men and Women,'' prepared for the U.S. Department of Labor
Office Employment Standards Administration (January 2009).
\9\ Charles E. James, Sr., Forward by the U.S. Department of Labor
to ``An Analysis of Reasons for the Disparity in Wages Between Men and
Women,'' prepared for the U.S. Department of Labor Office Employment
Standards Administration (January 2009), 1 (emphasis added). The
complete report can be accessed at http://www.hrpolicy.org/downloads/
2009/Gender%20Wage
%20Gap%20Final%20Report.pdf.
---------------------------------------------------------------------------
This analysis begins with discussing the protections against pay
discrimination under current law and then discusses the flaws in the
PFA. Furthermore, this memorandum demonstrates how current
nondiscrimination law is more than sufficient in preventing gender
compensation discrimination in the workplace.
Note: The Equal Pay Act and Title VII of the Civil Rights Act of
1964 are preexisting laws which work together to prevent discriminatory
practices in the workplace, including gender-based pay discrimination.
These laws render the Paycheck Fairness Act redundant and unnecessary.
ii. existing federal laws adequately address gender-based
wage discrimination
Currently, two Federal laws protect employees from gender-based
wage discrimination: the Equal Pay Act and Title VII of the Civil
Rights Act of 1964. The Federal agency responsible for enforcement of
these two laws is the EEOC. Under these laws, women cannot be:
denied equal pay for equal work;
paid differently than men because of their gender;
discriminated against in initial job assignments;
intentionally segregated into ``women's'' jobs;
denied the right to apply for any job, particularly higher
paying jobs dominated by males;
denied training, transfers, promotions, or any other job
opportunities because of their gender; or
subjected to intentional job evaluation manipulations that
downgrade women's pay because of their gender.
As explained in more detail below, Congress has already created
statutory provisions that prohibit all forms of gender-based wage
discrimination and provided effective remedies.
A. The Equal Pay Act
The EPA was originally passed in 1963 as an amendment to the Fair
Labor Standards Act (FLSA) to prohibit gender-based wage
discrimination.\10\
---------------------------------------------------------------------------
\10\ 29 U.S.C. 206(d) (2008).
---------------------------------------------------------------------------
Elements of an EPA Case
The EPA requires ``equal pay for equal work.'' In order to
establish a prima-facie case discriminatory pay ``an employee must
prove an employer paid different wages to men and women performing
equal work,'' \11\ which is demonstrated by demonstrating the
following:
---------------------------------------------------------------------------
\11\ Drum v. Leeson Electric Corp., 565 F.3d 1071, 1072 (8th Cir.
2009).
the work performed by an employee must be ``substantially
equal'' to the work performed by another employee of the opposite sex;
the work must be performed at the same establishment; and
the employee's pay rate must be less than that of an
employee of the opposite sex who performed the same work.
``Substantially equal'' work is proven by showing that the jobs
being compared require equal skill, effort, and responsibility, and
that they are performed under similar working conditions.\12\ The
``same establishment'' requirement has generally been interpreted to
mean the same ``distinct physical place of business'' or ``physically
separate place of business.'' \13\
---------------------------------------------------------------------------
\12\ Lavin-McEleney v. Marist College, 239 F.3d 476, 480 (2d Cir.
2001); Virginia v. Tufenkian Import-Export Ventures, 2008 U.S. Dist.
LEXIS 72139 *26 (S.D. N.Y. 2008).
\13\ 29 CFR 1620.9 (1998).
---------------------------------------------------------------------------
This framework essentially requires a plaintiff to establish only
the mere existence of disparate pay for the performance of equal work,
leaving the defendant with the burden to establish that any
demonstrated pay differential is not due to the aggrieved employee's
sex.'' \14\ Importantly, a plaintiff asserting an EPA claim does not
need to prove the existence of ``intentional discrimination.'' \15\ In
fact, ``the [EPA] prescribes a form of strict liability: Once the
disparity in pay between substantially similar jobs is demonstrated,
the burden shifts to the defendant to prove that a `factor other than
sex' is responsible for the differential. If the defendant fails, the
plaintiff wins.'' \16\
---------------------------------------------------------------------------
\14\ Vereen v. Woodland Hills School Dist., 2008 U.S. Dist. LEXIS
23075 *63 (W.D. Pa. 2008) (citation omitted).
\15\ Ledbetter v. Goodyear Tire, 550 U.S. 618, 639 (2009).
\16\ Miranda v. B & B Cash Grocery Store, Inc., 975 F.2d 1518, 1532
(11th Cir. 1992).
---------------------------------------------------------------------------
Defenses
After the employee proves each of the above elements, the burden
shifts to the employer to show, by a preponderance of the evidence,
that the wage differential is justified by one of four affirmative
defenses set forth in the EPA.\17\ The four affirmative defenses are
whether wages are set according to:
---------------------------------------------------------------------------
\17\ Corning Glass Works v. Brennan, 417 U.S. 188, 196 (1974)
(``Again, while the Act is silent on this question, its structure and
history also suggest that once the Secretary has carried his burden of
showing that the employer pays workers of one sex more than workers of
the opposite sex for equal work, the burden shifts to the employer to
show that the differential is justified under one of the Act's four
exceptions.'').
(i) a seniority system;
(ii) a merit system;
(iii) a system that measures earnings by the quantity or
quality of production; or
(iv) a differential based on any other factor other than
sex.
If the employer is unable to meet its burden of proving one of the
four defenses, it has violated the EPA. The fourth affirmative defense
is used by employers in the great majority of EPA cases to show that
any wage disparity is the result of legitimate nondiscriminatory
business factors. The PFA, however, would completely eviscerate this
defense. The burden of proving that a factor other than gender is a
reason for a wage differential under the EPA ``is a heavy one'' \18\
and employers must establish that gender was ``no part of the basis''
of the alleged wage disparity.\19\ Courts have permitted employers to
raise the fourth defense successfully for many nondiscriminatory
reasons such as when wage differentials exist as a result of temporary
reassignments, training programs, prior salary history, prior
experience, education, shift differentials, and ``red circle''
rates.\20\
---------------------------------------------------------------------------
\18\ Beck-Wilson v. Principi, 441 F.3d 353, 365 (6th Cir. 2006);
Mahan v. Peake, 2009 U.S. Dist. LEXIS, at * 23 (E.D. Mich. 2009).
\19\ Mahan v. Peake, 2009 U.S. Dist. LEXIS, at *23 (E.D. Mich.
2009) (emphasis in original).
\20\ ``Red circles rate'' has been defined to mean ``certain
unusual, higher than normal, wage rates which are maintained for many
reasons'' unrelated to gender. Gosa v. Bryce Hosp., 780 F.2d 917, 918
(11th Cir. 1986).
---------------------------------------------------------------------------
Damages
Available remedies to a successful EPA plaintiff include back pay
for 2 or 3 years and liquidated damages (i.e., double back pay).\21\
Back pay may be awarded for up to 3 years, rather than 2, if the
employer's actions are found to have been willful.\22\ Liquidated
damages (an amount equal to back pay) are generally awarded to a
prevailing plaintiff unless the employer demonstrates that its actions
were in ``good faith'' and that it had ``objectively reasonable grounds
for believing'' that its actions did not violate Federal law.\23\ While
attorneys' fees may be awarded, expert fees are not recoverable.
---------------------------------------------------------------------------
\21\ 29 U.S.C. 216(b) (2008).
\22\ 29 U.S.C. 255(a) (2008). ``Willful'' is only applicable for
the period of recovery (i.e. 2 or 3 years) and not whether liquidated
damages should be awarded. See Brown v. Fred's Inc., 494 F.3d 736, 744
(8th Cir. 2007) (``A different statute provides that if the employee
shows a willful violation, then the statute of limitations is extended
from 2 to 3 years, but this is not the standard for liquidated
damages.'').
\23\ 29 U.S.C. 260 (2008); Brown v. Fred's Inc., 494 F.3d 736,
743-44 (8th Cir. 2007).
---------------------------------------------------------------------------
B. Title VII of the Civil Rights Act
Employees may also bring gender-based wage discrimination claims
under Title VII of the Civil Rights Act of 1964.\24\ Indeed, many pay
discrimination plaintiffs allege violations of both statutes. Under
title VII, there are two theories by which a plaintiff can pursue a pay
discrimination claim: (1) disparate treatment and (2) disparate
impact.\25\ Disparate treatment occurs when a plaintiff is
intentionally treated less favorably than others because of gender.\26\
Disparate impact, on the other hand, exists where a neutral employment
practice has a disproportionately impact on the plaintiff 's gender
\27\ in such a manner that the practice is ``fair in form but
discriminatory in operation.'' \28\ In other words, proof of
discriminatory motive is not required under the disparate impact theory
of discrimination whereas disparate treatment discrimination requires a
showing of intentional discrimination.\29\ Understanding the difference
between these two theories of discrimination is important as different
remedies and damages are available under each.
---------------------------------------------------------------------------
\24\ 42 U.S.C. 2000e-2(a) (2008).
\25\ Moore v. The Boeing Co., 2004 U.S. Dist. LEXIS 5959 (E.D. Mo.
2004) (``Plaintiffs seek class certification on their salary claims,
both under a disparate treatment theory and under a theory of disparate
impact.'').
\26\ International Brotherhood of Teamsters v. U.S., 431 U.S. 324,
335 n.15 (1977).
\27\ Id.
\28\ Griggs v. Duke Power Co., 401 U.S. 424, 431 (1971).
\29\ International Brotherhood of Teamsters v. U.S., 431 U.S. at
335 n.15.
---------------------------------------------------------------------------
Broader Than EPA
Title VII is broader than the EPA in several ways. First, unlike
the EPA, which is limited to wage discrimination, title VII prohibits
gender discrimination in areas that have an impact on wages and have
compensation-related consequences such as hiring, firing, assigning,
promotion, and transfers. Indeed, courts have recognized that the
burden on employers is ``meaningfully'' different than under title VII.
One court noted, ``this standard differs meaningfully from the standard
applicable under title VII. In a title VII case, the plaintiff . . .
must establish that the employer discriminated against [him or her]
with respect to the terms of her compensation because of her sex. In
contrast, in an Equal Pay Act case, the defendant employer relying on
the [EPA's fourth affirmative] defense must establish that an aggrieved
employee . . . is not being paid less because of her sex.'' \30\
---------------------------------------------------------------------------
\30\ Vereen v. Woodland Hills School Dist., 2008 U.S. Dist. LEXIS
23075 *71 (W.D. Pa. 2008) (emphasis in orginal).
---------------------------------------------------------------------------
Moreover, under title VII, plaintiffs are not required to
demonstrate that the jobs are ``substantially'' equal as long as the
plaintiff can prove that the wage disparity is due to intentional
discrimination.\31\ Title VII also allows for recovery without the
comparison of wages with another employee of the opposite gender.\32\
For example, if an employer intentionally lowered an individual's pay
on account of gender ``even if there were no employees of the opposite
sex doing equal work for higher pay.'' \33\
---------------------------------------------------------------------------
\31\ Sims-Fingers v. City of Indianapolis, 2007 U.S. App. LEXIS
15253 *8 (7th Cir. 2007).
\32\ County of Washington v. Gunther, 452 U.S. 159, 178-80 (1981);
Drury v. Waterfront Media, Inc., 2007 U.S. Dist. LEXIS 18435 at *15
(S.D. N.Y. Mar. 7, 2007).
\33\ Drury v. Waterfront Media, Inc., 2007 U.S. Dist. LEXIS 18435
at *15 (S.D. N.Y. Mar. 7, 2007); Brennan v. City of White Plains, 1998
U.S. Dist. LEXIS 1931 at *9 (S.D.N.Y. 1998).
---------------------------------------------------------------------------
Defenses
As to defenses, the same four affirmative defenses available under
the EPA are also available under title VII.\34\ The defenses include
wages that are set according to a seniority system, a merit system, a
system that measures earnings by the quantity or quality of production,
or any other factor other than gender.
---------------------------------------------------------------------------
\34\ Gunther, 452 U.S. at 170-71.
---------------------------------------------------------------------------
Damages
Title VII and the EPA differ in the area of available remedies.
There is no provision for liquidated damages under title VII. However,
under title VII, in addition to receiving back pay for 2 years,
disparate treatment (i.e., intentional discrimination) plaintiffs may
also recover injunctive relief, front pay, capped compensatory and
punitive damages and attorney's fees and costs. Depending on the number
of employees of the employer, compensatory and punitive damage awards
may range from $50,000 to $300,000.\35\ However, under a disparate
impact theory of discrimination (i.e., unintentional discrimination), a
successful plaintiff may only recover injunctive relief, back pay and
attorney's fees and costs. The remedies available for plaintiffs suing
a disparate impact theory of discrimination are limited because there
is no requirement to prove the employer acted with discriminatory
motive whereas remedies available for disparate treatment
discrimination are much more expansive but there must be a showing of
intentional discrimination.
---------------------------------------------------------------------------
\35\ 42 U.S.C. 1981a(b)(3) (2008) (employers of 15-100 employees,
$50,000 cap; employers of 101-200 employees, a $100,000 cap; employers
of 201-500 employees, a $200,000 cap; employers of over 500 employees,
a $300,000 cap).
---------------------------------------------------------------------------
Admittedly, pay discrimination does occur in some cases. But the
pertinent question at hand is whether these occurrences can be
adequately addressed by the robust nondiscrimination protections
currently in the law or whether a drastic change in current law is
needed that the PFA represents. The ramifications of the PFA are
discussed below.
iii. the paycheck fairness act
The PFA has very little to do with punishing and deterring pay
discrimination thus ensuring equal pay for equal work, which since 1963
has been required by the EPA. Representative George Miller (D-CA),
Chairman of the House Education and Labor Committee, has gone on the
record admitting that the issue is not really gender discrimination,
but instead, about how employers compensate their employees, even in
cases where unlawful discrimination is decidedly absent. Rep. Miller
stated:
Currently, an employer can refute a pay discrimination claim
if he or she provides the difference of pay is based upon any
factor other than gender, even factors unrelated to the job.
That is just unacceptable. An excuse for equal pay that is not
related to the job is no excuse at all.\36\
---------------------------------------------------------------------------
\36\ 155 Cong. Rec. H127 (daily ed. Jan. 9, 2009) (statement of
Rep. Miller).
It is important to note that Rep. Miller does not distinguish
between differences in pay that are the result of discriminatory motive
or one that is nondiscriminatory. Indeed, other proponents of the PFA
have noted that the legislation would require employers to show that
pay disparities are not only nondiscriminatory (i.e., not based on
gender), but also that such disparities are job-related and necessary
to the operation of the business, which is a very high standard once a
practice, system or decision has already been deemed nondiscriminatory.
---------------------------------------------------------------------------
Proponents noted the following:
Permitting an employer to assert an affirmative defense in an
EPA action, only where the pay differential between men and
women is not related to gender, is related to job performance,
and is consistent with business necessity.\37\
---------------------------------------------------------------------------
\37\ Commission on Women in the Profession, Report to the House of
Delegates ABA, 1.
---------------------------------------------------------------------------
Effectively Eliminates Legitimate Nondiscriminatory Reasons as an
Adequate Legal Justification for Wage Differentials
The PFA substantially changes the affirmative defenses available
under the EPA. In particular, the bill would revamp the fourth
affirmative defense (i.e., any factor other than sex). An employer
demonstrating that a wage differential is the result of a legitimate
nondiscriminatory factor, by itself, would no longer be sufficient to
prevail against allegations of wage discrimination. As described above,
this defense has been successfully raised by employers when wage
differentials exist for several reasons including, but not limited to,
education, experience, training, prior salary history, profitability
and revenue production. The PFA would create a confusing scheme
requiring the employer to go beyond showing that a nondiscriminatory
reason is the basis for the wage difference. The employer would then be
required to prove that such legitimate nondiscriminatory factors are
job-related and consistent with business necessity. The PFA would
invoke a fundamental change in Federal nondiscrimination law by going
beyond the question of discrimination (i.e., whether the employment
action or pay disparity was based on a protected classification such as
gender). The legislation would require a business to establish that its
pay structure, systems or decisions were necessary to the operation of
the business or consistent with an overriding business objective.
A Bona Fide Factor. The first step in this scheme would require an
employer attempting to assert this defense to prove, first, that the
factor causing the wage disparity is ``bona fide.'' ``Bona fide'' could
be interpreted to require an employer to prove that this factor is part
of a ``systematic, formal system guided by objective, written
standards.'' \38\ Moreover, although not expressly making them
exclusive, the bill identifies three factors as examples of ``bona
fide'' factors, namely, education, training, and experience. If such
factors are considered non-exclusive, this step closes mirrors, the
current fourth affirmative defense, which considers whether the wage
disparity is based on a factor other than gender (i.e., not based on
gender--not discriminatory).
---------------------------------------------------------------------------
\38\ See Brennan v. Victoria Bank & Trust Co., 493 F.2d 896, 901
(5th Cir. 1974).
---------------------------------------------------------------------------
Job-Related & Consistent With Business Necessity Standard. Yet
under the PFA, whether a wage disparity is discriminatory does not end
the inquiry. Indeed, after the employer demonstrates that the factor is
``bona fide,'' the second step in the new scheme would be to require an
employer to prove that the factor is both ``job-related'' and
``consistent with business necessity.'' This very high burden is
reserved for unique situations arising in Federal employment law.
In fact, there are two unique situations where the courts apply the
job-related and business necessity standard. The first is under title
VII where a plaintiff establishes that an employer's practice is fair
in form but has a disproportionate impact on a particular protected
classification (i.e., disparate impact).\39\ The second scenario under
which the job-related and business necessity standard is used is under
the ADA where an individual challenges an employer test or standard
that screens out disabled individuals.
---------------------------------------------------------------------------
\39\ In a disparate impact action, ``a plaintiff establishes a
prima facie violation by showing that an employer uses `a particular
employment practice' that causes a disparate impact on the basis of
race, color, religion, sex, or national origin.'' An employer defends
against liability by demonstrating that the contested practice is
``job-related for the position in question and consistent with business
necessity.'' Even if the ``employer carries that substantial burden,
the [plaintiff] may respond by identifying `an alternative employment
practice' which the employer `refuses to adopt.' '' Ricci v. Destefano,
129 S. Ct 2658, 2673 (2009) (quotations omitted).
---------------------------------------------------------------------------
In order to show ``job-relatedness'' an employer ``must demonstrate
that the qualification standard fairly and accurately measures the
individual's actual ability to perform the essential functions of the
job.'' \40\ To establish that the disputed employment practice such as
a pay structure is consistent with ``business necessity,'' the employer
``must show that it substantially promotes the business's needs.'' \41\
Indeed, ``the `business necessity' standard is quite high, and is not
to be confused with mere expediency.'' \42\
---------------------------------------------------------------------------
\40\ Bates v. United Parcel Service, Inc., 511 F.3d 974, 996 (9th
Cir. 2007) (citations omitted).
\41\ Bates v. United Parcel Service, Inc., 511 F.3d 974, 996 (9th
Cir. 2007) (citations omitted). See also, EEOC v. Dial Corp., 475 F.3d
735, 743 (8th Cir. 2006) (``part of the employer's burden to establish
business necessity is to demonstrate the need for the challenged
procedure'')
\42\ Bates v. United Parcel Service, Inc., 511 F.3d 974, 996 (9th
Cir. 2007) (citations omitted).
---------------------------------------------------------------------------
In referring to the test for showing ``business necessity'' under
title VII's disparate impact theory of discrimination, Justice Ginsburg
explained that otherwise neutral employment practices which had a
disproportionate impact on a particular protected group ``could be
maintained only upon an employer's showing of `an overriding and
compelling business purpose.' '' \43\ Moreover, she noted ``that a
practice served ``legitimate management functions did not . . . suffice
to establish business necessity.'' \44\ Ginsburg cited a series of
cases setting forth the high standard of the business necessity defense
including the following:
---------------------------------------------------------------------------
\43\ Ricci v. Destefano, 129 S. Ct 2658, 2697 (2009) (dissenting,
Ginsburg) quoting Chrisner v. Complete Auto Transit, Inc., 645 F.2d
1251, 1261 n.9 (6th Cir. 1981).
\44\ Ricci v. Destefano, 129 S. Ct 2658, 2697-2698 (2009)
(dissenting, Ginsburg) quoting Williams v. Colorado Springs, 641 F.2d
835, 840-41 (10th Cir. 1981).
``a discriminatory employment practice must be shown to be
necessary to safe and efficient job performance'' \45\;
---------------------------------------------------------------------------
\45\ Dothard v. Rawlinson, 433 U.S. 321, 332 n. 14 (1977).
---------------------------------------------------------------------------
``the term `necessity' connotes that the exclusionary
practice must be shown to be of great importance to job performance''
\46\;
---------------------------------------------------------------------------
\46\ Williams v. Colorado Springs, 641 F.2d 835, 840-41 (10th Cir.
1981).
---------------------------------------------------------------------------
``the proper standard for determining whether `business
necessity' justifies a practice which has a racially discriminatory
result is not whether it is justified by routine business
considerations but whether there is a compelling need for the employer
to maintain that practice and whether the employer can prove there is
no alternative to the challenged practice'' \47\;
---------------------------------------------------------------------------
\47\ Kirby v. Colony Furniture Co., 613 F.2d 696, 705 n.6 (8th Cir.
1980).
---------------------------------------------------------------------------
``this doctrine of business necessity . . . connotes an
irresistible demand'' \48\;
---------------------------------------------------------------------------
\48\ Pettway v. American Cast Iron Pipe Co., 494 F.2d 211, 244 n.87
(5th Cir. 1974).
---------------------------------------------------------------------------
``an exclusionary practice must not only directly foster
safety and efficiency of a plant, but also be essential to those
goals'' \49\;
---------------------------------------------------------------------------
\49\ U.S. v. Bethlehem Steel Corp., 446 F.2d 652, 662 (2d Cir.
1971).
In fact, the business necessity defense demands that there is no
other less impactful way to achieve the employer's compelling need.
Justice Stevens, noted in comparing the business necessity standard to
the ``reasonable factor other than age'' defense under the ADEA, that
``unlike the business necessity test, which asks whether there are
other ways for the employer to achieve its goals that do not result in
a disparate impact on a protected class, the reasonableness inquiry
includes no such requirement.'' \50\ As noted above, it would not be
enough that a pay practice, system or decision is a legitimate
nondiscriminatory management decision or even reasonable. Such
decisions would still have to run the gauntlet of job relatedness and
business necessity. If such practices failed to pass the scrutiny of a
judge or jury--regardless of whether it was not based on gender--an
employer would be subject to the full range of damages under Federal
law.
---------------------------------------------------------------------------
\50\ Smith v. City of Jackson, 544 U.S. 228, 243 (2005).
---------------------------------------------------------------------------
No Other Means to Accomplish the Business Goal or Purpose. Under
the PFA, if the employer establishes that a wage difference is based on
a bona fide factor and if the employer is also able to satisfy the very
high burden of showing that the factor is job-related and consistent
with business necessity, the employee would then be given an
opportunity to defeat the employer's use of this defense altogether by
showing that an alternative means to achieve the legitimate business
purpose exists without resulting in a wage differential. If the
employee is able to make that showing, the employer would lose. In
other words, the plaintiff would be given the final opportunity to
defeat the employer's use of this so-called ``bona fide factor''
defense. Indeed, the deck is heavily stacked against the employer
simply because an employee can show that a wage disparity exists.
Unprecedented Penalty Provisions
The PFA would establish penalties for equal pay violations that are
unprecedented in Federal equal employment opportunity (EEO) law. The
bill would provide plaintiffs with unlimited monetary remedies,
including back pay, liquidated damages, unlimited compensatory and
punitive damages, attorneys' fees, costs of the action, and expert
fees.\51\ No other Federal EEO law provides such a wide array of
monetary relief to successful plaintiffs. (See Table 1).
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\51\ The expert fee provision of the PFA is not limited to equal
pay claims but also would amend the ADEA and FLSA to permit the award
of such fees under those statutes as well.
For example, Title VII of the Civil Rights Act, which prohibits
discrimination based on race, gender, religion, and national origin,
provides for recovery of back pay, attorney and expert fees, and awards
of compensatory and punitive damages.\52\ Unlike the PFA, however,
liquidated damages are not available under title VII, and compensatory
and punitive damages (collectively) are capped at $300,000 depending on
the size of the employer.\53\ The Americans with Disabilities Act
(ADA), which prohibits discrimination against qualified individuals
with disabilities, provides a remedial scheme identical to that of
title VII.\54\
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\52\ 42 U.S.C. 2000e-5 (g), (k) (2008).
\53\ Like title VII, the Civil Rights Act of 1866, 42 U.S.C 1981,
also prohibits discrimination in employment based on race. Under this
section, successful plaintiffs may recover back pay, compensatory and
punitive damages, and attorneys' fees. Patterson v. McLean Credit
Union, 491 U.S. 164, 182 n. 4 (1989). Liquidated damages and expert
fees, however, may not be awarded under the 1866 Act.
\54\ 42 U.S.C. 12,117 (2008); 42 U.S.C. 1981a (a) (2), (b) (3)
(2008); Luciano v. Olsten Corp., 110 F.3d 210, 221 (2d Cir. 1997).
---------------------------------------------------------------------------
The Age Discrimination in Employment Act (ADEA), on the other hand,
provides back pay and liquidated damages remedies, but does not permit
recovery of compensatory and punitive damages or expert fees.
Furthermore, under the ADEA, liquidated damages are capped at an amount
equal to the sum recovered in back pay.\55\
---------------------------------------------------------------------------
\55\ 29 U.S.C. 626 (b) (2008).
---------------------------------------------------------------------------
The outlier is the Civil Rights Act of 1866, which is also known as
Section 1981. This law was originally enacted to enforce the 13th,
14th, and 15th amendments to the U.S. Constitution following the Civil
War. The act prohibits race discrimination in making and enforcing
contracts. The courts determined that the act's prohibition applied to
the employer-employee relationship. Section 1981 only applies to race
and national origin discrimination.\56\ It allows uncapped compensatory
and punitive damages \57\ but does not provide for liquidated damages
as under the EPA.
---------------------------------------------------------------------------
\56\ Civil Rights Act of 1866, 14 Stat. 27.
\57\ 42 U.S.C. 1981 (2008).
---------------------------------------------------------------------------
Thus, unlike every other nondiscrimination law, under the PFA a
plaintiff is eligible to recover every remedy available under all other
Federal nondiscrimination laws combined. Clearly, such an expansive
measure exceeds the scope of the relief available under any existing
Federal EEO law.
Minimal Proof Requirements
No Proof of Intent Required. A troubling aspect of the PFA remedial
scheme is the lack of proof that is required under the bill to recover
the full panoply of damages. As noted above, the current standard for
proving an EPA violation is a form of strict liability and there is no
requirement that an individual be subjected to intentional
discrimination (though the damages are increased for bad-faith
violations).\58\ Whether a wage differential results accidentally, or
from an explicit intent on the part of the employer to discriminate
based on gender, makes no difference. The PFA in no way changes this
standard, but nonetheless provides for unlimited compensatory and
punitive damages under the act. The low standard established by the PFA
for recovery of compensatory and punitive damages is contrary to long
established Federal EEO policy unprecedented in Federal law. For
example, to recover such damages under title VII and ADA, plaintiffs
must prove that the employer intentionally discriminated against them
because of their race, gender, religion, national origin or
disability.\59\ Moreover, even where intent is proven under these laws,
damages are limited to no more than $300,000. The 1866 Civil Rights Act
also requires proof of intentional discrimination in order to recover
damages. Even the ADEA, which provides limited liquidated damages,
requires some demonstration of intent. Under that statute, an employer
is liable for damages only where the discrimination was willful--that
is, where the employer ``knew or showed reckless disregard for the
matter of whether its conduct was prohibited by the ADEA.'' \60\
However, as noted above, when a plaintiff advances a disparate impact
(i.e., unintentional discrimination) theory of discrimination the
plaintiff 's remedies are limited to back pay, injunctive relief and
attorney's fees.
---------------------------------------------------------------------------
\58\ Beck-Wilson v. Principi, 441 F.3d 353, 360 (6th Cir. 2006)
(stating that ``unlike the showing required under title VII's disparate
treatment theory, proof of discriminatory intent is not required to
establish a prima facie case under the Equal Pay Act.''); Fallon v.
Illinois, 882 F.2d 1206, 1213 (7th Cir. 1989); Brewster v. Barnes, 788
F.2d 985, 993 n.12 (4th Cir. 1986) (discriminatory intent is not an
element of a claim under the EPA); Tidwell v. Fort Howard Corp., 989
F.2d 406, 410 (10th Cir. 1993) (same).
\59\ 42 U.S.C. 1981a(a)(1) (2008).
\60\ Trans World Airlines v. Thurston, 469 U.S. 111 (1985).
---------------------------------------------------------------------------
Employer Defenses Restricted. Finally, unlike the EPA, the PFA will
penalize employers even when they acted with a reasonable belief that
their pay policies were lawful. Because of the complexity of wage
cases, Congress long ago recognized a defense to liquidated damages
awards under the FLSA and EPA where an employer acted in ``good faith''
and with ``reasonable grounds for believing'' its conduct was
lawful.\61\ In such cases, the court is authorized to limit or deny
liquidated damages. In the past, this has been a just and important
defense for employers, limiting their liability in cases where they had
acted in reliance on advice from their lawyers,\62\ on opinions of the
EEOC,\63\ or upon reasonable, but ultimately incorrect, wage comparison
data.\64\ While this defense remains available under the PFA for
liquidated damages, it would not affect awards for compensatory and
punitive damages. Given the factual and legal complexities associated
with EPA compliance, the absence of a good faith defense to
compensatory and punitive damages in the PFA could pose significant
problems for employers.
---------------------------------------------------------------------------
\61\ 29 U.S.C. 260 (2008).
\62\ E.g., Hill v. J.C. Penney Co., 688 F.2d 370, 375 (5th Cir.
1982).
\63\ E.g., EEOC v. Tree of Life Christian Sch., 751 F. Supp. 700,
707 (S.D. Ohio 1990).
\64\ E.g., Clymore v. Far-Mar-Co., 709 F.2d 499, 505 (8th Cir.
1983).
---------------------------------------------------------------------------
Dubious Policy for Confronting Workplace Discrimination
PFA Will Increase Litigation. As one can see from its remedial
scheme, the PFA adopts what has become an all-too-familiar policy for
confronting societal problems--expanding civil monetary penalties
against employers. History demonstrates that an expansion of civil
monetary remedies will only encourage the filing of meritless charges
and lawsuits.
A case in point is the Civil Rights Act of 1991. That statute was
designed to help deter workplace discrimination by drastically
increasing--in the form of compensatory and punitive damages--the
penalties for such discrimination. Federal charge and caseload data
indicate, however, that the 1991 Act has served more to encourage the
filing of frivolous charges and lawsuits, thereby imposing its own
costs on society.
Even the courts themselves have begun to take notice of the
proliferation of meritless employment claims. For example, one district
court stated:
This Court has observed too many cases where an individual
who has been rejected for a job or who has been fired from a
position will make totally unsupported claims of
discrimination. Indeed, some persons make multiple, non-
substantiated claims, i.e., race, religion, gender, age, in the
same case in the hope that maybe one of the claims will
``stick.'' \65\
---------------------------------------------------------------------------
\65\ Bray v. Georgetown Univ., 917 F. Supp. 55, 60 (D.D.C. 1996),
aff 'd without op., 116 F.3d 941 (D.C. Cir. 1997).
---------------------------------------------------------------------------
And another district court said:
This case is yet another entrant in a tiresome parade of
meritless discrimination cases. Again and again, the Court's
resources are sapped by such matters, instigated by implacable
parties and prosecuted with questionable judgment by their
counsel. It is high time for this to stop.\66\
---------------------------------------------------------------------------
\66\ Keegan v. Dalton, 899 F. Supp. 1503, 1515 (E.D. Va. 1995).
As former Justice O'Conner prudently observed over 20 years ago,
the value of any increase in the availability of monetary relief must
be evaluated by weighing the likely increase in deterrent effect
against the additional incentive for meritless litigation.\67\
Statistics have shown that the addition of limited damages under the
1991 Act failed this test. It appears likely that the unlimited damages
provisions of the PFA are destined to repeat that mistake.
---------------------------------------------------------------------------
\67\ Smith v. Wade, 461 U.S. at 93-94 (O'Connor, J. dissenting).
---------------------------------------------------------------------------
Class Action Changes: ``Opt-In'' to ``Opt-Out''
The PFA would also change the procedural requirements for bringing
class action claims under the EPA from ``opt-in'' class actions to
``opt-out'' actions. This is an especially troubling aspect of the new
bill, as it would dramatically increase the magnitude of class actions
brought under the EPA.
Under existing law, equal pay claims are subject to the class
action provisions contained in 29 U.S.C. 216(b). This section--which
also applies to actions brought under the FLSA and ADEA--permits
individual employees to bring ``collective'' or ``class'' lawsuits on
behalf of ``similarly situated'' employees against the employer.
Section 216(b) specifically states, however, that ``no employee shall
be a party plaintiff to any . . . action [under this section] unless he
gives his consent in writing to become such a party and such consent is
filed with the court in which such action is brought.'' Thus,
presently, employees who desire to participate in an equal pay class
action must take affirmative steps to join the class. This kind of
class action device often is referred to as an ``opt-in'' class action.
The PFA, however, amends the EPA to exclude equal pay claims from
Section 216(b) coverage. Under the proposed legislation, EPA class
actions instead would be subject to the requirements of Federal Rule of
Civil Procedure (Rule 23), the procedural rule that governs all other
class action cases in Federal court. This change is significant because
Rule 23 uses an ``opt-out'' procedure. That is, in a Rule 23 class
action all similarly situated employees automatically become members of
the class unless they take affirmative steps to withdraw from the
class.\68\ Since most individuals, when notified that a class action is
pending, do nothing at all, the magnitude of ``opt-out'' class actions
is invariably larger than ``opt-in'' actions.\69\ This is particularly
concerning because many individuals would remain (or not opt-out) as
part of a putative class even though they do not believe they have been
the subject of discrimination, which will waste judicial resources,
simply serve to drive up litigation or settlement costs and result in
significantly higher attorney's fees awards for the plaintiffs'
attorneys.
---------------------------------------------------------------------------
\68\ Fed. R. Civ. P. 23(c)(2) (2008).
\69\ Rule 23 also permits a court to certify class actions without
the opt-out right. Fed. R. Civ. P. 23(b)(1), (2). Under 23(b)(1) and
(2) cases, all potential class members are included in the action
regardless of their desires. Fed. R. Civ. P. 23(c)(3). Obviously,
classes certified under these provisions generate class sizes at least
as large as those certified with the opt-out provision. In the past,
employment discrimination cases commonly had been certified under
either approach. Thus, it is at least theoretically possible that PFA
claims likewise could be certified without an opt-out right. However,
many courts now question whether claims involving compensatory and
punitive damages, such as those that would arise under the PFA, can be
certified without affording potential class members the opportunity to
opt-out. See, e.g., Ticor Title Ins. Co. v. Brown, 114 U.S. 1359, 1361
(1994).
---------------------------------------------------------------------------
One Federal court of appeals has noted that these large opt-out
damages cases create insurmountable pressure on defendants to settle
regardless of the merits of the case. ``The risk of facing an all-or-
nothing verdict presents too high a risk, even when the probability of
an adverse judgment is low.'' \70\ Other Federal courts have referred
to these kinds of cases as ``judicial blackmail.'' \71\
---------------------------------------------------------------------------
\70\ Castano v. American Tobacco Co., 84 F.3d 734, 746 (1996).
\71\ See, e.g. Id. at 746; In re Rhone-Poulenc Rorer, Inc., 51 F.3d
1293 (7th Cir.), cert. denied, 116 U.S. 767 (1995).
---------------------------------------------------------------------------
Indeed, the real benefit goes to the lawyers who will bring suits
under the PFA. A PFA proponent admitted that one reason for adding
compensatory and punitive damages is to entice the plaintiffs' bar.
Representative Rob Andrews (D-NJ) stated:
Now, the problem with the Equal Pay Act is its remedies are
limited so much to just twice what your salary is that the
damages are never high enough to justify legal representation.
This is about getting lawyers for people who have a valid claim
who cannot afford the thousands of dollars it would be.\72\
---------------------------------------------------------------------------
\72\ 153 Cong. Rec. H128 (daily ed. Jan. 9, 2009) (statement of Rob
Andrews).
A key element that Rep. Andrews does not address, however, is that
both the EPA and title VII currently provide attorney's fees to the
prevailing party. Representative Tom Price (R-GA), concerned that the
plaintiffs' bar would aggressively use the PFA to attack employers' pay
systems, practice and decisions on a grand scale in order to achieve
high dollar settlements, offered an amendment in a House Committee
hearing that would have limited an award of ``reasonable attorney's
fees'' in PFA cases to $2,000 per hour.\73\ The proponents of the PFA,
however, rejected the amendment because it would unduly interfere with
the plaintiffs' bar pay.\74\ Indeed, the PFA provides every incentive
for the plaintiffs' bar to challenge employers pay systems, practices
or decisions regardless of whether a pay disparity is the result of
discrimination.
---------------------------------------------------------------------------
\73\ H.R. Rep. No. 110-783, at 53 (2008).
\74\ Notes of the legislative debate during the mark-up of the bill
in the House Education and Labor Committee between Reps. Price (R-GA),
McKeon (R-CA) and Andrews (D-NJ) on file with the author.
---------------------------------------------------------------------------
Wage Differentials Based on Work Location No Longer Permissible
As part of a plaintiff 's initial or prima facie EPA case, he or
she must also show that the show a wage disparity compared with another
employee working in the same establishment.\75\ EEOC regulations define
``establishment'' as follows:
---------------------------------------------------------------------------
\75\ 29 U.S.C. 206(d) (2008).
It refers to a distinct physical place of business rather
than to an entire business or enterprise which may include
several separate places of business. Accordingly, each
physically separate place of business is ordinarily considered
a separate establishment.\76\
---------------------------------------------------------------------------
\76\ 29 CFR 1620.9 (a).
This requirement recognizes real business and economic differences
that may exist from facility to facility and serves to prevent an
employee from comparing wages with other employees in separate plants,
or geographical regions.\77\ The regulations, however, recognize
exceptions to the rule in ``unusual circumstances.'' \78\
---------------------------------------------------------------------------
\77\ Collins v. Landmark Military Newspapers, 2007 U.S. Dist. LEXIS
57572 at **46-47 (E.D. Va. 2007) (holding that a plaintiff located in
Norfolk, VA, could not adequately be compared with employees of the
opposite gender in North Carolina because the EPA precludes
``comparison of jobs across establishments'' and the plaintiff failed
to set forth any ``unusual circumstances'' justifying consideration of
employees outside her establishment).
\78\ 29 CFR 1620.9 (b).
---------------------------------------------------------------------------
The PFA would expand ``establishment'' to mean any of the
employer's facility within the same county or similar political
subdivision. Importantly, however, the PFA would invite the EEOC to
draft new regulations on the meaning of ``establishment.''
Applicants Eligible to Make Equal Pay Act Claims
Presently, only employees are able to present Equal Pay Act claims.
Job applicants are not ``employees'' for purposes of the Equal Pay
Act.\79\ Under the revised PFA, applicants (who would be employees if
employed by the employer) would now be able to make Equal Pay Act
claims. Under this revision, an individual who was offered a job but
declined it could potentially make an EPA claim. Claims of pay
discrimination (i.e., wage disparity) brought by, or on behalf of,
individuals who have never worked for the employer is simply illogical
as the case would have to be constructed on hypothetical assertion
after hypothetical assertion. Indeed, the real purpose of such a
provision would be to significantly expand the scope of eligible
plaintiffs in class actions, which, as noted above, would simply serve
to drive up litigation costs (pushing employers to settle) and increase
the return to plaintiff attorneys on behalf of individuals who could
bring these claims. In the end, there is no rational justification for
this expansion of the EPA.
---------------------------------------------------------------------------
\79\ Torres v. Action for Boston Community Dev., Inc., 32 FEP 1516,
1519 (D. Mass. 1983).
---------------------------------------------------------------------------
Nonretaliation Provision for Wage Disclosure
Under Section 3 of the PFA, it would be illegal for an employer to
discharge or discipline an employee who ``has inquired about,
discussed, or otherwise disclosed the wages of the employee or another
employee.'' This provision would prevent employers from enforcing
company policies concerning the privacy and confidentiality of employee
payroll and wage information.
The National Labor Relations Board in its enforcement of the
National Labor Relations Act (NLRA) has similarly protected employees
who have shared or disclosed pay information. However, the PFA language
is even broader in terms of which employees would be protected. Under
the NLRA, supervisors and managerial employees are not covered
employees and, therefore, are not afforded this protection from being
disciplined or discharged. Under the PFA, supervisors and managerial
employees would be protected from discipline or discharged if they
disclose wage-
related information. Importantly, it is supervisors and managerial
employees who have far greater access to pay data.
Mandatory and Public Wage Data Collection and Reporting
Section 8 of the bill does not amend the EPA, but instead, creates
a new enforcement mechanism by enabling the EEOC to collect pay and
compensation data from all covered employers. The PFA directs the EEOC
to determine what wage data information would be helpful in
strengthening the enforcement of wage discrimination laws. The EEOC
would then issue regulations regarding how and what type of information
it would require from employers. Although the bill provides that, in
promulgating such regulations, the EEOC must consider the burden on
employers, the frequency of reporting, and protections to maintain pay
data confidentiality, the EEOC would be given virtually unlimited
discretion in determining what wage data employers must report. Nothing
in the bill prevents the wage data from being publicly disclosed by the
EEOC. Employers would be required to report the wage data by the
gender, race and national origin of their employees. In the end, it is
highly likely that the EEOC would require all employers to file
something very similar to the Equal Opportunity Survey (discussed
below), which was ultimately rescinded by the DOL in 2006 because of
its ineffectiveness. The PFA would essentially permit the EEOC to
mandate that employers provide more information than Federal
contractors currently provide to the Department of Labor's Office of
Federal Contract Compliance Programs (OFCCP).
Reinstatement of the Flawed EO Survey
Like the previous section, Section 9 of the PFA has nothing to do
with the EPA, but instead establishes a new enforcement regime for the
Department of Labor's OFCCP. The OFFCP is responsible for administering
and enforcing certain nondiscrimination and affirmative action
obligations which are applicable only to covered Federal contracts and
subcontracts.\80\
---------------------------------------------------------------------------
\80\ See Exec. Order No. 11246 (1965); Section 503 of the
Rehabilitation Act of 1973, 29 U.S.C. 793; 402 (2008) of the
Vietnam Era Veterans Readjustment Assistance Act of 1972, 38 U.S.C.
4211-4212 (2008).
---------------------------------------------------------------------------
The Flawed Equal Opportunity Survey. On September 8, 2006, the
OFCCP rescinded its regulation requiring it to conduct an Equal
Opportunity Survey (EO Survey) every year. Originally adopted in 2000,
primarily for the purpose of effectively targeting OFCCP compliance
review resources, the EO Survey gathered detailed information
concerning personnel hiring, compensation practices, and worker tenure
from Federal contractors.\81\
---------------------------------------------------------------------------
\81\ ``Affirmative Action and Nondiscrimination Obligations of
Contractors and Subcontractors; Equal Opportunity Survey,'' 71 Federal
Register 174 (8 September 2006), 53032.
---------------------------------------------------------------------------
Although the initial objectives of the EO Survey were laudable,\82\
the survey was severely flawed as a targeting tool; largely duplicative
of other information OFCCP collects; and provided no information to
contractors that would encourage self-evaluations. In fact, its
usefulness and integrity came under question as early as April 2000,
when Bendick and Eagan Economic Consultants Inc. provided a report to
OFCCP highlighting serious problems with the pilot EO Survey and
recommending that the usefulness of the survey be validated before it
was fully implemented.\83\ Such a validation study was not conducted
before the EO Survey was implemented and the final rule published on
November 13, 2000. In 2002, the OFCCP contracted with Abt Associates,
Inc. to evaluate and validate the reliability and usefulness of the EO
Survey methodology.
---------------------------------------------------------------------------
\82\ Id. The hope was that the survey would: (1) increase
compliance with equal opportunity requirements by improving contractor
self-awareness and encouraging self-evaluations; (2) improve the
deployment of Federal Government resources toward contracts most likely
to be out of compliance; and (3) increase agency efficiency by building
on the tiered-review process already authorized by OFCCP's regulatory
reform efforts.
\83\ Abt Associates Inc., An Evaluation of OFCCP's Equal
Opportunity Survey, (Cambridge, MA: Feb. 2005), 1.
---------------------------------------------------------------------------
The Abt report, ``An Evaluation of OFCCP's Equal Opportunity
Survey,'' was highly critical of the ability of EO survey data to be
used as an effective targeting tool for OFCCP's compliance reviews.
According to the report, the EO Survey had, on many occasions,
mistakenly identified discrimination where the OFCCP determined there
was none.\84\ Specifically, the Abt report found that the EO Survey
model lacked in basic predictive power and yielded a very high number--
93 percent--of ``false positives'' or instances where the model
predicted systemic discrimination but where none existed.
---------------------------------------------------------------------------
\84\ Id. at 10-11.
Note: The Abt report concluded that the accuracy of the methodology
of the EO Survey was little better than chance. Consequently, the OFCCP
concluded that there are better ways to target its enforcement
resources and rescinded the EO Survey requirement . . . The PFA,
however, rejects [the Abt report] and reinstates the flawed EO Survey
---------------------------------------------------------------------------
by statue . . .''
The Abt report concluded that the accuracy of the methodology of
the EO Survey was little better than chance. Consequently, the OFCCP
concluded that there are better ways to target its enforcement
resources and rescinded the EO Survey requirement.
Supporters of the EO Survey argue that it is the only reliable way
to collect compensation data. However, in response to this objection
the OFCCP reaffirmed its belief that ``remedying compensation
discrimination is important to [the OFCCP] mission,'' and determined
that using proven tools for determining discrimination, such as
multiple regression analysis and anecdotal evidence, is more effective
than the EO Survey's categorical failure in targeting systemic
discrimination.\85\
---------------------------------------------------------------------------
\85\ 71 Fed. Reg. 174, 53038.
---------------------------------------------------------------------------
The PFA, however, rejects out of hand two credible Department of
Labor studies and re-instates the flawed EO Survey by statute before
any additional research is conducted on the efficacy of using any at
all survey. There is simply no justification to reinstate such a
duplicative data collection.
Real Indicators of Discrimination Not Required. Not only would the
PFA reinstate the EO Survey and require the OFCCP to use the widely
discredited ``pay grade methodology'' in attempting to locate
discrimination, the bill would also prohibit OFCCP from requiring
``multiple regression analysis or anecdotal evidence for a compensation
discrimination case.'' \86\ Indeed, the OFCCP's 2006 standards for
evaluating compensation practices provided contractors with the first
definitive guidance on the subject and resolved previous conflicts
between the rules applied by OFCCP and the courts.
---------------------------------------------------------------------------
\86\ Paycheck Fairness Act, S. 182, 111th Cong. 9(b)(1)(A)-(C)
(2009).
---------------------------------------------------------------------------
Multiple regression analysis and anecdotal evidence are widely
accepted as important evidentiary tools used to ferret out and defend
against claims of systematic pay discrimination. In fact, Justice
Brennan explained that ``it is clear that a regression analysis . . .
may serve to prove a plaintiff 's case'' of a pattern or practice of
pay discrimination, if the regression incorporates the major factors
influencing compensation under the employer's pay system.\87\
Similarly, Justice Ruth Bader Ginsburg, then a judge on the D.C.
Circuit, noted that, ``in Title VII class actions, statistical proof is
a prominent part of the prima facie case.'' \88\ Justice Ginsburg also
noted in that case that, ``generally, as part of their prima facie
case, class action plaintiffs offer a combination of statistical proof
and individual testimony of specific instances of discrimination.''
\89\ Indeed, it is generally accepted by the courts that the parties
will use multiple regression analysis and anecdotal evidence to
prevail.\90\ In light of the wide acceptance of multiple regression
analysis and anecdotal evidence in support of and defense of systemic
pay discrimination claims, it is unclear what policy objective could be
achieved by legislation that precludes OFCCP from requiring its
investigators to use these types of evidentiary tools.
---------------------------------------------------------------------------
\87\ Bazemore v. Friday, 478 U.S. 385, 400 (1986).
\88\ Valentino v. U.S. Postal Service, 674 F.2d 56, 68 (D.C. Cir.
1982).
\89\ Id.
\90\ See, e.g., Dukes v. Wal-Mart Stores, Inc., 509 F.3d 1182 (9th
Cir. 2007) (``anecdotal evidence of discrimination is commonly used in
title VII `pattern and practice' cases to bolster statistical proof by
bringing `the cold numbers' convincingly to life.''); Segar v. Smith,
738 F.2d 1249, 1261 (D.C. Cir. 1984) (``Multiple regression is a form
of statistical analysis used increasingly in title VII actions that
measures the discrete influence independent variables have on a
dependent variable such as salary levels.'').
---------------------------------------------------------------------------
Moreover, OFCCP will use the pay grade analysis and its
conciliation process to pressure employers to voluntarily settle
allegations of discrimination where none exists. Only those employers
who decide to incur substantial legal expenses will dispute the
allegations. In fact, those employers who make remedial pay adjustments
to female or minority employees based on the pay grade analysis may be
subject to reverse discrimination claims under title VII or State law,
as pay adjustments to female or minority employees that are unsupported
by adequate multiple regression analyses may result in employer
liability.\91\
---------------------------------------------------------------------------
\91\ See e.g., Maitland v. Univ. of Minn., 155 F.3d 1013, 1016-18
(8th Cir. 1998) (reversing district court's grant of summary judgment
to employer on reverse discrimination claim and ruling that ``the fact
that the affirmative action salary plan was implemented pursuant to a
consent decree does not bolster the District Court's conclusion at the
summary judgment stage of this case that there was a manifest imbalance
in faculty salaries.''); Smith v. Virginia Commonwealth Univ., 84 F.3d
672, 676-77 (4th Cir. 1996) (reverse discrimination claim based on
inadequate multiple regression analysis).
---------------------------------------------------------------------------
iv. conclusion
The PFA would unjustifiably expand the EPA to provide a remedy
scheme unlike any other Federal nondiscrimination law. Moreover, it
would increase litigation by permitting uncapped damages and making it
easier to bring class actions, which will ultimately benefit the
plaintiffs' bar. In addition, the bill would permit the EEOC to gather
large amounts of information in an unprecedented manner from all
employers with 15 or more employees. Similarly, the bill would
reinstate the fundamentally flawed pay grade methodology and EO Survey,
which was recently rejected by the OFCCP. In sum, there are simply no
good policy reasons for such provisions.
______
Letters of Opposition
Associated Builders and Contractors, Inc.,
Arlington, VA 22203,
March 10, 2010.
Hon. Tom Harkin, Chairman,
Committee on Health, Education, Labor, and Pensions,
U.S. Senate,
Washington, DC 20510.
Hon. Michael B. Enzi, Ranking Member,
Committee on Health, Education, Labor, and Pensions,
U.S. Senate,
Washington, DC 20510.
Dear Chairman Harkin and Ranking Member Enzi: On behalf of
Associated Builders and Contractors (ABC), a national association with
77 chapters representing 25,000 merit shop construction and
construction-related firms with 2 million employees, I am writing to
express our strong opposition to S. 182, the ``Paycheck Fairness Act,''
scheduled for a hearing in the Senate Committee on Health, Education,
Labor, and Pensions tomorrow.
ABC is adamantly opposed to discrimination of any kind and is
strongly committed to equal employment, but believes current laws
already in place properly address problems with wage disparities and
discrimination in the workplace. We are concerned with many provisions
contained in this legislation, specifically:
S. 182 would make unlimited punitive and compensatory
damages available for violations of the Equal Pay Act (EPA), even when
a disparity in pay was unintentional. It is one thing to require
employers to correct improper wage differentials, but quite another to
impose unlimited punitive damages for unintentional conduct.
Appropriate remedies for intentional discrimination, including punitive
and compensatory damages, are available under Title VII of the Civil
Rights Act of 1964.
S. 182 includes changes to the EPA that would make it
easier to file large class actions against employers and to make it
more difficult for employers to justify legitimate pay disparities,
promoting costly litigation against well-intentioned employers.
S. 182 would allow for employees to have their pay
compared between jobs, in different labor markets with different market
wages and costs of living, for purposes of litigation.
S. 182 would force the Department of Labor to return to
debunked statistical models and inaccurate survey tools in an effort to
enforce civil rights laws among Federal contractors.
The impact of passage of S. 182, the ``Paycheck Fairness Act''
would be significant from both a compliance and litigation standpoint.
Given the broad and overreaching aspects of this legislation, ABC
strongly urges you to oppose this legislation.
Sincerely,
Geoffrey Burr,
Vice President, Government Affairs.
______
March 11, 2010.
Hon. Tom Harkin, Chairman,
Committee on Health, Education, Labor, and Pensions,
U.S. Senate,
Washington, DC 20510.
Hon. Michael B. Enzi, Ranking Member,
Committee on Health, Education, Labor, and Pensions,
U.S. Senate,
Washington, DC 20510.
Dear Chairman Harkin and Ranking Member Enzi: We write on behalf of
the undersigned organizations in opposition to S. 182, the ``Paycheck
Fairness Act.'' While our organizations and members are committed to
ensuring equal employment opportunities and abhor unlawful
discrimination, we vigorously oppose S. 182.
S 182 would impose unprecedented government control over how
employees are paid at even the Nation's smallest businesses. The flawed
legislation could outlaw many legitimate practices that employers
currently use to set employee pay rates, even where there is no
evidence of intentional discrimination. Common practices that a court
could find unlawful under S. 182 include premium pay for professional
experience, education, shift differentials or hazardous work, as well
as pay differentials based on local labor market rates or an
organization's profitability.
Furthermore, S. 182 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.
In sum, S. 182 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. As you know, two Federal laws already protect employees
from being paid lower wages on the basis of sex: the Lilly Ledbetter
Fair Pay Act--amended Civil Rights Act of 1964 and the Equal Pay Act of
1963. Both statutes prohibit unequal pay based on sex and both make
available substantial remedies to employees for gender-based pay
differentials. But as the Washington Post editorial board stated,
adding S. 182 to these existing laws ``risks tilting the scales too far
against employers and would remove, rather than restore, a sense of
balance.''
For these reasons, we urge you to oppose S. 182.
Sincerely,
American Bakers Association; American Hotel and Lodging
Association; Associated Builders and Contractors; College
and University Professional Association for Human
Resources; Food Marketing Institute; HR Policy Association;
Independent Electrical Contractors; International
Foodservice Distributors Association; International
Franchise Association; International Public Management
Association for Human Resources; National Association of
Manufacturers; National Association of Wholesaler-
Distributors; National Council of Textile Organizations;
National Federation of Independent Business; National
Public Employer Labor Relations Association; National
Retail Federation; National Roofing Contractors
Association; Retail Industry Leaders Association; Small
Business & Entrepreneurship Council; Society for Human
Resource Management; U.S. Chamber of Commerce.
______
March 23, 2010.
Hon. Tom Harkin, Chairman,
Committee on Health, Education, Labor, and Pensions,
U.S. Senate,
Washington, DC 20510.
Hon. Michael B. Enzi, Ranking Member,
Committee on Health, Education, Labor, and Pensions,
U.S. Senate,
Washington, DC 20510.
Dear Chairman Harkin and Ranking Member Enzi: The undersigned
organizations represent State and local government employers. We are
writing to draw your attention to a particularly troubling aspect of S.
182, the ``Paycheck Fairness Act.'' The enhanced penalties section
allows for unlimited punitive damages and exempts only the Federal
Government from this provision.
As you are aware, State and local governments are exempt from
punitive damages under Title VII of the Civil Rights Act. States and
localities faced with large punitive damage awards would be forced to
raise taxes or cut services. Ultimately, the burden of paying a large
damages award would fall on the citizens of the State or locality. We
believe allowing punitive damages would be detrimental under any
circumstances but would be devastating to State and local budgets in
the current economy.
We urge you to add State and local governments in the exemption
provision along with the Federal Government in S. 182.
Sincerely,
International Public Management Association for Human
Resources;
International Municipal Lawyers Association;
National Public Employer Labor Relations Association.
______
Response to Questions of Senators Harkin, Enzi, and Coburn
by Stuart J. Ishimaru
senator harkin
Question 1. In her oral testimony on March 11, Jane McFetridge
testified that ``in 2009, the EEOC found reasonable cause in only 4.6
percent of the EPA charges and 5 percent of the title VII sex
discrimination charges that it received, demonstrating the vast
majority of employees who filed charges do not have valid claims.''
Do you agree with Ms. McFetridge's conclusion?
Answer 1. No. The ``reasonable cause'' rate does not provide a
complete picture of the percentage of meritorious charges of
discrimination filed with EEOC. Charges of discrimination are resolved
in several ways, not just through the issuance of a ``cause'' or ``no
cause'' determination. The statutes enforced by EEOC encourage
voluntary compliance and early resolution of charges of discrimination,
and significant numbers of charging parties and respondents choose to
settle their charges prior to a finding on the merits of the charge.
This choice is consistent with the statutory schemes and does not
indicate that those charges do not have merit.
Charges often are settled through a negotiated settlement
procedure, settled through mediation, and/or are withdrawn by the
charging party with or without benefits. Many of the charges that are
settled prior to a finding or that are withdrawn with benefits are
meritorious claims. The EEOC's ``merit factor'' rate captures and
reflects all charge resolutions in which the charging party received a
benefit (including negotiated settlements, mediations, conciliations,
and withdrawals with benefits). This ``merit factor'' rate thus is a
better measure of the percentage of meritorious claims filed with the
EEOC than the ``reasonable cause'' rate. In fiscal year 2009, the merit
factor rate for all charge resolutions was 20.3 percent. The merit
factor rate for EPA charges was 19.5 percent, the merit factor rate for
title VII sex-based wage charges was 21 percent, and the merit factor
rate for all sex-based charges was 21.7 percent, all significantly
higher than the cause rate.
Question 2. Ms. McFetridge further testified that ``in claims where
the EEOC found a basis to proceed, successful parties received over
$126 million in compensation, proof positive that the EEOC is already
identifying and compensating the true victims of pay discrimination.''
Do you agree with Ms. McFetridge's conclusion?
Answer 2. To the extent Ms. McFetridge's comments suggest that all
victims of pay discrimination are being identified and appropriately
compensated, we would not agree. To be sure, the Commission has
recovered significant relief for some of these victims. In fiscal year
2009, the agency obtained $4.8 million in monetary benefits in Equal
Pay Act charges, $17 million in title VII sex-based wage charges, and
$121.5 million in all sex-based charges. Examining just wage
discrimination charges, from fiscal year 2000 to fiscal year 2009, EEOC
obtained $120,825,776 in total monetary benefits for sex-based wage
charges filed by women, and $222,253,820 in monetary benefits for all
sex-based wage charges.
However, there undoubtedly are other victims of compensation
discrimination who are unaware that they are being discriminated
against. (Indeed, Lilly Ledbetter was unaware for decades that she was
being paid less than men performing the exact same job.) Further, even
workers who do know that they are the victims of pay discrimination may
be choosing not to come forward to file charges, many perhaps out of
fear that they will be retaliated against for challenging company pay
practices. The Paycheck Fairness Act would provide the Commission with
much-needed tools to help some of these victims vindicate their right
to be free from compensation discrimination and free from retaliation
for discussing pay in the workplace.
Question 3. Given the successes you have had, why do you believe
that the EEOC needs additional tools to combat sex-based wage
discrimination? What tools does the EEOC need to better enforce the
laws prohibiting sex-based wage discrimination?
Answer 3. The Paycheck Fairness Act would make significant changes
to the Equal Pay Act that would enhance EEOC's capacity to combat
gender-based wage discrimination, while at the same time preserving an
employer's ability to base wages on bona fide factors other than sex.
One of the most significant barriers to eradicating pay
discrimination is the fact that workers are often in the dark about
what their coworkers make. The Paycheck Fairness Act will help to
address this problem by making it unlawful for an employer to penalize
workers for asking about or discussing wage information. Critically,
however, these protections would not apply to employees who as part of
their essential job functions have access to information about the
wages of other employees and who disclose the wages of other employees
to an individual who does not otherwise have access to this information
(unless the disclosure is in response to a charge or complaint or in
furtherance of an investigation, proceeding, hearing or other action
related to the Equal Pay Act).
Similarly, the Paycheck Fairness Act would make it clear that
Congress expects the Commission to begin collecting wage data. The EEOC
currently does not collect any compensation-related data from private
sector employers. Appropriate compensation data would reveal wage
disparities based on sex, race, or national origin in particular
occupations at particular companies and/or in particular industries.
This data would enable the Commission to identify employers that may be
engaging in unlawful wage discrimination. This information could also
be useful in fulfilling our obligations to provide technical assistance
to employers and help them comply with Title VII of the Civil Rights
Act of 1964 and the Equal Pay Act.
The Paycheck Fairness Act also would aid enforcement by allowing
workers to compare their wages to workers of the opposite sex who work
for the same employer anywhere in the same county or similar political
subdivision of a State, rather than only to workers in the same
physical location. This change would not prevent an employer from being
able to justify pay differences in appropriate circumstances, such as
where the differential is based on geographic disparities.
Currently under the Equal Pay Act, employers are able to justify a
pay differential between a man and a woman who are performing
substantially equal work by pointing to ``any other factor other than
sex.'' The Paycheck Fairness Act would require employers to establish
that a pay discrepancy is based on a bona fide factor other than sex,
such as education, training, or experience. This new standard would
help to close the loophole in current law that has allowed employers to
defend wage discrepancies by pointing to factors that are inherently
gender-based without having to establish that they reflect job-related
qualifications.
Further, by expanding EPA remedies to include compensatory and
punitive damages, the Paycheck Fairness Act would provide the necessary
incentive to promote employer compliance, deter violations, and ensure
that victims receive complete make-whole relief.
senator enzi
Question 1. Please describe your personal experience as an employer
in a private sector, non-government-funded workplace. Have you hired
employees in a private sector workplace? Have you been charged with
setting compensation in a setting where salary and wage levels were not
government-set? Have you been responsible for determining raises and
fringe benefits in a setting where these costs were not born by
taxpayers? If so, was your business profitable?
Answer 1. Other than hiring a limited number of household
employees, I have not previously served as an employer in the private
sector.
Question 2. Section 8 of S. 182 directs your agency to survey
available wage data and issue regulations to collect pay information
from employers as described by sex, race, and national origin of
employees for enforcement use. Please describe how you envision EEOC
using this data for enforcement.
Answer 2. The EEOC currently does not collect any compensation-
related data from private sector employers. Appropriate compensation
data could reveal wage disparities based on sex, race, or national
origin in particular occupations at particular companies and/or in
particular industries. This data would enable the Commission to
identify employers that may be engaging in unlawful wage
discrimination. This information could also be useful in fulfilling our
obligations to provide technical assistance to employers and help them
comply with Title VII of the Civil Rights Act of 1964 and the Equal Pay
Act.
Additionally, when EEOC identifies potential issues of compensation
discrimination, EEOC may, to the extent authorized by law, share such
information, as appropriate, with the Department of Labor's (DOL)
Office of Federal Contract Compliance Programs (OFCCP), as well as any
other information that will enhance the effectiveness of OFCCP and
DOL's Wage and Hour Division as enforcement agencies or programs.
(EEOC-ESA Memorandum of Understanding Providing for Cross-Training,
Referrals and Information Sharing on Compensation Discrimination Cases
(April 7, 1999)).
Question 3. Would you advocate EEOC collecting this data from all
employers?
Answer 3. The Commission has not yet determined which employers (if
any) would be required to collect or report compensation data.
Question 4. How frequently would you recommend requiring this data
reporting?
Answer 4. The Commission has not determined how often or the
circumstances under which employers would be required to collect or
report compensation data.
Question 5. Do you plan to require employers to update this data
when pay levels or workforce makeup change?
Answer 5. The Commission has not yet determined how often or the
circumstances under which employers would be required to collect or
report compensation data.
Question 6. Would you suggest that EEOC collect compensation data
on employees who work on commission or tips? Why or why not?
Answer 6. The Commission has not yet determined the type or
categories of compensation data (if any) that should be collected or
reported.
Question 7. Would you support exempting small employers for whom
these reporting requirements will be overly burdensome?
Answer 7. The Commission has not yet determined which employers (if
any) would be required to collect or report compensation data. However,
section 709(c) of Title VII of the Civil Rights Act of 1964, which
provides the Commission with the authority to require employers to
collect and/or report various types of data, only applies to employers
with 15 or more employees. Currently, only private sector employers
with 100 or more employees (or Federal contractors with 50 or more
employees and a contract amounting to $50,000 or more) must file the
Employer Information Report EEO-1.
Question 8. Would you support a hardship exemption for employers
with valid conditions making the reporting impossible, such as natural
disasters, economic distress, personnel loss, etc?
Answer 8. The Commission has not yet determined the circumstances
under which employers would be required to collect or report
compensation data. However, section 709(c) of Title VII of the Civil
Rights Act of 1964, which provides the Commission with the authority to
require employers to collect and/or report various types of data,
explicitly allows any employer to apply to the Commission for an
exemption from the collection or reporting requirement if the employer
believes that the requirement would result in undue hardship.
Question 9. Would you support penalizing employers who fail to
submit data by scheduled deadlines?
Answer 9. The Commission has not yet determined the circumstances
under which employers would be required to collect or report
compensation data. However, by way of comparison, the filing of
Employer Information Report EEO-1 is mandatory. Under section 709(c),
which provides the commission with the authority to require employers
to file the Report EEO-1, any employer who fails or refuses to file the
Report EEO-1 when required to do so may be compelled to file it by
order of a U.S. District Court (upon application by the Commission).
Question 10. How could EEOC protect the privacy of this data,
should it choose to do so? Would the data be accessible via Freedom of
Information requests?
Answer 10. Section 709(e) of Title VII of the Civil Rights Act of
1964 would make it unlawful for any officer or employee of the
Commission to make this type of information public. In fact, section
709(e) provides that any Commission official who makes this type of
information public in violation of section 709(e) shall be guilty of a
misdemeanor and subject to a fine and/or imprisonment. For this reason,
company-specific data submitted by employers who currently file the
Employer Information Report EEO-1 is never made available to members of
the public--even in response to a Freedom of Information Act (FOIA)
request. Only data aggregating information by industry or area, in such
a way as not to reveal any particular employers statistics, is made
public. Company-specific Report EEO-1 data may be disclosed to a
charging party who files a FOIA request to obtain information in the
EEOC's investigative file on the charging party's charge if the data
was obtained by the investigator during the investigation, deemed
relevant to the charge, and included in the charge file, so long as the
deadline for filing suit on the charge has not yet expired. In such a
case, the charging party is not a member of the public for purposes of
title VII's confidentiality restrictions. Report EEO-1 data also could
be provided to the charging party after he or she has filed suit on a
title VII charge if the EEO-1 data is involved in the lawsuit, or could
be made public in conjunction with an enforcement lawsuit filed by the
Commission against the company which submitted the data (as permitted
by section 709(e) of title VII).
Question 11. Based on EEOC's ability to fulfill other mandates and
duties, how many employees will be necessary to collect and analyze
this data? What additional personnel, information technology and budget
resources will be required?
Answer 11. The number of additional employees or resources the EEOC
would need to collect and analyze this data cannot be determined until
the Commission has determined the precise nature of the compensation
data to be collected and/or reported, the form in which this data
should be collected and/or reported, and the number of employers that
would be subject to the collection and/or reporting requirement.
senator coburn
Question 1. In January of 2009, the Department of Labor released a
detailed statistical analysis of the wage gap carried out by the non-
partisan Consad Research Corporation. The study, An Analysis of the
Reasons for the Disparity in Wages Between Men and Women, found that
most of the so-called wage gap was an artifact of the different choices
men and women make--such as different fields of study, different
professions, different balance between home and work. In the Foreword,
a Labor Department official writes:
``This study leads to the unambiguous conclusion that the
differences in the compensation of men and women are the result
of a multitude of factors and that the raw wage gap should not
be used as the basis to justify corrective action. Indeed,
there may be nothing to correct. The differences in raw wages
may be almost entirely the result of the individual choices
being made by both male and female workers.''
Do you think it is appropriate for ``wage gap'' calculations to
ignore these differences?
Answer 1. Former Assistant Secretary Charles James' quote is one
interpretation of the report's findings. To be sure, a portion of the
gap between men's and women's earnings is likely attributable to other
measurable factors like occupational segregation, time spent in the
labor force, and education. However, different studies have also found
that such measurable factors do not account for all of the gender wage
gap, and that a significant portion remains unexplained. For example,
in 2009, Maria Shriver, working with the Center for American Progress,
released a ground breaking report entitled, ``A Woman's Nation Changes
Everything.'' This sweeping study of the role of women in our Nation's
economies and the economies of our families today provided a wealth of
insights into the challenges women still face when it comes to earning
equal pay for equal work. This study found that although some of the
pay gap can be explained by differentials in experience or as a result
of the differences in the occupations men and women typically do, about
41 percent of the pay gap cannot be explained by these factors.\1\
---------------------------------------------------------------------------
\1\ The Shriver Report: A Woman's Nation Changes Everything 58
(Heather Boushey and Ann O'Leary, eds., 2009).
---------------------------------------------------------------------------
As the Supreme Court has recognized in analyzing employment
discrimination claims, once nondiscriminatory reasons for differential
treatment have been eliminated, ``discrimination may well be the most
likely alternative explanation.'' \2\ In the wage context, the Supreme
Court has explained that discrimination need not be proven with
scientific certainty and that statistical evidence of a wage disparity
may be sufficient to prove a plaintiff 's case of discrimination even
if the evidence does not account for all measurable variables.\3\ Thus,
the EEOC's Compliance Manual Section on Compensation Discrimination
notes that a rough but plausible measure of the extent of gender-based
pay discrimination may be the portion of the wage gap that is
unexplained by measurable factors.\4\
---------------------------------------------------------------------------
\2\ Reeves v. Sanderson Plumbing Prods. Inc., 530 U.S. 133, 147
(2000).
\3\ Bazemore v. Friday, 478 U.S. 385, 400 (1986).
\4\ Section 10: Compensation Discrimination, EEOC Compliance
Manual, Volume II (2000), available at http://www.eeoc.gov/policy/docs/
compensation.html (citing President's Council of Economic Advisers,
Explaining Trends in the Gender Wage Gap (June 1998)); see also GAO
Rep. 09-729 (portion of the Federal wage gap that could not be
explained by measurable factors may be based in part on gender
discrimination).
---------------------------------------------------------------------------
Moreover, even as to measurable factors contributing to the wage
gap, it is not necessarily clear that all such factors are gender-
neutral. In particular, the Consad Research study includes
``motherhood'' among the measurable factors contributing to the wage
gap but does not appear to examine the effect of fatherhood on wages.
Courts have long recognized that treating mothers less favorably than
fathers constitutes unlawful gender discrimination.\5\ Wage
discrepancies between working mothers and working fathers may reflect
gender-based stereotypes about motherhood. For example, a recent study
found that mothers were offered lower starting salaries than similarly
situated childless women whereas fathers were offered higher starting
salaries than similarly situated childless men.\6\
---------------------------------------------------------------------------
\5\ See Phillips v. Martin Marietta Corp., 400 U.S. 542 (1971)
(treating women with preschool-age children less favorably than men
with preschool-age children violates title VII).
\6\ Shelley Correll & Stephen Benard, Getting a Job: Is There a
Motherhood Penalty?, 112 Am. J. Sociology 1297, 1316 (2005).
Question 2. Many critics of the Paycheck Fairness Act, including
the editorial board of the Washington Post, say that it is intrusive,
impractical, and potentially injurious to the free enterprise system.
For example, it gives government the power to determine what
constitutes fair wages. It requires any employer accused of wage
discrimination to cite a ``bona fide'' reason for paying a particular
male employee more than a female; potential reasons for the wage
difference include the male's superior education or his special skills.
However, the Paycheck Fairness Act further stipulates that the alleged
``bona fide'' explanation ``shall not apply'' if the employee
``demonstrates that an alternative employment practice exists that
would serve the same business purpose without producing such
differentials and the employer has refused to adopt such alternative
practice.'' What happens in a case where an employer judges the
``alternative'' (e.g. a special training program for female employees)
to be prohibitively expensive? Business owners protest that this
vaguely worded second provision turns the Federal courts into a quasi
business partner with unlimited authority to second guess key business
decisions? Do you think such fears are unfounded?
Answer 2. The concept of ``alternative employment practices''
already exists in Federal employment discrimination law.\7\ The concept
was codified almost 20 years ago as part of the Civil Rights Act of
1991,\8\ and it is a standard with which courts are familiar.\9\ Under
the current law, the plaintiff bears the burden of proving the
availability of an alternative employment practice, and the alternative
must be equally effective in meeting the employer's business needs.\10\
---------------------------------------------------------------------------
\7\ See 42 U.S.C. 2000e-2(k)(1)(A)(ii).
\8\ See Pub. L. 102-166, title I 105(a).
\9\ See, e.g., Allen v. City of Chicago, 351 F.3d 306, 315-17 (7th
Cir. 2003) (neither the officers' proposed alternative to the merit-
based component of the promotion process nor their alternative to the
requirement that they pass the test were equally valid-less
discriminatory alternatives); Bryant v. City of Chicago, 200 F.3d 1092,
1095 (7th Cir. 2000) (City liable because it failed to adopt a less
discriminatory alternative for its Lieutenant's promotion exam);
Fitzpatrick v. City of Atlanta, 2 F.3d 1112, 1122 (11th Cir. 1993)
(plaintiffs failed to introduce enough evidence to show that their
proposal to allow firefighters to wear short beards was an equally
effective alternative).
\10\ See, e.g., Watson v. Fort Worth Bank and Trust, 487 U.S. 977,
998 (1988) (``Factors such as the cost or other burdens of proposed
alternative selection devices are relevant in determining whether they
would be equally as effective as the challenged practice in serving the
employer's legitimate business goals.''); see also EEOC Fact Sheet:
Employment Tests and Selection Procedures, available at http://
www.eeoc.gov/policy/docs/factemployment_procedures.html. (``If a
selection procedure screens out a protected group, the employer should
determine whether there is an equally effective alternative selection
procedure that has less adverse impact and, if so, adopt the
alternative procedure.'').
---------------------------------------------------------------------------
H.R. Rep. 110-783 of the House Committee on Education and Labor
made clear that the Paycheck Fairness Act would adopt the well
established title VII standard on ``business necessity'' because doing
so would ``provide[] workers and employers with a known legal standard
for assessing pay disparities.'' \11\ Similarly, the concept of
``alternative employment practice''--codified at the same time and as
part of the same statutory section as the concept of ``business
necessity'' \12\--would provide workers and employers with a known
legal standard. Accordingly, we think that fears that it gives courts
``unlimited authority to second guess key business decisions'' are
unfounded. That has not proved to be the case with respect to the
application of the same concept under current law.
---------------------------------------------------------------------------
\11\ H.R. Rep. No. 110-783, at 30 (2008).
\12\ See 42 U.S.C. 2000e-2(k)(1)(A).
Question 3. According to the Paycheck Fairness Act, an employer is
legally vulnerable if an employee can show that she was paid less than
a male colleague because of intentional discrimination or the
``lingering effects of past discrimination.'' Could this prevent
employers from paying market wages? For example, universities typically
cite ``market forces'' as the reason professors of business are paid
more than professors of social work. In many universities there are far
more women teaching social work than business. Should they be able to
sue on the grounds that ``market forces'' reflect the lingering effects
of discrimination? They could surely find expert witnesses in women's
studies programs who would testify that sexist attitudes led society to
place a higher value on male-centered fields like business than female-
centered fields like social work. Is it your view that such litigation
would be helpful in promoting the goals of the act?
Answer 3. As the Supreme Court has recognized, the passage of the
Equal Pay Act was intended to correct those market forces that had led
employers to pay male workers more than female workers performing the
same work simply because the men were unwilling to perform the work for
the same low wages as the female workers.\13\ Nevertheless, because of
the broadly worded ``any other factor other than sex'' defense, some
courts have continued to permit employers to justify wage discrepancies
by pointing to market forces or prior salary history without any
showing that the market or prior salary history compensates employees
for job-related skills and not merely their gender.\14\
---------------------------------------------------------------------------
\13\ See Corning Glass Works v. Brennan, 417 U.S. 188, 205 (1974).
\14\ H.R. Rep. No. 110-783, at 25-28 (2008).
---------------------------------------------------------------------------
The EEOC Compliance Manual Section on Compensation Discrimination
states that, under current law, ``[m]arket value qualifies as a factor
other than sex only if the employer proves that it assessed the
marketplace value of the particular individual's job-related
qualifications, and that any compensation disparity is not based on
sex.''\15\ The Paycheck Fairness Act would not affect employers'
ability to base pay discrepancies on qualifications--including market
forces--that are job-related with respect to the position in question
and consistent with business necessity, as long as such criteria are
not based upon or derived from a sex-based differential in
compensation. As H.R. Rep. 110-783 of the House Committee on Education
and Labor on the Paycheck Fairness Act points out, ``[w]hile market
forces may be a legitimate basis for determining pay, market forces
tainted with sex discrimination are not.''\16\
---------------------------------------------------------------------------
\15\ Section 10: Compensation Discrimination, EEOC Compliance
Manual, Volume II, at 10-IV F.2.g (2000), available at http://
www.eeoc.gov/policy/docs/compensation.html.
\16\ H.R. Rep. No. 110-783, at 28 (2008).
---------------------------------------------------------------------------
Critically, however, the Paycheck Fairness Act would not alter the
requirement that the jobs being compared are substantially equal. Thus,
an employer would not need to establish that ``market forces''
constitute a legitimate defense to a gender-based pay differential
unless the employee has first demonstrated that the jobs being compared
require substantially equal skill, effort, and responsibility and are
performed under similar working conditions.
Question 4. The 1963 Equal Pay Act awards victims of intentional
discrimination up to $300,000 in compensatory damage and limited
punitive damages. The Paycheck Fairness would change that by allowing
for unlimited multi-million dollar settlements. This is good news for
trial lawyers, but is it a good policy for a nation facing an
unemployment crisis? Employers are nervous and fearful of making new
hires. Won't the act reinforce fear?
Answer 4. Under current law, the Equal Pay Act does not allow
victims of sex-based wage discrimination to recover compensatory or
punitive damages. Rather, the EPA allows victims to recover a maximum
of 2 years of back pay (or 3 years for willful violations), and to
recover ``liquidated damages'' in an amount equal to the amount of back
pay awarded if an employer cannot show that it acted in ``good faith.''
Under Title VII of the Civil Rights Act of 1964, as amended by the
Civil Rights Act of 1991, victims may recover compensatory and/or
punitive damages, up to a total of $300,000 depending upon the size of
the employer. Thus, victims of discrimination, including sex-based wage
discrimination, who bring suit under the EPA and/or title VII are
unable to recover complete relief in a case in which their actual
damages exceed $300,000.
By contrast, under 42 U.S.C. 1981, victims who prevail on claims
of wage discrimination based on race or national origin can recover
complete relief, since section 1981 contains no cap on damages. Since
wage discrimination based on sex is no less illegal, intolerable, or
pernicious than wage discrimination based on race and/or national
origin, sex-based wage discrimination claims should be placed on an
equal legal footing with race- and national origin-based wage
discrimination claims. The Paycheck Fairness Act would accomplish this
objective by authorizing victims of sex-based wage discrimination to
recover compensatory and/or punitive damages that are not artificially
restricted by an arbitrary cap. At the same time, however, the bill
would impose critical constraints on a jury's ability to award punitive
damages. Under the Paycheck Fairness Act, punitive damages could only
be awarded in cases in which the employee proves that the employer
acted with ``malice or reckless indifference.'' In title VII cases,
this same statutory qualification has proven to be a significant
limitation on plaintiffs' ability to recover punitive damages.
Question 5. To help the agency increase hiring and reduce the
backlog, the EEOC requests an increased budget in fiscal year 2011 of
$385 million. However, EEOC data shows that ``reasonable cause'' was
present in only 4.5 percent of the 93,277 discrimination charges
received in fiscal year 2009. Given the low percentage of charges for
which reasonable cause is ultimately determined, please explain how the
EEOC's ``Education and Outreach'' program balances its responsibility
of preventing discrimination with deterring frivolous charges that
consume the EEOC's time and resources?
Answer 5. The ``reasonable cause'' rate does not provide a complete
picture of the percentage of meritorious charges of discrimination
filed with EEOC. Charges of discrimination are resolved in several
ways, not just through the issuance of a ``cause'' or ``no cause''
determination. The statutes enforced by EEOC encourage voluntary
compliance and early resolution of charges of discrimination, and
significant numbers of charging parties and respondents choose to
settle their charges prior to a finding on the merits of the charge.
This choice is consistent with the statutory schemes and does not
indicate that those charges do not have merit.
Charges often are settled through a negotiated settlement
procedure, settled through mediation, and/or are withdrawn by the
charging party with or without benefits. Many of the charges that are
settled prior to a finding or that are withdrawn with benefits are
meritorious claims. The EEOC's ``merit factor'' rate captures and
reflects all charge resolutions in which the charging party received a
benefit (including negotiated settlements, mediations, conciliations,
and withdrawals with benefits). The ``merit factor'' rate thus is a
better measure of the percentage of meritorious claims filed than the
``reasonable cause'' rate. In fiscal year 2009, the merit factor rate
for all charge resolutions was 20.3 percent. The merit factor rate for
EPA charges was 19.5 percent, the merit factor rate for title VII sex-
based wage charges was 21 percent, and the merit factor rate for all
sex-based charges was 21.7 percent, all significantly higher than the
cause rate.
In enacting Title VII of the Civil Rights Act of 1964, Congress
recognized that the fight against employment discrimination requires a
variety of tools for enforcing the law. Therefore, the Commission seeks
to maintain a comprehensive enforcement program, which includes
education, outreach, and technical assistance. Indeed, title VII
specifically requires the EEOC to engage in outreach and educational
activities.\17\ The Commission conducts both free and fee-based
outreach and education. In 1992, Congress passed the Educational,
Technical Assistance and Training Revolving Fund Act of 1992, which
authorizes the Commission to charge a fee to recover its costs for
education, technical assistance and training programs. The EEOC
Training Institute conducts the EEOC's fee-based training program.
---------------------------------------------------------------------------
\17\ See U.S.C. 2000e-4(h)(2) (providing that the Commission
``shall carry out educational and outreach activities''); 42 U.S.C.
2000e-4(j) (requiring the EEOC to ``establish a Technical Assistance
Training Institute through which the Commission shall provide technical
assistance and training regarding the laws and regulations enforced by
the Commission'').
---------------------------------------------------------------------------
The purpose of these outreach efforts is to educate employees,
employers, advocacy groups, and others about the laws enforced by EEOC
and rights and responsibilities under those laws. This work is vital to
our mission. Outreach and education to the employer community helps to
prevent discrimination from occurring in the first place. Outreach and
education to employees not only informs them of the right to be free
from discrimination in the workplace, but also helps them make informed
decisions about whether to file a charge of discrimination, thus
deterring the filing of frivolous charges.
The agency's outreach program reached 238,017 persons in fiscal
year 2009. EEOC offices participated in 4,240 educational, training,
and outreach events. In addition, in fiscal year 2009, the EEOC
Training Institute trained over 20,000 individuals from the private
sector and State, local, and Federal Governments at more than 500
events. The Commission has engaged in extensive outreach efforts on
wage discrimination issues. Over the last 3\1/2\ years, we have
conducted 491 outreach events where the Equal Pay Act or wage
discrimination generally was discussed. Almost 38,000 people attended
these events.
Question 6. As you know, in February a Federal judge in Iowa
dismissed a discrimination case brought by your agency brought against
CRST, a Cedar Rapids, IA trucking company, and ordered the EEOC to pay
CRST $4.5 million to cover defense costs and attorneys' fees. In
dismissing the EEOC's complaint on behalf of 67 claimants, the court
found the EEOC `` . . . did not conduct any investigation of the
specific allegations [of these claimants] . . . let alone issue a
reasonable cause determination as to th[eir] allegations or conciliate
them.'' Given the judge's ruling, which consumes 20 percent of the
agency's fiscal year 2010 budget increase, can you explain your
rationale for filing suit in this particular case? What processes does
the EEOC go through when considering whether or not to file a suit?
Answer 6. This matter remains in litigation and is presently
pending with the U.S. Court of Appeals for the Eighth Circuit. We
believe it would be inappropriate to comment further on this matter at
this time.
Response to Questions of Senators Enzi and Coburn by Heather Boushey
senator enzi
Question 1. Please describe your personal experience as an employer
in a private sector, non-government-funded workplace. Have you hired
employees in a private sector workplace? Have you been charged with
setting compensation in a setting where salary and wage levels were not
government-set? Have you been responsible for determining raises and
fringe benefits in a setting where these costs were not born by
taxpayers? If so, was your business profitable?
Answer 1. I have worked as a staff-person with management
responsibilities, but not as the employer with the final decisionmaking
power on these issues.
Question 2. More than two-thirds of employees working in human
resources are female and, as was stated at the hearing, 30 percent of
businesses are women-owned. Do you believe that women HR professionals
and employers could possibly create and perpetuate gender-based pay
discrepancies? If those pay discrepancies are not found to further a
legitimate business purpose, is the only possible cause discrimination?
Answer 2. In a market-based economy, pay should be based on
legitimate business purposes because pay should be based by the
contribution of an employee to an organization. Pay gaps that are not
based on legitimate business purposes make no sense. Systemic pay gaps
that are not tied to the job or the skills of the employee must
therefore be discriminatory as there is no legitimate business purpose
for them.
The first question is whether women can perpetuate pay
discrimination. Any employer can discriminate, regardless of their
race, gender or other characteristics. Further, simply because women
are commonly HR professionals does not mean that they have final
decisionmaking power within an organization. The vast majority of CEO's
are men and that power gap may play a role in perpetuating pay
discrimination.
senator coburn
Question 1. In January 2009, the Department of Labor released a
detailed statistical analysis of the wage gap carried out by the non-
partisan Consad Research Corporation. The study, An Analysis of the
Reasons for the Disparity in Wages Between Men and Women, found that
most of the so-called wage gap was an artifact of the different choices
men and women make--such as different fields of study, different
professions, different balance between home and work. In the Foreword,
a Labor Department official writes:
``This study leads to the unambiguous conclusion that the
differences in the compensation of men and women are the result
of a multitude of factors and that the raw wage gap should not
be used as the basis to justify corrective action. Indeed,
there may be nothing to correct. The differences in raw wages
may be almost entirely the result of the individual choices
being made by both male and female workers.''
Do you think it is appropriate for ``wage gap'' calculations to
ignore these differences?
Answer 1. Analysis of the wage gap does not ignore productivity-
related differences between men and women. What economists find is that
once we account for measurable, productivity-related differences
between men and women, a pay gap remains.
To better understand the gender pay gap, economists use so-called
regression-
adjusted estimates of pay for men and women, controlling for all
measurable productivity-related characteristics of workers. This method
allows us to compare the pay of men and women with similar
characteristics and determine what factors contribute to the pay gap
and what the model cannot explain. Using regression analysis, labor
economists Francine Blau and Lawrence Kahn found that educational
attainment levels lowered the discrepancy in pay between men and women
but also that other productivity-related factors, such as experience,
occupation, and industry all widened the gap. Overall, nearly a third
of the gender pay gap (27.4 percent) can be explained by differences in
occupations, one-fifth (21.9 percent) can be explained by industry, and
10.5 percent can be explained by labor force experience.
This means that if women worked in the same jobs as men and had the
same educational and experience levels, same propensity to be in a
union, same racial and ethnic make-up as men--all factors we can
measure--the gender pay ratio would rise from 80 percent to 91 percent
of men's pay levels. In other words, just over half of gender pay
inequity can be explained by these factors. But, this leaves nearly
half of the total pay gap (41.1 percent of the pay gap) as not
explainable by measurable productivity-related characteristics.
As Blau and Kahn point out, half (49.3 percent) of the total pay
gap can be explained by differences in the industries and occupations
that men and women work in. Men continue to be more likely to hold jobs
as managers and professionals, transportation or construction workers,
or in heavy manufacturing.
In contrast, women are disproportionately represented in nursing,
teaching, retail sales, and clerical work. While the extent to which
jobs in the U.S. economy are segregated by sex has fallen since the
1950s, more so for workers with a college degree than for other
workers, there remains a high degree of occupational segregation by
gender. But many of these jobs that were historically held by women are
underpaid, relative to men's jobs that require similar levels of skill.
As women have taken their careers more seriously, they have worked
hard to get more education. That is paying off in terms of narrowing
the gender pay gap, even if it hasn't fully eliminated it. According to
Blau and Kahn, women's education choices are narrowing the gap by 6.7
percent. Women now are more likely than men to graduate from high
school as well as college. It's worth noting though, that among women
aged 25 to 45 only a quarter have at least a college degree, while
nearly two-thirds have a high school degree, but no 4-year college
degree (and this is similar for men as well).
An important research finding that flies in the face of women's
educational attainment, however, is that the gender pay gap emerges as
soon as women graduate. The American Association of University Women
examined the pay gap in pay between college-educated men and women and
found that even once they accounted for the measurable factors that
affect pay, such as the individual's job, whether the job boasts a
flexible schedule, the kind of educational credentials they have
(including their grade point average and the selectivity of the college
that they attended), among graduates just 1 year out of school, a 5
percent unexplainable pay gap remained.
This means that a woman who goes to the same school, gets the same
grades, has the same major, takes the same kind of job with similar
workplace flexibility perks and has the same personal characteristics--
such as marital status, race, and number of children--as her male
colleague earns 5 percent less the first year out of school. Ten years
later, even if she keeps pace with the men around her, this research
found that she'll earn 12 percent less. This is not about the
``choices'' a woman makes because the model compares men and women who
have made nearly identical choices.
Differences in men's and women's work histories explain a large
chunk--10.5 percent--of the gender wage gap. But the AAUW study cited
above shows that the gender pay gap emerges right out of college--at a
point in their lives when differences in work experience between them
and their male colleagues do play a large role in determining pay.
At least some of the wage gap between men and women is attributable
to women taking on greater parenting responsibilities and working fewer
hours. Women are more than twice as likely as men to be employed part-
time and since few jobs offer part-time work, the part-time jobs
available tend to pay less than comparable full-time jobs. But, the
reality is that this cannot fully explain the gap in pay.
For example, it is a myth that women choose less-paying occupations
because they provide flexibility to better manage work and family. The
empirical evidence shows that mothers are actually less likely to be
employed in jobs that provide greater flexibility. In general, workers
who hold higher positions and are privileged in general (better
educated, white, male) have more access to all kinds of workplace
flexibility. Women are less likely than men to have access to
flexibility, but parents--especially single mothers--are the least
likely to have access to workplace flexibility. In fact, parents are
more likely to have nonstandard shifts and rotating hours, making work/
family balance more difficult to achieve.
Indeed, differences in work history are treated differently
depending on whether a woman is a mother or not. In a 2001 paper,
sociologists Michele Budig and Paula England found that interruptions
from work, working part-time, and decreased seniority/experience
explain no more than about one-third of the gap in pay between women
with and without children, and that ``mother-friendly'' job
characteristics explained very little of the gap. They conclude that
two-thirds of the wage gap between mothers and non-mothers must be
either because employed mothers are less productive at work or because
of discrimination against mothers.
A body of new research focuses on the role of the ``maternal wall''
in accounting for at least some--if not most--of the unexplained pay
gap. In groundbreaking work, Cornell University sociologists Shelley
Correll, Stephen Benard, and In Paik used a laboratory experiment to
find out whether being a mother simply means being paid less, all else
equal. They had study participants evaluate application materials for a
pair of job candidates that were designed specifically to be equally
qualified, but one person was identified as a parent and the other was
not. The two candidates had equal levels of education and work
experience at similarly ranked schools.
Their findings were simply astonishing. The job candidates
identified as mothers were perceived to be less competent, less
promotable, less likely to be recommended for management, less likely
to be recommended for hire, and had lower recommended starting salaries
even though their actual credentials were no different from those of
the non-mothers. The job candidates identified as fathers were not
penalized in the same way, and often saw a boost. Study participants
also held mothers to higher standards than non-mothers (both women
without children and men with or without children) by requiring a
higher score on a management exam and significantly fewer times of
being late to work before being considered hirable or promotable.
Question 2. Many critics of the Paycheck Fairness Act, including
the editorial board of the Washington Post, say that it is intrusive,
impractical, and potentially injurious to the free enterprise system.
For example, it gives government the power to determine what
constitutes fair wages. It requires any employer accused of wage
discrimination to cite a ``bona fide'' reason for paying a particular
male employee more than a female; potential reasons for the wage
difference include the male's superior education or his special skills.
However, the Paycheck Fairness Act further stipulates that the alleged
``bona fide'' explanation ``shall not apply'' if the employee
``demonstrates that an alternative employment practice exists that
would serve the same business purpose without producing such
differentials and the employer has refused to adopt such alternative
practice.'' What happens in a case where an employer judges the
``alternative'' (e.g. a special training program for female employees)
to be prohibitively expensive? Business owners protest that this
vaguely worded second provision turns the Federal courts into a quasi
business partner with unlimited authority to second guess key business
decisions? Do you think such fears are unfounded?
Answer 2. This seems to be a legal, not economic question as the
key issue is how the courts interpret ``bona fide'' explanation and
``alternative employment practice.'' A lawyer familiar with these
issues would be better suited to address how the courts interpret that
phrase.
Question 3. According to the Paycheck Fairness Act, an employer is
legally vulnerable if an employee can show that she was paid less than
a male colleague because of intentional discrimination or the
``lingering effects of past discrimination.'' Could this prevent
employers from paying market wages? For example, universities typically
cite ``market forces'' as the reason professors of business are paid
more than professors of social work. In many universities there are far
more women teaching social work than business. Should they be able to
sue on the grounds that ``market forces'' reflect the lingering effects
of discrimination? They could surely find expert witnesses in women's
studies programs who would testify that sexist attitudes led society to
place a higher value on male-centered fields like business than female-
centered fields like social work. Is it your view that such litigation
would be helpful in promoting the goals of the act?
Answer 3. This seems to be a legal, not economic question as the
key issue is how the courts define ``lingering effects of past
discrimination.'' A lawyer familiar with these issues would be better
suited to address how the courts interpret that phrase.
Question 4. The 1963 Equal Pay Act awards victims of intentional
discrimination up to $300,000 in compensatory damage and limited
punitive damages. The Paycheck Fairness Act would change that by
allowing for unlimited multi-million dollar settlements. This is good
news for trial lawyers, but is it a good policy for a nation facing an
unemployment crisis? Employers are nervous and fearful of making new
hires. Won't the act reinforce fear?
Answer 4. There is no logical reason for an employer who is paying
their workers fairly to be nervous or fearful of making new hirers. In
fact, because this law will level the playing field, the Paycheck
Fairness Act will be a boon to employers who are currently paying their
workers fairly. Competitors who now may choose to violate the law in
hopes of not getting caught will now think twice as there will be real
penalties. Therefore, many firms currently engaging in illegal pay
practices will stop and discontinue their discriminatory pay, leveling
the playing field between them and those firms who have been abiding by
the law.
For the law to be effective, it must include a sufficient penalty
to act as a deterrent. Currently, employers have few real penalties for
engaging in wage discrimination: if they are caught, they have to pay
back wages--the fair pay level--but if they are not caught, they have
been able (illegally) to pay some workers less wages. As Deborah Brake
noted in her testimony, the law as it stands does not provide
sufficient deterrents:
Currently, employment discrimination law sets up a hierarchy
of remedies for employees who experience different kinds of pay
discrimination. Although full and uncapped remedies are
available to victims of pay discrimination on the basis of
race, no Federal statute provides complete remedies to women
who are paid less because of their sex. Under the Equal Pay
Act, an employee may recover only the amount of her unlawfully
withheld wages (up to 2 years' back pay, or 3 years' back pay
for ``willful'' violations) and an equal amount in ``liquidated
damages.'' (p. 10)
Question 5. You speak of ``the segregation of men and women into
different kinds of jobs.'' Do you rule out the possibility that men and
women, as groups, might have different preferences? Is it really gender
segregation that explains women's preference for say, teaching over oil
drilling, or veterinary medicine over astrophysics? In your testimony,
you imply that it is unjust that zookeepers make more than childcare
workers. There are many people who know how to take care of children;
there are very few who know how to bathe and feed a giraffe. Why is it
wrong for a zookeeper to make more than a childcare worker when the
zookeeper has a more specialized knowledge set?
Answer 5. Certainly, each individual has their preferences. The
challenge is that these preferences cannot explain the gender pay gap.
For example, the gender pay gap emerges as soon as women graduate from
college even if they made the same decisions as their male peers. The
American Association of University Women examined the pay gap in pay
between college-educated men and women and found that among graduates
just 1 year out of school, a 5 percent unexplainable pay gap remained
even once they accounted for the measurable factors that affect pay,
such as the individual's job, whether the job boasts a flexible
schedule, the kind of educational credentials they have including their
grade point average and the selectivity of the college that they
attended.
Thus, what we learn from this research is that in analysis that
compares men and women who have made identical choices, there remains a
gap in pay. A woman who goes to the same school, gets the same grades,
has the same major, takes the same kind of job with similar workplace
flexibility perks and has the same personal characteristics--such as
marital status, race, and number of children--as her male colleague
earns 5 percent less than him the first year out of school. Ten years
later, even if she keeps pace with the men around her, this research
found that she'll earn 12 percent less.
Response to Questions of Senators Enzi and Coburn
by Deborah L. Frett
senator enzi
Question 1. Please describe your personal experience as an employer
in a private sector, non-government-funded workplace. Have you hired
employees in a private sector workplace? Have you been charged with
setting compensation in a setting where salary and wage levels were not
government-set? Have you been responsible for determining raises and
fringe benefits in a setting where these costs were not born by
taxpayers? If so, was your business profitable?
Answer 1. Business and Professional Women's Foundation is a non-
profit, 501(c)(3) organization and a non-government-funded workplace.
As CEO, I am responsible for hiring all employees and setting
compensation and wage levels. Washington, DC is a very competitive
market for top-notch nonprofit employees and I have found that it is in
the best interest of our organization to offer competitive salaries and
benefits to attract the best talent. In addition, BPW Foundation has a
written and transparent pay policy. Wages are reviewed annually and
each time a new hire is made. I believe our organization is very
profitable in that we successfully serve our mission to empower working
women to achieve their full potential and partner with employers to
build successful workplaces through education, research, knowledge and
policy.
In terms of the private sector, my for-profit experience includes a
proven track record of leadership and influence as an executive in
association management and for-profit businesses. I have served as
Chief Operating Officer of a $29 million for-profit company providing
an integrated portfolio of health care communications, information,
education and research products and services. I have also served as
President and CEO of a $7 million for-profit company market leader in
health care provider data and information. For both companies, I was
involved in hiring employees, setting compensation and benefits as well
as determining raises and fringe benefits. And, yes, both companies
were profitable.
As an employer I support the Paycheck Fairness Act.
Question 2. At the hearing we discussed the phenomenal growth of
women-owned firms in recent years. You stated that women-owned firms
would have ``a reduction in risk'' of being sued for discriminatory pay
disparities. If that is the case, should the Equal Pay Act provide an
exemption for women employers? If not, do you have reservations about
attributing a gender pay disparity to discrimination when both the
employer and the plaintiff employee are women?
Answer 2. BPW Foundation believes in pay equity for both men and
women and does not support an exemption for female employers. The Equal
Pay Act prescribes ``equal pay for equal work'' and that protection is
available to everyone regardless of the gender of the employer or
employee.
To clarify my statement, any firm that has written and transparent
pay equity policies would have ``a reduction of risk'' of liability
with regard to pay discrimination. Women business owners know that
hiring women and paying them equally is good for business. A quest for
fair pay is often the reason highly skilled women leave an employer to
start their own companies. Business owners like Debra Ruh support the
Paycheck Fairness Act. Ms. Ruh owns TecAccess in Rockville, VA.
TecAccess is a consulting firm that helps companies update their web
and information technology systems in order to reach and better serve
people with disabilities. Like many women business owners, Ms. Ruh
struck out on her own so that she could run a business her way. She
told BPW Foundation it would never occur to her to pay a woman less
than a man; it would be short-sighted and bad for business--she would
lose out on a creative, innovative and loyal workforce. It would be
supremely unfair to business owners like Debra Ruh who are doing right
by their employees to have to compete on an unfair playing field
against companies that discriminate and pay their women workers less.
senator coburn
Question 1. In January 2009, the Department of Labor released a
detailed statistical analysis of the wage gap carried out by the non-
partisan Consad Research Corporation. The study, An Analysis of the
Reasons for the Disparity in Wages Between Men and Women, found that
most of the so-called wage gap was an artifact of the different choices
men and women make--such as different fields of study, different
professions, different balance between home and work. In the Foreword,
a Labor Department official writes:
``This study leads to the unambiguous conclusion that the
differences in the compensation of men and women are the result
of a multitude of factors and that the raw wage gap should not
be used as the basis to justify corrective action. Indeed,
there may be nothing to correct. The differences in raw wages
may be almost entirely the result of the individual choices
being made by both male and female workers.''
Do you think it is appropriate for ``wage gap'' calculations to
ignore these differences?
Answer 1. The wage gap calculations do not ignore these
differences. Even when researchers hold for differences in education,
time out of the workforce and other factors--a gap between men's and
women's wages still remains.\1\ Further, the median gender wage gap
calculation is useful because it raises questions about the persistent
gap between men's and women's wages and challenges us to look for
answers. The gender wage gap is a complex social problem attributable
to many factors including discrimination and the different choices men
and women make about employment.
---------------------------------------------------------------------------
\1\ AAUW Educational Foundation. (2007). Behind the Pay Gap, by
Catherine Hill and Judy Goldberg Dey. Washington, DC. http://
www.aauw.org/research/behindPayGap.cfm and Jessica Arons, Lifetime
Losses: The Career Wage Gap, Center for American Progress Action Fund,
December 2008, http://www.americanprogressaction.org/issues/2008/
lifetime_losses.html.
---------------------------------------------------------------------------
A 2003 Government Accounting Office (GAO) study concluded that even
after accounting for ``choices'' such as work patterns and education,
women earn an average of 80 cents for every dollar that men earn.\2\
Even when women choose traditionally male fields such as business they
receive lower salaries. Catalyst, Inc. found that on average, women
MBA's are being paid $4,600 less in their first job than men.\3\ That
is long before time out of the workforce for child rearing comes into
play. Blau and Kahn, who are cited several times in the Consad report
referenced in the question, found that once they controlled for
education, labor force experience race, occupation, industry, and
unionized workplace, 41.1 percent of the wage gap still could not be
explained.\4\
---------------------------------------------------------------------------
\2\ General Accounting Office, Women's Earnings: Works Patterns
Partially Explain Difference Between Men's and Women's Wages, GAO-04-
35, October 2003, http://www.gao.gov/new.items/d0435.pdf.
\3\ Nancy M. Carter, Ph.D. and Christine Silva, Pipelines Broken
Promise, Catalyst, February 2010. http://www.catalyst.org/publication/
372/pipelines-broken-promise.
\4\ Blau, F., Kahn, L., ``The gender pay gap: have women gone as
far as they can?'', Academy of Management Perspectives, February, pp.1-
23. (2007).
---------------------------------------------------------------------------
In 2008, women working full-time, year-round earned only about 77
cents for every dollar earned by men. Things are even worse for women
of color. African-American women make only 61 cents, and Latinas only
52 cents, for every dollar earned by white, non-Hispanic men. Gender
wage discrimination has been illegal since President Kennedy signed the
Equal Pay Act in 1963 but the wage gap persists. Women earned 59 cents
to every dollar earned by men in 1963, but progress has slowed and the
gender wage gap widened slightly from 77.8 to 77.1 percent between 2007
and 2008.
No matter how you count it and what you hold for, a gender wage gap
remains. Just as the differences in men's and women's wages may be the
result of individual choices, the differences in wages may be the
result of sex-based discrimination. And in instances where that gap is
due to discrimination, it should be illegal and punishable to the
fullest extent of the law.
The Paycheck Fairness Act addresses the causes of the wage gap
along with the results. This legislation would provide funding for
education programs, employer guidelines and technical assistance as
well as recognition of good practices by employers. In addition, there
is a competitive grant program to develop salary negotiation training
for women and girls. The Paycheck Fairness Act also recognizes that
there are many employers doing right by their employees and establishes
a recognition program through the Department of Labor for those
employers.
Question 2. Many critics of the Paycheck Fairness Act, including
the editorial board of the Washington Post, say that it is intrusive,
impractical, and potentially injurious to the free enterprise system.
For example, it gives government the power to determine what
constitutes fair wages. It requires any employer accused of wage
discrimination to cite a ``bona fide'' reason for paying a particular
male employee more than a female; potential reasons for the wage
difference include the male's superior education or his special skills.
However, the Paycheck Fairness Act further stipulates that the alleged
``bona fide'' explanation ``shall not apply'' if the employee
``demonstrates that an alternative employment practice exists that
would serve the same business purpose without producing such
differentials and the employer has refused to adopt such alternative
practice.'' What happens in a case where an employer judges the
``alternative'' (e.g. a special training program for female employees)
to be prohibitively expensive? Business owners protest that this
vaguely worded second provision turns the Federal courts into a quasi
business partner with unlimited authority to second guess key business
decisions? Do you think such fears are unfounded?
Answer 2. These fears are unfounded; business owners that are
paying equal pay for equal work have nothing to fear from the Paycheck
Fairness Act. The Paycheck Fairness Act will not interfere in employer
wage setting decisions or require costly trainings. This legislation
will still allow businesses to reward employees with merit and
performance-related increases. Wage differentials based on seniority,
merit, quantity or quality of production are also allowable under the
law. However, if a business wants to pay men and women doing the same
job differently, there must be a business reason for doing so.
Discrimination based on factors that are used as substitutes for gender
such as a male worker's stronger salary negotiation skills or an
assumption that women will work for less would not be allowed.
The ``bona fide'' business necessity language is borrowed from
Title VII of the Civil Rights Act, which has been the law for over 40
years and is a familiar standard to employers. Title VII does not
require employers to develop cost prohibitive programs to satisfy the
comparable alternative requirement and neither would the Paycheck
Fairness Act.
Businesses which have clearly written pay policies and practices
and proactively review the wages of existing employees will find
compliance with the Paycheck Fairness Act easy. Development and
adoption of formal, written pay equity policies lay the groundwork for
unbiased compensation systems and provide metrics for analyzing
salaries to identify disparities.
Question 3. According to the Paycheck Fairness Act, an employer is
legally vulnerable if an employee can show that she was paid less than
a male colleague because of intentional discrimination or the
``lingering effects of past discrimination.'' Could this prevent
employers from paying market wages? For example, universities typically
cite ``market forces'' as the reason professors of business are paid
more than professors of social work. In many universities there are far
more women teaching social work than business. Should they be able to
sue on the grounds that ``market forces'' reflect the lingering effects
of discrimination? They could surely find expert witnesses in women's
studies programs who would testify that sexist attitudes led society to
place a higher value on male-centered fields like business than female-
centered fields like social work. Is it your view that such litigation
would be helpful in promoting the goals of the act?
Answer 3. The Paycheck Fairness Act will not prevent employers from
paying market wages. This legislation will still allow businesses to
reward employees with merit and performance-related increases. Wage
differentials based on merit, quantity or quality of production and
seniority are also allowable under the law. However, if a business
wants to pay men and women doing the same job differently, there must
be a business reason for doing so. Discrimination based on factors that
are used as substitutes for gender such as a male worker's stronger
salary negotiation skills or an assumption that women will work for
less would not be allowed.
An employee alleging gender wage discrimination under the Equal Pay
Act must identify a comparable male employee who makes more money for
performing equal work, requiring ``equal skill, effort and
responsibility'' under similar working conditions.\5\ This high burden
of proof protects employers. If there is no comparator, then there is
no case and the employer does not need to mount a defense.
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\5\ 29 U.S.C. 206(d)(1).
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In addition, an employer is able to justify the wage disparity
based on the most common business reasons for wage differentials which
are seniority, merit, and quantity or quality of production.\6\ In the
unlikely event that the employer would even get to the ``factor other
than sex'' defense, they would still be able to say the wage
differential was based on a gender-neutral factor, job related and
consistent with business necessity.
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\6\ Peter Avery, Note, The Diluted Equal Pay Act: How Was It
Broken? How Can It be Fixed?, 56 Rutgers L. Rev. 849, 868 (2004).
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Businesses which have clearly written policies and practices and
proactively review the wages of existing employees will find compliance
with the Paycheck Fairness Act easy.
Question 4. The 1963 Equal Pay Act awards victims of intentional
discrimination up to $300,000 in compensatory damage and limited
punitive damages. The Paycheck Fairness Act would change that by
allowing for unlimited multi-million dollar settlements. This is good
news for trial lawyers, but is it a good policy for a nation facing an
unemployment crisis? Employers are nervous and fearful of making new
hires. Won't the act reinforce fear?
Answer 4. The Equal Pay Act does not currently allow the award of
compensatory or punitive damages. Currently, women who have been paid
less than their male counterparts are entitled to recover only their
unpaid minimum wages. Those subject to race and national origin
discrimination are eligible for compensatory or punitive damages.
Punitive damages are only awarded if the employer intentionally
discriminated and acted with ``malice or reckless indifference to the
plaintiff 's federally protected rights. Women and men who endure sex-
based wage discrimination should be entitled to the same remedies as
those available in race and national origin cases.
The Paycheck Fairness Act will not bankrupt employers through an
explosion of court cases, class-action lawsuits, damages awards and
damage awards would be limited by the usual limits in law.
The Paycheck Fairness Act ensures that women can obtain the same
remedies as those subject to discrimination on the basis of race or
national origin. The Paycheck Fairness Act extends to victims of sex-
based discrimination the same standards for class action lawsuits.
These are familiar regulations that business are already complying with
and have been for some time.
Employers that want to be profitable are not fearful about making
new hires. Those that look to recruit and retain the best talent as
well as maintain a competitive edge believe in equal pay for equal
work.
Pay equity is good for business and will result in improved
employee retention, positive human capital outcomes, and a more
productive work force. In addition to talent acquisition, gender
diversity helps companies meet business goals. A recent European
Commission study showed that 58 percent of companies with diversity
programs reported higher productivity as a result of improved employee
motivation and efficiency, and 62 percent said that the programs helped
attract and retain highly talented people.\7\
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\7\ Desvaux, Georges, Devillard-Hoellinger, Sandrine and. Meaney,
Mary C, A Business Case for Women, McKinsey and Company, September
2008.
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Business owners that are paying equal pay for equal work have
nothing to fear from the Paycheck Fairness Act. The current system is
unfair to those employers who treat their employees fairly because it
creates a competitive advantage for discriminatory employers.
Currently, it is worthwhile for some businesses to pay a woman less
than her male counterparts, and gamble that she won't sue for back
wages in the future. If she doesn't sue, the employer keeps the
``savings''; if she does, the employer only has to pay 2 years of back
pay. This encourages discriminatory pay and unfair treatment of female
employees.
As we face this unemployment crisis, it is the best time to
institute such a policy. Women are now half of workers on U.S. payrolls
and many families are trying to make ends meet on women's earnings
alone. Paying women equally is not only good for the women but their
families and the Nation as a whole. As they help rebuild the national
economy and workforce, shouldn't they be equally compensated?
Response to Questions of Senator Enzi by Jane M. McFetridge
Question 1. At the hearing there was some discussion of the
phenomenal growth of women-owned firms in recent years, and it was
claimed that women-owned firms had a reduced risk of being sued for pay
discrimination. In your personal experience as an employment lawyer, is
that the case?
Answer 1. No, I have not seen a discernible difference in the
litigation risks faced by women-owned businesses. Unfortunately, in my
experience, a company's litigation risk often has less to do with its
policies and practices--or its leadership--than one might think. The
companies I work with, regardless of ownership, are committed to
ensuring gender pay parity and work hard to eradicate discrimination in
the workplace. However, that does not mean they don't get sued. As
evidenced by EEOC statistics, the vast majority of Equal Pay Act of
1963 (the ``EPA'') and title VII if the Civil Rights Act of 1964
(``title VII'') charges filed with the agency lack merit. In 2009, for
example, after thoroughly investigating and evaluating the charging
party's allegations of discrimination, the EEOC found ``reasonable
cause'' in only 4.6 percent of the EPA and 5 percent of the title VII
charges it received.\1\ These statistics demonstrate that the vast
majority of claims lack merit, irrespective of the gender of the
business owner. Furthermore, many (if not most) of the businesses I
work with are corporations with diverse ownership, so it is a little
difficult to assign ``gender'' to such entities. I will say that the
majority of corporate representatives with whom I deal are women--both
in the corporate counsel's department and as decisionmakers in Human
Resources or management. The presence of female decisionmakers and
management does not appear to influence the likelihood of a business
being sued, nor does it affect the outcome of litigation.
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\1\ EEOC Sex-Based Charges, available at http://www.eeoc.gov/eeoc/
statistics/enforcement/sex.cfm (last visited Mar. 5, 2010).
Question 2. 2. How difficult is it for a woman who believes she may
be the victim of gender-based pay discrimination to commence an
investigation?
Answer 2. It is very simple for an employee who believes she may be
the victim of gender-based pay discrimination to commence an
investigation under both the EPA and title VII: all she must do is file
a charge of discrimination with the EEOC.\2\ The EEOC charge-filing
process is intentionally designed so that employees do not have to rely
on lawyers to prompt the EEOC to initiate an investigation.
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\2\ Although plaintiffs are not required to file a charge of
discrimination with the EEOC prior to commencing an EPA lawsuit, the
EEOC has the authority to investigate EPA charges and commence
litigation. See 29 CFR 1620.30 (2008).
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A complaint can be filed with the EEOC through a phone call or a
visit to a local EEOC office, as well as by mail. Although a formal
charge cannot be filed by phone, anyone who believes she has been
subjected to discrimination can call the EEOC's hotline and provide
basic information, which the EEOC will then forward to a local office
that will contact the caller.\3\ Where necessary, the EEOC provides
special assistance, such as a foreign language interpreter, at local
offices.\4\ The EEOC also allows an individual, organization or agency
to file a charge on someone else's behalf.\5\
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\3\ The Charge Handling Process, available at http://www.eeoc.gov/
employees/howtofile.cfm (last visited Mar. 30, 2010).
\4\ Id.
\5\ Id.
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As the U.S. Supreme Court has explained, title VII ``sets up a
`remedial scheme in which lay persons, rather than lawyers, are
expected to initiate the process.' ''\6\ A filing constitutes a
``charge,'' the Court has said, when it can be ``reasonably construed
as a request for the agency to take remedial action to protect the
employee's rights or otherwise settle a dispute between the employer
and the employee.'' \7\ A Federal district court recently reiterated
this reasoning in a sex-based pay discrimination case, holding that a
plaintiff 's intake questionnaire, with allegations of unequal pay, was
sufficient to constitute filing of an EEOC charge. ``While a formal
charge was not signed by [plaintiff], the . . . questionnaire contained
an allegation of discrimination, the name of the charged party and a
request for the agency to take action.'' \8\
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\6\ Federal Express Corp. v. Holowecki, 552 U.S. 389, 402 (Feb. 27,
2008).
\7\ Id.
\8\ Glodek v. Jersey Shore State Bank, 2009 U.S. Dist. LEXIS 77118,
at *31 (M.D. Pa. Aug. 28, 2009).
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Not only is the charge-filing process simple, but employees also
have a substantial period of time to file. The Lilly Ledbetter Fair Pay
Act of 2009 provides that the charge-filing period (300 days in most
States and 180 days in States that do not have a fair employment
agency) for title VII pay discrimination claims restarts each time an
employee receives a paycheck based on a discriminatory compensation
decision. For the EPA, an employee must file an EEOC charge or a
lawsuit ``within 2 years of the alleged unlawful compensation practice
or, in the case of a willful violation, within 3 years.'' \9\
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\9\ Equal Pay/Compensation Discrimination, available at http://
www.eeoc.gov/laws/types/equalcompensation.cfm (last visited Mar. 30,
2010).
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Beyond investigating a charge of pay discrimination, the EEOC may
also pursue mediation or file a lawsuit on an employee's behalf.\10\ In
some cases, the EEOC even decides on its own to investigate whether a
company is engaging in discrimination outside of what is alleged in a
particular charge. A Federal appeals court in New York recently held
that the EEOC has authority to request company-wide information
regarding an employer's religious exemptions to company policy after
two employees filed religious discrimination charges.\11\ In other
words, if one or two female employees file EEOC charges alleging their
employer engaged in gender-based pay discrimination, the EEOC could
request nationwide pay data for all employees. The end result is that a
single EEOC charge filed by an individual employee in Chicago can
result in a massive litigation initiated by the EEOC against a company
with operations across the country. In such a scenario, the EEOC could
pursue class-wide relief for a group of female employees. Furthermore,
the EEOC can take notice of possibly discriminatory practices through
third party sources such as news reports and investigate employers for
potential civil rights violations, such as gender pay disparities.\12\
In this scenario, no complainant is necessary to prompt an
investigation.
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\10\ The Charge Handling Process, available at http://www.eeoc.gov/
employees/process.cfm (last visited Mar. 30, 2010).
\11\ EEOC v. UPS, 587 F.3d 136 (2d Cir. Nov. 19, 2009).
\12\ See 42 U.S.C. 2000e-5(b) (granting EEOC Commissioners
authority to issue charges on their own initiative under title VII);
see also Press Release, U.S. Equal Employment Opportunity Commission,
$27.5 Million Consent Decree Resolves EEOC Age Bias Suit Against Sidley
Austin (Oct. 5, 2007), available at http://www.eeoc.gov/eeoc/newsroom/
release/10-5-07.cfm (last visited Apr. 29, 2010) (noting that ``[t]he
litigation has yielded a number of important legal decisions, . . .
[including] ratifying the authority of EEOC to investigate and obtain
relief for victims of age discrimination on its own initiative.'')
Question 3. What would be the effect of S. 182 on litigation levels
and liability exposure for small employers?
Answer 3. S. 182 would undoubtedly increase litigation levels and
liability exposure for small employers. The proposed legislation not
only makes it more difficult for employers to establish an affirmative
defense to EPA liability, but, by making uncapped punitive and
compensatory damages available in EPA cases regardless of the
employer's size, it both encourages plaintiffs' attorneys to bring such
claims and increases potential exposure.
When Congress added compensatory and punitive damages to the relief
available in title VII disparate treatment cases through passage of the
Civil Rights Act of 1991, it was careful to include a statutory cap on
such damages. That cap is set at $50,000 (for companies with 15-100
employees) to $300,000 total for compensatory and punitive damages,
depending on the employer's size. As the U.S. Court of Appeals for the
Second Circuit has pointed out, a review of the act's legislative
history reveals that ``the purpose of the cap is to deter frivolous
lawsuits and protect employers from financial ruin as a result of
unusually large awards.'' \13\
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\13\ Luciano v. Olsten Corp., 110 F.3d 210, 221 (2d Cir. Mar. 21,
1997) (referencing 137 Cong. Rec. S15472 (1991) (statement of Sen.
Dole); 137 Cong. Rec. S15478-79 (1991) (statement of Sen. Bumpers)).
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S. 182, on the other hand, makes no attempt to ameliorate the size
of available damages for smaller employers, who are arguably less
capable of surviving such an award, or the cost of the litigation
itself. Thus, S. 182 exposes small employers to significantly greater
liability than what they currently face under both the EPA and title
VII. The promise of uncapped damages will also provide added incentive
for plaintiffs' counsel to bring EPA claims against employers in the
first place, including small employers.
To better understand how enhanced damage remedies affect litigation
levels, a good place to look is the Civil Rights Act of 1991. According
to one article, ``In the decade following the passage of the Civil
Rights Act of 1991, the number of employment discrimination trials
jumped 26 percent, while other civil trials declined by a roughly
equivalent percentage.'' \14\
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\14\ Lee Reeves, Pragmatism Over Politics: Recent Trends in Lower
Court Employment Discrimination Jurisprudence, 73 Mo. L. Rev. 481, 510
(2008). In addition, as I mentioned in my Opening Remarks, the State of
California has many times more discrimination cases than any other
State in the country--and the cost of doing business there is
significantly higher than in other locations--because State law
provides for unlimited damages.
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Further, by allowing ``opt-out'' class actions under a law that
makes it very difficult for employers to defend legitimate decisions
while exposing them to unlimited damages, S. 182 would also encourage
plaintiffs' attorneys to bring class action lawsuits against employers
who may be forced to settle even when they did nothing wrong, or face
financial ruin from the extraordinary costs associated with litigation
of this nature. This is true for both large and small employers, but
the threat of financial ruin is even greater for small employers.
Question 4. 4. In your view could S. 182 impose liability on
employers that have not engaged in any discriminatory behavior?
Answer 4. Yes, I absolutely believe S. 182 could impose liability
on employers that have not engaged in any discriminatory behavior.
There are three specific aspects of the legislation that lead me to
this conclusion: (1) Sec. 3(a)(2)(B), which would replace the EPA's
``any factor other than sex'' defense with a ``business necessity''
requirement; (2) Sec. 3(a)(2)(C), which would amend the EPA to define
``establishment'' as ``workplaces located in the same county or similar
political subdivision of a State;'' and (3) Sec. 9, which would no
longer require the OFCCP to use multiple regression analysis when
performing compensation discrimination analyses. Further, if S. 182 is
enacted, employers who have not engaged in any discriminatory behavior
could be liable for uncapped compensatory damages. I will address each
of these provisions in turn.
First, the Paycheck Fairness Act would eliminate the EPA's ``any
factor other than sex'' defense, replacing it with a ``bona fide factor
other than sex'' that is ``consistent with business necessity.'' That
defense would be unavailable if a plaintiff demonstrates that ``an
alternative employment practice exists that would serve the same
business purpose.'' As I stated in my opening remarks, as a practical
matter, there is simply no way an employer will be able to demonstrate
that each and every pay determination it makes is consistent with
business necessity. There may be dozens or hundreds of factors that go
into determining an employee's compensation, some objective and some
subjective, and all of which can be legitimate, non-discriminatory
considerations. Under S. 182, however, there is a clear dichotomy:
either the reason for the pay differential is ``consistent with
business necessity'' or it is discriminatory.
In my testimony, I highlighted a few examples of how pay
determinations that have nothing to do with discrimination would not
fit into S. 182's ``business necessity'' defense. I gave the example of
jobs that require frequent personal interaction, like a waitress. If S.
182 is enacted, employers could be liable for pay differentials based
upon qualities like a friendly disposition or positive attitude if a
court does not consider them ``consistent with business necessity.''
This is just one example. There are an infinite number of scenarios in
which an employer may decide to pay one employee more than a similarly
situated employee for reasons having nothing to do with gender
discrimination. Consider a company that decides to give a male manager
a larger raise than a female manager because he has successfully
implemented initiatives to improve employee morale, demonstrated
excellent judgment and decisionmaking skills in high pressure
situations, and has generally impressed senior-level management for
reasons that cannot necessarily be quantified. In this situation, S.
182 could impose liability on employers that have not engaged in any
discriminatory behavior.
Another example is mergers and acquisitions. When one company
acquires another, it absorbs differing pay scales, oftentimes resulting
in pay disparities that are wholly unrelated to sex. However, by
requiring the justification to be job-related and consistent with
business necessity, employers would arguably have to undertake a prompt
review of these differing pay scales upon consolidation and normalize
the disparities by elevating the lower salaries to the higher-paid
salary (as the EPA does not allow employers to reduce salaries in
response to a pay disparity).
The inevitable result of S. 182's ``business necessity''
reformulation of the ``any factor other than sex'' defense is that
employers may be liable for making individual pay determinations. Even
if employers are not found liable, that result will only come after
costly and protracted litigation.
Second, S. 182 would amend the EPA to define ``establishment'' as
``workplaces located in the same county or similar political
subdivision of a State.'' This change would make it illegal for
employers to incentivize employees who agree to work in less desirable
neighborhoods or work less desirable shifts, even though the pay
differential has nothing to do with discrimination. The same would be
true for counties that encompass both urban and rural populations:
employers could be liable for discrimination if they pay workers
employed in an urban center more than workers employed in a rural
setting, even though the cost of doing business is significantly higher
in the rural location.
Third, S. 182 would direct the OFCCP to use the ``full range of
investigatory tools'' to determine the presence of potential
discrimination in Federal contractors' compensation systems, including
the ``pay grade methodology,'' which the OFCCP rejected in 2006.
Instead, the OFCCP has been using multiple regression analyses--which
generally allows the OFCCP to consider the impact of variables, such as
years of work experience, education, and past performance--to determine
the presence of potential discrimination. As a result, the OFCCP would
likely bring more actions against employers based on inadequate and
faulty data. Even if employers are not found liable, they would be
forced to spend money defending themselves.
For all of these reasons, I believe S. 182 could impose liability
on employers that have not engaged in any discriminatory behavior.
[Whereupon, at 12:03 p.m., the hearing was adjourned.]