[Senate Hearing 113-830]
[From the U.S. Government Publishing Office]
S. Hrg. 113-830
ACCESS TO JUSTICE: ENSURING EQUAL PAY WITH THE PAYCHECK FAIRNESS ACT
=======================================================================
HEARING
OF THE
COMMITTEE ON HEALTH, EDUCATION,
LABOR, AND PENSIONS
UNITED STATES SENATE
ONE HUNDRED THIRTEENTH CONGRESS
SECOND SESSION
ON
EXAMINING S. 84, TO AMEND THE FAIR LABOR STANDARDS ACT OF 1938 TO
PROVIDE MORE EFFECTIVE REMEDIES TO VICTIMS OF DISCRIMINATION IN THE
PAYMENT OF WAGES ON THE BASIS OF SEX
__________
APRIL 1, 2014
__________
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
BARBARA A. MIKULSKI, Maryland LAMAR ALEXANDER, Tennessee
PATTY MURRAY, Washington MICHAEL B. ENZI, Wyoming
BERNARD SANDERS (I), Vermont RICHARD BURR, North Carolina
ROBERT P. CASEY, JR., Pennsylvania JOHNNY ISAKSON, Georgia
KAY R. HAGAN, North Carolina RAND PAUL, Kentucky
AL FRANKEN, Minnesota ORRIN G. HATCH, Utah
MICHAEL F. BENNET, Colorado PAT ROBERTS, Kansas
SHELDON WHITEHOUSE, Rhode Island LISA MURKOWSKI, Alaska
TAMMY BALDWIN, Wisconsin MARK KIRK, Illinois
CHRISTOPHER S. MURPHY, Connecticut TIM SCOTT, South Carolina
ELIZABETH WARREN, Massachusetts
Derek Miller, Staff Director
Lauren McFerran, Deputy Staff Director and Chief Counsel
David P. Cleary, Republican Staff Director
(ii)
C O N T E N T S
__________
STATEMENTS
TUESDAY, APRIL 1, 2014
Page
Committee Members
Mikulski, Hon. Barbara A., a U.S. Senator from the State of
Maryland....................................................... 1
Alexander, Hon. Lamar, a U.S. Senator from the State of
Tennessee, opening statement................................... 2
Warren, Hon. Elizabeth, a U.S. Senator from the State of
Massachusetts.................................................. 45
Baldwin, Hon. Tammy, a U.S. Senator from the State of Wisconsin.. 47
Franken, Hon. Al, a U.S. Senator from the State of Minnesota..... 52
Witnesses
Eisenberg, Deborah Thompson, Associate Professor of Law,
University of Maryland Francis King Carey School of Law,
Baltimore, MD.................................................. 5
Prepared statement........................................... 6
Young, ReShonda, Operations Manager, Alpha Express, Inc.,
Waterloo, IA................................................... 19
Prepared statement........................................... 20
Sleeman, Kerri, Mechanical Engineer, Houghton, MI................ 23
Prepared statement........................................... 24
Olson, Camille A., Partner, Seyfarth Shaw, Chicago, IL........... 28
Prepared statement........................................... 30
ADDITIONAL MATERIAL
Statements, articles, publications, letters, etc.:
Letter:
Camille A. Olson......................................... 56
Response by Deborah Thompson Eisenberg to questions of:
Senator Alexander........................................ 60
Senator Franken.......................................... 62
Response of Camille A. Olson to questions of Senator Harkin,
Senator Alexander, and Senator Mikulski.................... 63
(iii)
ACCESS TO JUSTICE: ENSURING EQUAL PAY WITH THE PAYCHECK FAIRNESS ACT
----------
TUESDAY, APRIL 1, 2014
U.S. Senate,
Committee on Health, Education, Labor, and Pensions,
Washington, DC.
The committee met, pursuant to notice, at 3:14 p.m., in
room SD-430, Dirksen Senate Office Building, Hon. Barbara
Mikulski presiding.
Present: Senators Mikulski, Murray, Casey, Franken,
Baldwin, Murphy, Warren, and Alexander.
Opening Statement of Senator Mikulski
Senator Mikulski. Good afternoon, everybody. The Committee
on Health, Education, Labor, and Pensions will come to order.
Today, we are holding a hearing on the Paycheck Fairness bill.
The topic of the hearing is Access to Justice: Ensuring Equal
Pay with the Paycheck Fairness Act. We will hear from a
distinguished group of visitors who will tell their stories and
also, hopefully, will provide us with insights on what is the
best way to proceed.
For me, I want to make sure that women have a fair shot, a
fair shot at equal pay for equal work. I want to finish the job
we began with Lilly Ledbetter in which we kept the courthouse
door open so that if you felt Equal Pay rights had been
violated, you would have access to the courts without the
arbitrary decisions of time limits.
We find that the Equal Pay Act again is thwarted over the
years through either retaliation for trying to find out what
others are paid in your work place, or that they're increasing
loopholes, saying that it's not identical or not comparable
work. So we want to finish the job, end the retaliation, end
paycheck secrecy, and also close the loopholes that prevent
equal pay for equal or comparable work.
In 1963, Lyndon Johnson wanted to pass three major civil
rights bills, Equal Pay for Equal Work, the Civil Rights Act,
and also the Voting Rights Act. He began with equal pay,
because he thought it would be the easiest to pass and the
easiest to enforce. And here we are now, 50 years later, in
some ways fighting the same battles.
So we hope that through this legislation, we will finally
end paycheck secrecy, workplace retaliation if you try to find
out or offer any kind of advocacy in your own behalf to get
equal pay, and also to close those loopholes. Women are almost
half of the workforce. In many instances, 40 percent are now
the sole bread winners for families.
And many over the years, for many decades, have said,
``Well, we don't have to pay you as much because the guys are
the bread winners.'' Well, now, the women are the bread
winners, and they're tired of getting paid in crumbs. So this
is what we're trying to do here, to look at the legislation,
and to look at the best way forward to continue that
legislation.
I know we've had a delayed time in starting this hearing
because of the votes. So I'm going to ask unanimous consent
that my full statement go into the record, and I'm going to
turn to Senator Alexander, who offers such great insight on
these issues, for any comments that he has.
[The prepared statement of Senator Mikulski was not
available at time of print.]
Senator Alexander.
Opening Statement of Senator Alexander
Senator Alexander. Thank you, Madam Chairman. I appreciate
that. I'm not going to take an excessive amount of time, but I
do want to make my statement.
I thank you for the hearing, but I think it ought to be on
a different subject. I think it ought to be about more
flexibility for working parents. This bill is about more
litigation, more lawyers, higher income for trial lawyers, and
more class action lawsuits whether you want them on your behalf
or not.
Let me tell a story to suggest why I believe instead we
should be talking about more flexibility for working parents.
Years ago, in my private life, I helped start a company with
Bob Keeshan, Captain Kangaroo, and my wife and a couple of
others that later merged with Bright Horizons and became the
largest worksite daycare provider in the country.
We recognized that probably the most important social
phenomenon in our country over the last 30 or 40 years are the
number of women working outside the home. And, typically, many
of them had young children, and the idea was that we would help
corporations provide worksite daycare centers that were safe
and good for those moms, and dads as well, who worked with
young children outside the home.
We did a lot of surveys, and what we found out was that in
many cases, more important than pay was flexibility in the
workforce, that a mom or a dad with a young child who was
working outside the home didn't want to miss the school play,
didn't want to miss the football game, wanted to be available
to deal with a sick child.
I tell that story because I think instead of a law like the
one proposed here, which would literally reduce the flexibility
that employers have to provide men and women in the workplace
with more flexibility to go to the football game or the school
play, I think we need more flexibility, not a mandate. We need
to enable employers to do that.
Let me give you an example or two. Take a school where an
employer might want to say, as we did in Tennessee 30 years
ago, ``We're going to pay teachers more for teaching well.''
That's a very subjective thing to do. Or we might be in a
situation where we wanted to encourage girls to become more
interested in mathematics. And to do that, we might like to
hire an outstanding woman teacher of mathematics and science to
be in the classroom.
We might have to pay her more than we do a man, because she
has so many other opportunities if she has those talents. Or,
on the other hand, we might have a rough school where we need a
man who is a strong role model for boys who cause a lot of
trouble. Sometimes we might have to pay that man more than a
woman.
We might be in a situation in another worksite where a mom
might say, ``Well, I've got two kids. I'd rather have the day
shift than the night shift.'' And for exactly the same work,
you might pay a man more for the night shift, or vice versa.
Under current law, arguably, you could do many of those things.
Under the proposed legislation, it would reduce the flexibility
employers may provide in the workforce.
So I would like to see a hearing--and I hope we'll have
plenty of opportunities, Madam Chairman, to amend this
proposal, and then debate it here in the committee, and then go
to the floor where I'll have a number of amendments. I've
noticed--and I hope you won't mind my saying this--and I will
give my Democratic friends credit for being very forthright
about what they're doing here.
Here's a big article in The New York Times a few days ago
where Senator Schumer announces their 10-part political plan,
including this bill, to try to recapture some political ground
because of the disaster Obamacare has been. And they say,
``Privately, White House officials''--this is The New York
Times--``say they have no intention of searching for any grand
bargain with Republicans on any of the issues.'' The point
isn't to compromise. I give them credit for being
straightforward.
But my suggestion would be that the Democratic jobs agenda
is more like a war on jobs. Obamacare is causing restaurant
companies to reduce their number of employees. We had testimony
right here on the minimum wage where the nonpartisan
Congressional Budget Office said it will cost 500,000 jobs, and
the Paycheck Fairness proposal, so-called, really reduces the
flexibility that employers would have to help working parents
go to the school play or have other opportunities to be with
their children.
So we have great differences of opinion here, and I'm
looking forward to hearing the witnesses. I'm looking forward
to offering a number of amendments when we mark the bill up.
And when it comes to the floor, we'll have a large number of
amendments aimed at the goal of giving working parents more
flexibility in the workplace so they can be better parents.
Thank you, Madam Chairman.
Senator Mikulski. Thank you, Senator Alexander, for your
comments. First of all, I personally want to thank you for the
very constructive role that you played in enabling us to pass
the Child Care Development Block Grant. I remember earlier in
our conversations, you had 64 issues that you raised with our
staff, and by working through them, we were able to find a way
to find that sensible center, and I think we passed a very
excellent bill. So we look forward to your comments and your
amendments on this.
In terms of whether this committee should hold a hearing on
workplace flexibility, I don't chair the committee. I'm
chairing this particular hearing. But I think that we would
request our chairman, Senator Harkin, to have just one on
workplace flexibility. I think it is a compelling topic that
needs to be addressed for families to be able to participate,
whether you're a two-parent household, or whether you're a
single-parent household headed by a man or a woman.
The framework for the way we do work in our country now
needs to be examined, and we need to work in partnerships with
the private sector. This hearing is not an adversarial hearing
toward the private sector. It is to say, though, we have a bill
that passed in 1963, the Equal Pay Act, and now we need to make
sure that the impediments for enforcing the bill and people
having the opportunity to have equal pay for equal work are
removed.
What I'm going to do now is turn to the witnesses, because
we are running late. Then I'll turn to my colleagues and ask
that their opening statements be submitted in the record and
that they can include them.
So we want to turn first to--we'll go right down the aisle.
We want to turn to Professor Eisenberg. I'm going to introduce
everybody now, and then you can all pick up.
We welcome you, Professor Eisenberg. And it's with great
pride that I comment that you're from the Francis King Carey
School of Law in Maryland. You have extensive background in
studying the impact of pay secrecy policies, have won that wage
gap, and you've written extensively about the Pay
Discrimination Act. We welcome you.
Ms. ReShonda Young is an actual business owner, a real
business owner. We know you took over your business from your
dad. You found that in doing so, as you tried to grow the
business, that the women were paid less, and there were old
fashioned reasons for that. But now we're in a new fashion, new
fangled economy, and you took constructive steps, and we'll be
interested in how you did that and whether it affected the
bottom line.
We want to turn to Kerri Sleeman, herself a mechanical
engineer who was a design supervisor and worked very hard in
her company and, as I understand, received outstanding reviews.
But when for a variety of reasons the company failed, and there
was the bankruptcy hearing, she was startled to find that the
very men she supervised made more than her. So we'd like to
hear your story, Ms. Sleeman, and what you did to try to
address that grievance, which we should learn.
And then we want to also welcome Ms. Olson from the Chamber
of Commerce. We know you have an extensive detailed policy. I
kind of read through it this morning, but I will read it again.
We want you to know you are most welcome at this hearing, and
we'd like the insights from the Chamber on this bill and
perhaps ideas on how to improve it. So we want you to know that
you're most cordially welcomed.
Professor Eisenberg, why don't you kick it off? We'll go
down the table, and Ms. Olson will be last person at the bat.
Then we'll move to questions.
STATEMENT OF PROFESSOR DEBORAH THOMPSON EISEN-
BERG, ASSOCIATE PROFESSOR OF LAW, UNIVERSITY OF MARYLAND
FRANCIS KING CAREY SCHOOL OF LAW, BALTIMORE, MD
Ms. Eisenberg. Thank you, Chairwoman Mikulski and members
of the committee. I am honored to testify in support of the
Paycheck Fairness Act. As a scholar, I've studied the current
failure of Federal law to provide an effective remedy for many
women who have experienced pay discrimination. And as an
employment lawyer and now mediator, I've witnessed the profound
impact that pay discrimination can have.
My written testimony explains why gender pay discrimination
is still a serious problem, how it happens in the modern
economy, and why the Paycheck Fairness Act is critical
legislation that should be passed. I want to highlight three
points.
First, the Paycheck Fairness Act recognizes, in the words
of Louis Brandeis, that sunshine is the best disinfectant. As
we know from Lilly Ledbetter's story, most unlawful pay
discrimination is hidden from sight. This can allow unlawful
pay disparities to snowball over time, undetected and
undeterred. Many women do not know that drastic pay disparities
exist between them and their male cohorts until they find out
by accident.
Many employees are afraid to compare notes or ask about the
pay of their counterparts out of fear of getting fired. One
study found that half of all American workers are either
strictly forbidden or strongly discouraged from discussing
their pay with co-workers. This is a problem, because studies
show that if women are armed with better information about
appropriate pay rates, gender pay disparities can be reduced or
eliminated all together.
The act lets in just a little bit of sunshine, while
balancing confidentiality concerns. It prohibits retaliation
against employees who simply ask about or discuss their wages
in the workplace. It also facilitates better data collection
and study about pay rates to better understand the causes of
pay discrimination and to better assist employers with best
practices.
This is a balanced, proactive approach. The goal is to
motivate employers to correct unlawful pay disparities before
they turn into fodder for litigation.
Second, the Paycheck Fairness Act will make the Equal Pay
Act a more effective remedy against those who, 50 years later,
still flout the law. The act amends the any-act-other-than-sex
defense in the Equal Pay Act, which a minority of Federal
courts have interpreted to be a gaping loophole, to an
anything-under-the-sun defense, which has swallowed the Equal
Pay for Equal Work rule.
The act fixes that problem by adding the common sense
fairness notion that a wage disparity between two employees who
perform the same jobs should be based on a factor related to
the business, the job, and the employees in those jobs. That
standard is not only fair, but it's smart business. This
standard is already working well in a majority of Federal
circuits and has been adopted by the EEOC.
To be clear, the act does not get the government involved
in wage setting at all. The act does not dictate to employers
which factors should be used in setting pay. Employers have the
sole discretion to set pay, based on anything that matters for
their business and those jobs, a limitless array of factors
such as skills, qualifications, performance, seniority, extra
responsibility, and the list goes on.
Third, the act puts gender pay discrimination on equal
footing with remedies for racial and national origin pay
discrimination under section 1981 by permitting compensatory
damages in appropriate cases and punitive damages for
especially egregious and malicious violations. It also allows
women who are affected by a widespread common discriminatory
pay practice to join together in one representative action.
These changes will promote voluntary compliance by
employers and provide a more effective remedy against those
that break the law. Opponents who suggest that strengthening
the Equal Pay Act will somehow open the flood gates to
frivolous claims and runaway jury verdicts do not understand
the realities of equal pay litigation. These cases are
extremely hard to win.
As my research explains, employees are less likely to
prevail on equal pay claims today than at any other time in the
act's history. Very few equal pay claims are filed in Federal
court, and those that are filed are typically dismissed on
summary judgment and never make it to a jury, often for reasons
that have nothing to do with the merits of the pay disparity
itself.
Rest assured that the women of America do not want to sue
their employers. They simply want to be paid fairly. The
Paycheck Fairness Act will help to ensure that the promise of
equal pay for equal work is not an empty one.
Thank you, and I look forward to your questions.
[The prepared statement of Ms. Eisenberg follows:]
Prepared Statement of Deborah Thompson Eisenberg
summary
The Paycheck Fairness Act is critical legislation that addresses
several gaps in the Equal Pay Act. Federal equal pay laws have become
an empty promise for many women who experience pay discrimination. This
Act sets forth a balanced approach--with both proactive strategies and
a more workable legal remedy--that will ensure ``equal pay for equal
work.''
Most importantly, the Act amends the ``any factor other than sex''
defense--a gaping loophole which has swallowed the ``equal pay for
equal work'' rule in some cases--with the common sense fairness notion
that a wage disparity between two employees who perform the same jobs
should be based on a bona fide factor related to the job or business.
This standard is already used in a majority of Federal courts and has
been adopted by the Equal Employment Opportunity Commission. Two
Federal circuits have interpreted this defense as ``anything under the
sun,'' even if unrelated to the job or business. The idea that
differences in pay should relate to the job and business is not only a
matter of basic fairness; it is simply smart business. The Act leaves
it to the employer's sole discretion which factors should be used to
determine pay.
Second, the Act recognizes, to paraphrase Justice Brandeis, that
``sunshine is the best disinfectant.'' Pay secrecy has allowed unlawful
pay disparities between men and women performing the same jobs to
flourish, undetected and undeterred. To address this problem, the Act
prohibits employers from retaliating against employees who ask about or
discuss wage information and facilitates the collection and study of
pay data so we better understand the causes of pay discrimination. This
reinforces that the law's requirement of equal pay for equal work
cannot be ignored simply because no one knows about unlawful pay
disparities. It will motivate employers to correct unjustified pay
disparities before they turn into fodder for litigation. The Act also
creates an award for employers who demonstrate best practices and
encourages negotiation training for women and girls. These provisions
provide a balanced, proactive approach to combating wage
discrimination.
Third, the Act addresses the difficulties that women have in
remedying the multiple harms of pay discrimination by allowing
compensatory and punitive damages in appropriate cases and permitting
employees to join together in a class action to address systemic
violations. These provisions will put gender pay discrimination on
equal footing with Federal law regarding pay discrimination based on
race under 42 U.S.C. Sec. 1981 and be a stronger deterrent against the
subset of employers that flout the Nation's equal pay laws.
______
Chairwoman Mikulski and members of the Senate Committee on Health,
Education, Labor and Pensions, I am honored to have the opportunity to
testify before you in support of the Paycheck Fairness Act. This issue
is important to me as a scholar who has studied the current failure of
Federal law to provide a workable remedy for most women who experience
pay discrimination in the modern economy; as a former employment
litigator and now mediator who has witnessed first-hand the profound
impact that compensation discrimination has on women, and the
difficulties they have seeking a remedy for that harm; and as a proud
mother of two daughters.
The Paycheck Fairness Act is critical legislation that expresses
our Nation's commitment to equal pay for equal work and addresses
several gaps in the Equal Pay Act. It should be passed for four main
reasons:
1. Most importantly, the Paycheck Fairness Act amends the ``any
factor other than sex'' defense--a gaping loophole which has swallowed
the ``equal pay for equal work'' rule in some jurisdictions--with the
common sense fairness notion that a wage differential between two
employees who perform the same jobs should be based on a bona fide
factor related to the job or business. This standard is already working
well in a majority of Federal circuit courts and has been adopted by
the Equal Employment Opportunity Commission, but two Federal circuits
have interpreted this defense to mean ``anything under the sun,'' even
if unrelated to the job or business. The idea that differences in pay
should bear some relation to the job and business should be an
uncontroversial proposition. It is not only a matter of basic fairness
(for all employees) and equal opportunity for women; it is simply smart
business and good corporate governance for an employer to be more
thoughtful about how its pay awards relate to the job and business.
2. The Paycheck Fairness Act recognizes, in the words of Justice
Brandeis, that ``sunshine is the best disinfectant'' by prohibiting
employers from retaliating against employees who simply ask about,
discuss, or disclose wage information. As described below and in my
scholarship, pay secrecy has allowed unlawful pay disparities between
men and women performing the same jobs to flourish, undetected and
undeterred. The Act also facilitates the collection and analysis of pay
data so we better understand the causes of pay discrimination. It will
reinforce that the law's requirement of equal pay for equal work cannot
be ignored simply because no one knows about unlawful pay disparities.
And it will motivate employers to correct unjustified pay disparities
before they turn into fodder for Federal litigation. This is a
balanced, proactive approach.
3. The Paycheck Fairness Act provides an incentive for voluntary
compliance and the development of best practices by employers by
establishing a National Award for Pay Equity in the Workplace, while
empowering women and girls with negotiation training so they can better
navigate the often difficult and risky process of salary negotiations.
4. The Paycheck Fairness Act addresses the difficulties that women
have in remedying the multiple harms of pay discrimination by providing
compensatory and punitive damages and permitting them to join together
in a class action to address systemic violations. These provisions will
put gender pay discrimination on equal footing with Federal law
regarding pay discrimination based on race under 42 U.S.C. Sec. 1981
and be a stronger deterrent against the subset of employers that flout
the Nation's equal pay laws.
At the outset, I want to dispel some common myths about the
Paycheck Fairness Act.
Myth #1: This will open the floodgates to frivolous lawsuits by
``jack-pot'' trial lawyers
Opponents who suggest that this legislation will somehow open the
floodgates to frivolous EPA claims by ``trial lawyers'' do not
understand (or are not being forthright) about the realities of equal
pay litigation. In addition to being expensive and extremely difficult
to win, pursuing an employment discrimination lawsuit can damage a
plaintiff 's mental and physical health and often results in career
suicide. In addition, this area of the law is complicated and tends to
be litigated on both the employee and management sides by sophisticated
attorneys who understand that most plaintiffs in Federal employment
discrimination cases do not prevail, and that employers will win most
cases at the summary judgment stage.
Rest assured: most women do not want to sue their employers--they
want the law to express a stronger commitment to equal pay for equal
work so employers will have an incentive to pay them fairly without the
need for litigation. Moreover, employee-side attorneys who handle
employment discrimination cases tend to do this work out of a sense of
a public interest mission as a ``private attorney general,'' enforcing
our Nation's equal opportunity laws. Filing ``frivolous'' cases will
not keep the lights on in their law offices. The idea that attorneys
would put their law licenses and reputations on the line by filing
``frivolous'' cases--and that our smart Federal judges would allow
those ``frivolous'' cases to proceed to a jury, and then juries would
award astronomical damages for unmeritorious claims--is a fantastical
red herring.
Myth #2: This Changes the ``Equal Work'' Standard into ``Comparable
Worth''
Nothing in the Paycheck Fairness Act permits the concept of
``comparable worth'' to be used in the EPA. The prima facie standard of
``equal work'' remains.
Myth #3: The Government Will Interfere in Pay Decisions
Employers are already obligated under the Equal Pay Act and title
VII to refrain from pay discrimination and ensure equal pay for
substantially equal jobs. The problem is that pay secrecy and the lack
of effective workable remedies has allowed unlawful pay discrimination
to flourish undetected and unaddressed in some workplaces. The Paycheck
Fairness Act reaffirms our commitment to equal pay for equal work by
encouraging employers to give more attention to ensuring that their pay
practices honor that promise--but it leaves pay decisions entirely up
to the employer's sole discretion.
To be clear: this Act does not get the government involved in wage-
setting at all. The Act does not dictate to employers which factors
should be used in setting pay. It merely requires that pay decisions
bear some relation to the job and business. This is not only about
basic fairness for employees performing the same jobs and equal
opportunity for women: it is simply smart business. As generally
accepted in the executive compensation context, it is good corporate
governance to relate pay to performance and the goals of the job and
business. In addition to helping to reduce the gender pay gap, studies
have also shown that employees who understand how pay is determined are
more likely to be productive and loyal to their employers.\1\
As described below, in some industries there is an ``anything
goes'' approach to wage setting--facilitated by pay secrecy--that has
permitted wildly divergent and unfair pay rates between employees doing
the same job. We can, and must, do better than that if ``equal pay for
equal work'' is ever going to be a reality.
The rest of my testimony explains how pay discrimination manifests
itself in the modern economy, describes how existing equal pay laws
have failed to provide an effective remedy for women who experience pay
discrimination, and examines how the Paycheck Fairness Act will help to
deter pay discrimination against women.
1. status of women's wages in today's market
Equal pay laws have undoubtedly increased women's earning power and
encouraged most employers to take pay equity seriously. Yet, the pay
gap between men and women who perform substantially equal jobs remains
widespread, persistent, and systemic in our economy. The rhetoric about
the ``gender pay gap'' tends to be heated and polarizing but one thing
is clear: study after study that has examined the pay gap has
demonstrated that unexplained pay disparities between men and women
performing substantially equal jobs remain even after controlling for
so-called ``choice'' factors--such as education, years of work
experience, age, hours worked, occupational field, and jobs held.\2\
I have written about how the gender pay gap is more complex--and in
many job categories much worse--than the aggregate statistic that women
who work full-time, year round earn about 77 cents for every dollar
earned by their male peers.\3\ The overall wage gap is only the tip of
the iceberg. The problem is even more alarming when one examines data
regarding men and women who have similar qualifications and perform
similar jobs, especially women who try to climb the economic ladder and
move into higher-paying jobs.
Women at every wage level and in nearly every industry experience a
wage gap. Consider these statistics:
Women in the 10 largest low-wage occupations are paid an
average of about 10 cents less than men in those occupations for full-
time work.\4\
Although women generally are becoming better educated than
men--earning more college and advanced degrees--women with higher
education levels experience a greater pay gap than women who have less
educational attainment.\5\
Contrary to the notion that more education and experience
will decrease the wage gap, the disparity increases for women who
attain the highest levels of education and professional achievement,
such as lawyers (female lawyers earn 74.9 percent as much as their male
peers),\6\ physicians and surgeons (64.2 percent),\7\ securities and
commodities brokers (64.5 percent),\8\ accountants and auditors (75.8
percent),\9\ and managers (72.4 percent).\10\
A wage gap exists for men and women who have the same
education and enter the same jobs at the start of their careers. For
example, a recent study of starting salaries of graduates of medical
residency programs in New York found that male physicians made on
average $16,819 more than their female cohorts. The regression models
in the study controlled for 10 variables that could potentially affect
wage rates, including specialty choice, practice setting, work hours,
geographic location, and other characteristics.\11\ According to the
researchers, ``We honestly tried everything we could to make it go
away, but it wouldn't.''\12\
The wage gap between men and women performing the same
jobs starts small, but balloons throughout their careers. A regression
analysis by the American Association of University Women found that,
after controlling for choice factors that could affect pay, about one-
quarter of the pay gap (5 percent) remained for recent college
graduates--that is, men and women with exactly the same education
entering the same job at the same time--but 10 years after graduation
the unexplained pay gap grew to 12 percent.\13\
Some say that the gender pay gap can be explained because
men work more hours than women. But women who work the greatest number
of hours experience a higher disparity.\14\
The wage gap exists even in professions in which women
have long dominated, such as education,\15\ nursing,\16\ social
work,\17\ and clerical work.\18\
In sum, 50 years after the passage of the Equal Pay Act, pay
discrimination is still a serious problem for too many women in
America. Based on my research and experience, I believe there are
several reasons this is still happening.
First, it is my firm belief that most employers try to comply with
the law and do not set out to intentionally discriminate against women.
Nevertheless, there is no question that pay discrimination remains. In
some cases, that discrimination is as blatant as it was during the
1960s, with some employers professing that men deserve to be paid more.
For example, women who worked at Walmart reported that managers told
them that male employees would always make more because ``God made Adam
first, so women would always be second to men'' and ``[y]ou don't have
the right equipment. . . . [Y]ou aren't male, so you can't expect to
be paid the same.''\19\ When one plaintiff asked her manager why a male
co-worker in the same position was making $10,000 more per year, the
manager told her to bring in her household budget so he could decide
whether she deserved as much as the man.\20\ Examples of these sexist
attitudes exist in other pay discrimination cases.\21\
Second, the stereotype that working mothers do not need to be paid
as much, and that working fathers deserve more pay, sometimes creeps
into the wage setting process, often unconsciously. Working mothers
tend to experience a ``motherhood penalty'' in wages that cannot be
explained by human capital or occupational factors.\22\ In one study,
participants evaluated application materials for a pair of same-gender,
equally qualified job candidates who differed only on parental
status.\23\ The study found that ``mothers were judged as significantly
less competent and committed than women without children.''\24\ In
addition, ``[t]he recommended starting salary for mothers was $11,000
(7.4 percent) less than that offered to nonmothers, a significant
difference.''\25\ In contrast, fathers were offered significantly
higher salaries than nonfathers.''\26\
It is a fallacy today to think that mothers are not working to
support their families. A recent study found that a huge majority of
middle-income mothers work 40 or more hours per week.\27\ About half of
all mothers work full-time.\28\ Two-thirds of the 21.7 million working
mothers are part of a dual-earner family, but one-third--or 7.5 million
mothers--``were the sole job-holders in their family, either because
their spouse was unemployed or out of the labor force, or because they
were heads of households.''\29\ During the recession, ``families where
the mother was the only job-holder increased.\30\ As a recent
congressional report concluded, ``[m]ore than ever, families depend on
mothers' work.''\31\
A third factor that lowers women's wages is that compensation
decisions in today's economy tend to be wholly discretionary on the
part of certain managers, without company guidance about how pay should
be determined and work rewarded. The more discretionary and subjective
the process for setting pay--which tends to be the case for management
and professional occupations--the greater the gender pay gap. I saw
this in an equal pay case I litigated on behalf of a Chief Technology
Officer at a technology startup. Her base salary was less than all of
the men on the executive team, but the disparities in discretionary
components were extreme: her bonuses were only about one half, and her
stock options awards only about one-quarter, of the awards given to all
of the men on the executive team.\32\
A large body of social science research demonstrates that sex-
stereotyping and unconscious cognitive biases influence pay decisions
that are based on subjective, arbitrary, or discretionary
assessments.\33\ In addition, studies show that significant gender
differences in salaries will occur in ``high ambiguity'' industries--
those in which employees are not well-informed about the appropriate
amount to request during salary negotiations.\34\ A study of MBA
students entering their first jobs found that women who entered
industries in which salaries were more ambiguous ``accepted salaries
that were 10 percent lower on average than did the men.''\35\ This is
also reflected in wage statistics. Although a gender wage gap exists in
nearly every occupation and industry, it tends to be the lowest for
more standardized, low-wage jobs for which the compensation structures
are well-defined and non-negotiable.
The problem is that wages in the modern economy are more likely to
be the product of a negotiation process, conducted under conditions of
pay secrecy with little to no guiding company standards. Rather than
the lock-step compensation plans of the industrial era, many job
sectors today follow a ``winner-take-all'' and ``anything goes''
approach to setting pay. These trends have exacerbated internal pay
inequities, resulting in wildly divergent salaries for individuals
performing essentially the same jobs.\36\
These dynamics disproportionately disadvantage women's pay.
Negotiation experts explain that unconscious gender-stereotypes are
more likely to skew results against women when compensation decisions
are informal and unguided. Studies show, however, that if pay processes
are more transparent and women have adequate information during the
negotiation process, gender pay disparities may be reduced or
eliminated altogether.\37\
2. current federal law fails to provide an effective remedy for pay
discrimination
My scholarship has analyzed how the Equal Pay Act (EPA), which the
Paycheck Fairness Act amends, currently provides an empty promise for
many women who experience pay discrimination. Although evaluation of
equal pay claims is supposed to be fact-intensive,\38\ modern courts
increasingly dismiss cases at the summary judgment stage rather than
permitting the claims to proceed to a jury trial. In a study I
conducted of all cases in which Federal district courts considered
whether to grant summary judgment on an EPA claim over the last decade
(from January 1, 2000 to December 31, 2011), only about one-third
survived summary judgment.\39\ In other words, the merits of equal pay
claims rarely make it before juries and most women who file equal pay
cases are stopped at the summary judgment ``starting gate.'' In
addition, employees whose cases make it to an appellate level are less
likely to prevail on equal pay claims today than at any other time
since the EPA's passage.\40\
There are several reasons for the EPA's ineffectiveness in the
modern economy:
The Prima Facie Hurdle: The EPA requires that employees of opposite
sexes at the same establishment receive equal pay for equal work. To
state a claim under the EPA, plaintiffs must first meet a very strict
``prima facie'' threshold standard. A plaintiff must show that he or
she performs substantially ``equal work on jobs the performance of
which requires equal skills, effort, and responsibility, and which are
performed under similar working conditions.''\41\ My research has
explained that this prima facie standard has been interpreted by some
courts so strictly that it leaves many women in the modern economy--
especially those in non-standardized or upper-level jobs--outside of
the EPA's protection.\42\ The Paycheck Fairness Act does not change the
substantially equal work standard and it is likely to continue to be a
stumbling block for most plaintiffs in EPA cases.
The ``Anything Under the Sun'' Defense: If a plaintiff survives the
strict prima facie standard of showing ``equal work,'' the burden of
persuasion shifts to the employer to prove that the pay disparity
actually resulted from one of four affirmative defenses: ``(i) a
seniority system; (ii) a merit system; (iii) a system which measures
earnings by quantity or quality of production; or (iv) a differential
based on any other factor other than sex.''\43\
Most employers in EPA cases rely on the catch-all ``factor other
than sex'' defense and rarely invoke the first three.\44\ In a majority
of circuits\45\ and under the EEOC's interpretation,\46\ the employer
is not permitted to rely on literally any other factor, but only a
factor that is job-related, adopted for a legitimate business reason,
and not based on sex. As courts have explained, ``[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.''\47\ Unfortunately, in a
minority of Federal circuit courts, that loophole exists.\48\
The Paycheck Fairness Act codifies the majority view that the
``factor other than sex'' defense does not mean ``anything under the
sun'' other than an admission of sex discrimination. Rather, the factor
must be related to the job in question and consistent with business
necessity. This amendment is the most important provision of the
Paycheck Fairness Act. It will encourage employers to develop more
clearly defined compensation systems--guided by any considerations the
employer wants--so long as they relate to the business and job. As one
Federal judge commented:
``The Equal Pay Act concerns business practices. It would be
nonsensical to sanction the use of a factor that rests on some
consideration unrelated to the business.''\49\
Some opponents contend that adopting the majority view will somehow
threaten the free-market system and turn courts into ``super-personnel
officers.'' That has not happened in the majority of circuits in which
this standard has already been operating. In addition, the argument
that employers must be able to use vague, ill-defined ``market''
excuses for pay discrimination among equal jobs is alarming to hear 50
years after the passage of the Equal Pay Act. Indeed, the EPA was
designed to alter the compensation market so that employers would not
pay women less than men performing substantially equal jobs simply
because that was what the ``market'' required or permitted, or because
men asked for more pay than women did.\50\
Given the distinct market purpose of the EPA, early cases flatly
rejected ``market forces'' defenses asserted by employers because they
perpetuated the very discrimination that Congress sought to
alleviate.\51\ Courts noted that the EPA aimed to cure imbalances in
the compensation market based on gender. As the Supreme Court stated in
Corning Glass Works v. Brennan:
The whole purpose of the Act was to require that these
depressed wages be raised, in part as a matter of simple
justice to the employees themselves, but also as a matter of
market economics, since Congress recognized as well that
discrimination in wages on the basis of sex ``constitutes an
unfair method of competition.''\52\
Since the EPA was passed, the ``market'' defense in some EPA cases
has evolved into an escape hatch through which many pretexts for gender
pay discrimination have been accepted. A common market defense in EPA
cases relies on employees' prior salaries.\53\ If a man earned more in
a prior position with a different employer, and a woman earned less in
a prior position with a different employer, they will be paid based on
their prior salaries, regardless of whether they are now performing
substantially equal jobs and have comparable qualifications.
Market defenses also rely on negotiation outcomes: the male
employee negotiated a higher salary, and the woman either failed to ask
for more pay, or was prohibited from negotiating a higher rate.\54\
Negotiation defenses harm women. Studies have shown that employers
react more favorably to men who negotiate salaries, and that women may
be reluctant to ask for higher pay because they may be penalized for
violating gender stereotypes and feel more social pressure to agree to
employers' wage offers.\55\ This is compounded by the problem of pay
secrecy: employers enjoy a monopoly on pay information and women may
not have access to the same networks that men do to determine potential
pay ranges.
Consider the following example from an equal pay case that I
litigated. Like some companies, the employer had no formal job
descriptions or compensation system, which allowed gender pay
disparities between employees performing substantially equal jobs to
flourish. The supervisors of each department had great discretion to
negotiate and set individual salary amounts upon hiring, without
guiding criteria. In one department, a female vice president was hired
months earlier than two other male vice presidents. All three were
hired to do essentially the same work. All had comparable
qualifications for the job. The executive vice president who hired them
admitted that the female vice president had equal if not better
performance and was even appointed a ``player-lead'' to train her male
colleagues--yet her pay was substantially lower than her male peers.
When asked why he paid his female player-lead less than two men doing
the same job, the supervisor defended the disparity based on the
employees' prior salaries and their wage negotiations with him.\56\
When asked why he failed to pay similarly qualified vice presidents
equal pay for equal work, the supervisor responded:
Because I didn't need to. I mean at the end of the day it
was, at the end of the day [sic]--first of all they, they
didn't need to see what each other's salaries were. They
weren't--it wasn't like we post it on your name tag. So there
was no demotivation. [The female vice president] was somewhat
aware what the other people were making, so it was, you know, I
didn't want to demotivate her, but, you know, at the end of the
day you're paying people, you know, the market rate, you're not
necessarily paying them for a job. You know, you're saying
what's it take?\57\
As seen in this example, the ``market'' on which the supervisor
relied was nothing more than a haphazard situational accident, not a
fair reflection of the job duties, skill sets, and performance of the
employees. The employer paid the worst performer the highest salary
simply because he asked for it. The female player-lead who trained her
male peers received the lowest salary, simply because her salary at a
previous employer was lower than that of her male counterparts. The law
requires equal pay for equal work, but pay secrecy enables inequities
based on the happenstance of prior salaries--not the skills,
responsibility, and effort required for the job--to continue
uncorrected. This perpetuates the very discrimination that Congress
sought to prevent with the EPA.
In other words, some employers' vague assertions that the invisible
hand of ``the market'' dictated wage rates tend to be mythical covers
for paying women less than men to perform substantially equal jobs--for
reasons that have nothing to do with actual market compensation data,
the job, or the merits of the employees in those jobs. Just as Congress
saw through employers' assertions of ``market forces'' when the Equal
Pay Act was passed, Congress should pass the Paycheck Fairness Act to
once again confirm that abstract notions of ``the market'' do not trump
the promise of equal pay.\58\
title vii also does not provide an adequate remedy
Title VII is not a workable remedy for pay discrimination in most
cases because of its intent requirement, which is virtually impossible
to show in these cases.\59\ Proving a discrimination case of any kind
is extremely difficult. As one Federal court noted:
Employment discrimination and retaliation, except in the
rarest cases, is difficult to prove. It is perhaps more
difficult to prove such cases today than during the early
evolution of Federal and State anti-discrimination and anti-
retaliation laws. Today's employers, even those with only a
scintilla of sophistication, will neither admit discriminatory
or retaliatory intent, nor leave a well-developed trail
demonstrating it.\60\
Proving pay discrimination is especially challenging. First, unlike
hiring and promotions, pay decisions are often made in secret,\61\ and
psychological research has shown that decisionmakers typically
undervalue employees if they are women rather than men.\62\ Scholars
have shown how unconscious biases can lead to discrimination.\63\ When
the decisionmaking processes surrounding pay are opaque and guided by
subjective factors, unconscious biases are more likely to reduce
women's wages.\64\
Second, the employer has a monopoly on the information used to make
the pay decision and should have the burden of proving the reasons for
that decision. Employees are typically not privy to the decisionmaking
process, and records of the reasons underlying pay decisions rarely
exist unless the company has an established compensation system. It is
therefore easier for an employer to craft post hoc excuses for pay
disparities to mask discrimination.\65\ For these reasons, the burden-
shifting structure of the EPA is more appropriate for pay
discrimination claims. Indeed, some plaintiffs prevail on EPA claims
but lose on title VII claims due to insufficient evidence of
intent.\66\
In sum, the notion that women already have adequate, well-
functioning tools to remedy pay discrimination is belied by the
experience of women who have attempted--unsuccessfully--to vindicate
the protections of title VII and the EPA.
3. the paycheck fairness act brings the equal pay act into the modern
era
In addition to adopting the standard used by a majority of Federal
circuits for the ``factor other than sex'' defense, the Paycheck
Fairness Act modernizes the Equal Pay Act in other important ways:
a. Widening the ``Same Establishment'' for the Prima Facie Standard
The Paycheck Fairness Act permits plaintiffs to use comparators who
work for the same employer at a different physical location in the same
county or similar political subdivision of a State at the prima facie
stage. This adapts to the reality that more employers have
decentralized structures. Note that this ``same establishment''
provision relates only to the showing of a prima facie comparator who
performs equal work: it would not preclude an employer from defending a
pay disparity at the affirmative defense stage based on a job or
business-related reason, such as the potential need to pay workers in
an urban area of a county a higher wage.
b. Compensating for Non-Economic Harms of Pay Discrimination and
Deterring Malicious Conduct
If an employee wins an EPA case, she may recover only the amount of
the pay disparity (up to 2 years of back pay, or 3 years if a
``willful'' violation), plus an additional equal amount as liquidated
damages. The harms of pay discrimination often extend beyond the actual
dollar amount of the pay disparity.
Work is an essential component of how we define ourselves in this
country. It brings us a sense of purpose, dignity, and fulfillment. In
many cases, women do not discover egregious pay disparities between
themselves and male co-workers who perform substantially the same jobs
until after many years or even decades of working hard for an employer.
When that happens, women often feel betrayed and humiliated. For many
women, it eviscerates their sense of identity and impacts their mental
and physical health in dramatic ways. Yet, the EPA does not compensate
for these very real harms. Such damages are available for victims of
racial pay discrimination under 42 U.S.C. Sec. 1981, and under title
VII for employment discrimination, albeit at very low-capped damage
levels. The Paycheck Fairness Act recognizes that women who experience
pay discrimination should likewise have those damages available to
them, where appropriate.
In addition, for those cases in which employers act ``with malice
or reckless indifference,'' the Paycheck Fairness Act permits punitive
damages. This enhanced penalty is important for those cases in which
proven violations are especially egregious and malicious. As in other
employment discrimination cases, such awards are likely to be extremely
rare. Nevertheless, their availability will express our strong
commitment to equal pay for equal work and be a strong deterrent
against future violations.
c. Permitting Class Actions for Systemic Pay Discrimination
Under current law, the EPA does not permit class actions.\67\
Instead, it follows the Fair Labor Standards Act collective action
structure, which requires every individual plaintiff to affirmatively
``opt-in'' to the litigation by filing a signed consent form with the
court.\68\ The benefit of this approach is that the preliminary
certification standard for a collective action is more lenient than the
standard for class certification.\69\ Plaintiffs only need to show that
they are ``similarly situated'' and do not have to satisfy the more
demanding prerequisites of Federal Rule of Civil Procedure 23.
The major downside is that a collective action can be considerably
more expensive to manage and litigate. For example, rather than having
a representative group of plaintiffs answer discovery requests and
appear for depositions, defense attorneys often demand answers to
interrogatories for and depositions of every member of the collective
action (and then they seek to dismiss the claims of those individual
plaintiffs who do not respond). This significantly raises the costs of
the litigation.
In addition, the opt-in collective action procedure is intimidating
for many employees at the initiation of litigation. Although the named
plaintiffs may muster up the courage to take a stand on behalf of the
collective group, other employees may fear retaliation or be reluctant
to go on public record to challenge the employer in court. In this
respect, employment class actions are very different from other types
of class actions, such as those involving consumer or securities law.
Whereas consumers or investors can simply purchase from another company
or go without the product in question, many employees do not want to
risk unemployment and may not be able to move to another employer if
they lose their jobs. For many women, in particular, claiming pay
discrimination or suing their employer can be damaging to their future
job prospects. A class action procedure will help to protect those
women who are similarly harmed by a common discriminatory pay policy or
practice but fear that they will be fired if they go on public record
against the employer.
Permitting class actions--which are available for most other types
of employment discrimination and have a more exacting standard for
certification--would provide an important tool to address systemic pay
discrimination by the same employer.
d. Using ``Sunshine as a Disinfectant'' by Encouraging Better Wage
Information
Pay secrecy is common in American workplaces. Most workers have no
idea how their pay is determined and do not know what their peers make.
Many employers have strict pay confidentiality policies, the violation
of which can lead to termination, even though such policies violate the
National Labor Relations Act.\70\ Some women have been fired for asking
about the salaries of their male counterparts.\71\ Many women do not
discover gross pay disparities until they, for example, receive
anonymous letters on the eve of retirement,\72\review proxy
statements,\73\ or are publicly ridiculed by co-workers who happen to
see how low her paycheck is.\74\
The Paycheck Fairness Act recognizes that a litigation remedy
alone--which is reactive, piecemeal, and difficult to achieve--will not
fully address the problem of unequal pay for equal work, especially
when most pay discrimination remains ``hidden from sight.''\75\ Greater
transparency about pay practices is needed to encourage compliance
without litigation.
To that end, the Paycheck Fairness Act would prohibit employers
from retaliating against employees because they simply discuss or
inquire about wages in the workplace. The Act also instructs the
Department of Labor to,
``conduct studies and provide information to employers, labor
organizations, and the general public concerning the means
available to eliminate pay disparities between men and women.''
These anti-retaliation and data collection provisions provide a
balanced, proactive approach to combating pay discrimination. My
scholarship has explained how the compensation market we have now in
this country is failing because it lacks one of the key ingredients to
a well-functioning, efficient market: information.\76\ Better
information and study about existing market pay rates will help women
understand their potential value in the marketplace and provide an
incentive for employers to address pay disparities among employees who
perform similar jobs before they turn into fodder for litigation.
Greater pay data analysis will help to sharpen our understanding of the
causes of the gender wage gap and educate employers about best
practices. The Act also provides for training that will empower women
and girls with better tools to negotiate salaries and an employer pay
equity award that will encourage the development of best practices.
These programs will engage both employees and employers in the effort
to reduce the gender pay gap.
In conclusion, the Paycheck Fairness Act takes a balanced,
commonsense approach to adjusting the Equal Pay Act to the realities of
the modern workplace. Without the Paycheck Fairness Act, the Equal Pay
Act will continue to be an ``empty shell'' for many women who
experience pay discrimination. As Congresswoman Dwyer stated in the
original debates regarding the EPA in 1963: ``I can assure you that
women would not be inclined to welcome an empty shell of a bill--
legislation with a title but with no substance. This would be a
heartless deception, and Congress would only be fooling itself if it
should follow such a course.''\77\
Thank you for the opportunity to testify on this important
legislation.
References
1. See Deborah Thompson Eisenberg, Money, Sex and Sunshine: A
Market-Based Approach to Pay Discrimination, 43 Ariz. St. L.J. 951,
971-82 (2011).
2. See, e.g., 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 21 (May 2004) (``There is a
substantial gap in median earnings between men and women that is
unexplained, even after controlling for work experience . . .
education, and occupation.''); U.S. Gen. Acct. Office, Gao-04-35,
Women's Earnings: Work Patterns Partially Explain Difference Between
Men's And Women's Earnings 2 (2003) (concluding based on nationally
representative longitudinal data set 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
responsibilities); 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), available at http://www.iwpr.org/pdf/C355.pdf (finding
that differences in men's and women's labor force attachment do not
explain the gap); Francine D. Blau & Lawrence M. Kahn, Gender
Differences in Pay 10 (Nat'l Bureau of Econ. Research, Working Paper
No. 7732, 2000) (finding unexplained residual of 10-15 percent of total
wages, after controlling for other factors that may explain gender wage
gap).
3. See Deborah Thompson Eisenberg, Shattering the Equal Pay Act's
Glass Ceiling, 63 SMU L. Rev. 17, 23-28 (2010) (``Shattering''); Money,
Sex and Sunshine: A Market-Based Approach to Pay Discrimination, 43
Ariz. St. L.J. 951, 971-82 (2011) (``Money, Sex and Sunshine''); Wal-
Mart v. Dukes: Lessons for the Legal Quest for Equal Pay, 46 N. Eng. L.
Rev. 229 (2012); Stopped at the Starting Gate: The Overuse of Summary
Judgment in Equal Pay Cases, 57 N.Y. L. Rev. 815 (2012/13) (``Overuse
of Summary Judgment''). All of these articles are available at
www.ssrn.com/author=1401276.
4. Joan Entmacher, Katherine Gallagher Robbins, & Lauren Frolich,
Nat'l Women's Law Ctr., Women Are 76 Percent Of Workers In The 10
Largest Low-Wage Jobs And Suffer A 10-Percent Wage Gap (Mar. 2014),
available at http://www.nwlc.org/sites/default/files/pdfs/
women_are_76_percent_of_workers_
in_the_10_largest_low-wage_jobs_and_suffer_a_10_percent_wage_gap
.pdf.
5. Bureau of Labor Statistics, U.S. Dep't of Labor, Highlights Of
Women's Earnings In 2009, at 8 tbl.1 (2010), available at http://
www.bls.gov/cps/cpswom2009.pdf [2009 Highlights]. Women who earn a
bachelor's degree and higher earn 73.1 percent as much as their male
colleagues, whereas those with less than a high school diploma earn
76.4 percent, and those with a high school diploma, 75.7 percent.
6. Id. at 14 tbl.2.
7. Id. at 16 tbl.2.
8. Id. at 20 tbl.2.
9. Id. at 12 tbl.2.
10. Id. at 10 tbl.2. Within the ``management occupations''
category, the earnings gap was the largest for financial managers (66.6
percent) and the smallest for lodging managers (84.6 percent). Id.
Chief executives also fall in the managers' category, with female chief
executives earning 74.5 percent as much as male chief executives. Id.
11. Anthony T. LoSasso, et al., The $16,819 Pay Gap for Newly
Trained Physicians: The Unexplained Trend of Men Earning More Than
Women, 30 Health Affairs 193 (2011).
12. Id. at 201.
13. Judy Goldberg Dey & Catherine Hill, AAUW Educational
Foundation, Behind The Pay Gap 10 (2007), available at http://
www.aauw.org/learn/research/upload/behindPayGap.pdf (``If the pay gap
is going to disappear naturally over time, we would expect that pay
differences among full-time female and male workers after college would
be small or nonexistent. . . . Yet 1 year after college, female
graduates working full-time earn only about 80 percent as much as male
graduates earn.'').
14. 2009 Highlights tbl.5, at 40.
15. Id. at 13-14 tbl.2.
16. Id. at 15-16.
17. Id. at 13-14.
18. Id. at 21-22.
19. Plaintiffs' Motion for Class Certification and Memorandum of
Points and Authorities at 26, Dukes, 222 F.R.D. 137 (N.D. Cal.) (No. C-
01-2252 MJJ) (providing examples of sex-based explanations for pay
disparities by Walmart supervisors).
20. Barriers to Justice and Accountability: How the Supreme Court's
Recent Rulings Will Affect Corporate Behavior: Hearing Before the S.
Comm. on the Judiciary, 112th Cong. (June 29, 2011) (statement of Betty
Dukes), available at http://judiciary.senate.gov/pdf/11-6-
29%20Dukes%20Testimony.pdf.
21. For example, Lilly Ledbetter's supervisor told her that it was
``a lot easier to downgrade you. . . . You're just a little female and
these big old guys, I mean, they're going to beat up on me and push me
around and cuss me.'' Brief for the Petitioner at 4, Ledbetter v.
Goodyear Tire & Rubber Co., 550 U.S. 618 (2007) (No. 05-1074), 2006 WL
2610990 at 6; see also Brinkley-Obu v. Hughes Training, Inc., 36 F.3d
336, 340 (4th Cir. 1994) (employer told plaintiff to be an engineer or
a ``mama'').
22. See Deborah J. Anderson et al., The Motherhood Wage Penalty
Revisited: Experience, Heterogeneity, Work Effort, and Work-Schedule
Flexibility, 56 Indus. & Lab. Rel. Rev. 273, 273-76 (2003) (finding
motherhood wage penalty of approximately 5 percent for one child and 7
percent for two or more children); Michelle J. Budig & Paula England,
The Wage Penalty for Motherhood, 66 Am. Soc. Rev. 204, 219-20 (2001)
(finding that interruptions from work, working part-time, and decreased
seniority/experience collectively explain no more than about one-third
of the motherhood penalty of approximately 7 percent per child).
23. Shelley J. Correll et al., Getting a Job: Is There a Motherhood
Penalty?, 112 Am. J. Soc. 1297, 1297 (2007).
24. Id. at 1316.
25. Id.
26. Id. at 1317.
27. Joan Williams, Ctr. for Worklife Law & Heather Boushey, Ctr.
for Am. Progress, The Three Faces of Work-Family Conflict 36 (2010),
available at http://www.worklifelaw.org/pubs/ThreeFacesofWork-
FamilyConflict.pdf.
28. Id. at 1.
29. Id. at 2.
30. Id. at 3.
31. Id.
32. I discuss this case in more detail in my scholarship. See
Shattering, at 48 and Money, Sex, and Sunshine, at 992-93.
33. See Linda Hamilton Krieger, The Content of Our Categories: A
Cognitive Bias Approach to Discrimination and Equal Employment
Opportunity, 47 Stan. L. Rev. 1161 (1995) (reviewing cognitive
psychology scholarship regarding the nature of human inference and the
roles played by cognition and motivation in decisionmaking).
34. Hannah Riley Bowles & Kathleen L. McGinn, Gender in Job
Negotiations: A Two-Level Game, 24 Negot. J. 393, 396 (2008); Hannah
Riley Bowles, Linda Babcock & Kathleen McGinn, Constraints and
Triggers: Situational Mechanics of Gender in Negotiation, 89 J.
Personality & Soc. Psychol. 951 (2005).
35. Id.
36. Katherine V.W. Stone, From Widgets to Digits: Employment
Regulation for the Changing Workplace 165 (2004).
37. Linda Babcock & Sara Laschever, Women Don't Ask 65 (2003)
(``[K]nowledge of what the market will pay for their skills and time
can help override women's inaccurate sense of self-worth.'').
38. Brobst v. Columbus Servs. Int'l, 761 F.2d 148, 156 (3d Cir.
1985) (``Given the fact intensive nature of the [Equal Pay Act]
inquiry, summary judgment will often be inappropriate [in EPA
cases].'').
39. Overuse of Summary Judgment in Equal Pay Cases, supra, at 821-
24.
40. In Shattering the Equal Pay Act's Glass Ceiling, I conducted an
empirical analysis of every reported case involving an Equal Pay Act
claim at a Federal appellate circuit court from 1970 to 2009. I found
that employees prevailed on equal pay claims only 35 percent of the
time from 2000-09, a substantial decrease from previous decades:
employees prevailed on appeal in 55 percent of EPA cases in the 1990s,
52 percent in the 1980s, and 59 percent in the 1970s.
41. 29 U.S.C. Sec. 206(d)(1) (2006).
42. See Shattering, supra.
43. Id.
44. Overuse of Summary Judgment, at 836.
45. See Steger v. Gen. Elec. Co., 318 F.3d 1066, 1078-79 (11th Cir.
2003) (``Because the evidence showed that the salary retention plan was
justified by `special exigent circumstances connected with the
business,' and because there was no evidence which rebutted GE's
explanation, the district court did not err in submitting the matter to
the jury or in denying Steger's motion for judgment as a matter of
law.'' (quoting Irby v. Bittick, 44 F.3d 949, 954 (11th Cir. 1995));
Belfi v. Prendergast, 191 F.3d 129, 136 (2d Cir. 1999) (``To
successfully establish the [factor-other-than-sex] defense, an employer
must also demonstrate that it had a legitimate business reason for
implementing the gender-neutral factor that brought about the wage
differential.''); Aldrich v. Randolph Cent. Sch. Dist., 963 F.2d 520,
526 (2d Cir. 1992) (``[A]n employer bears the burden of proving that a
bona fide business-related reason exists for using the gender-neutral
factor that results in a wage differential in order to establish the
factor-other-than-sex defense.''); EEOC v. J.C. Penney Co., 843 F.2d
249, 253 (6th Cir. 1992) (``[The factor-other-than-sex] defense does
not include literally any other factor, but a factor that, at a
minimum, was adopted for a legitimate business reason.''); Glenn v.
Gen. Motors Corp., 841 F.2d 1567, 1571 (11th Cir. 1988) (``[The factor-
other-than-sex] exception applies when the disparity results from
unique characteristics of the same job; from an individual's
experience, training, or ability; or from special exigent circumstances
connected with the business.''); Kouba v. Allstate Ins. Co., 691 F.2d
873, 876 (9th Cir. 1982) (``The Equal Pay Act concerns business
practices. It would be nonsensical to sanction the use of a factor that
rests on some consideration unrelated to business. An employer thus
cannot use a factor which causes a wage differential between male and
female employees absent an acceptable business reason.'').
46. EEOC, Directives Transmittal No. 915.003, Sec. 10.IV.F.2. &
nn.65-66 (Dec. 5, 2000), available at http://www.eeoc.gov/policy/docs/
compensation.html#N_65_
(``An employer . . . must show that the factor is related to job
requirements or otherwise is beneficial to the employer's business
[and] the factor must be used reasonably in light of the employer's
stated business purpose as well as its other practices.'').
47. Aldrich v. Randolph Cent. Sch. Dist., 963 F.2d 520, 525 (2d
Cir. 1992), cert. denied, 506 U.S. 965 (1992).
48. See Wernsing v. Dep't of Human Servs., State of Ill., 427 F.3d
466, 470 (7th Cir. 2005) (discussing split between Seventh and Eighth
circuits and those circuits that require an `acceptable business
reason').
49. Kouba v. Allstate Ins. Co., 691 F.2d 873, 876 (9th Cir. 1982).
50. See Money, Sex, and Sunshine, supra at 964-71 (describing
market purpose of the EPA).
51. Brennan v. Victoria Bank & Trust Co., 493 F.2d 896, 902 (5th
Cir. 1974) (``[U]se of the `market force' theory, i.e. a woman will
work for less than a man, is not a valid consideration under the
Act.''); Brennan v. Prince William Hosp. Corp., 503 F.2d 282, 286 (4th
Cir. 1974) (finding ``the availability of women at lower wages than
men'' to be ``precisely the criterion for setting wages that the Act
prohibits''); Brennan v. City Stores, Inc., 479 F.2d 235, 241 n.12 (5th
Cir. 1973) (stating that there is ``no excuse'' for hiring female
workers at a lower rate ``simply because the market will bear it'');
Hodgson v. Brookhaven Gen. Hosp., 436 F.2d 719, 726 (5th Cir. 1970)
(finding that an employer's greater bargaining power with women ``is
not the kind of factor [other than sex] Congress had in mind'' in
enacting the EPA); Hodgson v. Corning Glass Works, 474 F.2d 226, 234
(2d Cir. 1973) (noting that Congress passed the EPA ``[r]ecognizing the
weaker bargaining position of many women and believing that
discrimination in wage rates represented unfair employer exploitation
of this source of cheap labor'').
52. 417 U.S. 188, 207 (1974) (quoting Sec. 2(a)(5), 77 Stat. at 56)
(emphasis added).
53. See Jeanne M. Hamburg, Note, 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, 1108 (1989) (urging
greater scrutiny of prior salary defenses).
54. See, e.g., Balmer v. HCA, Inc., 423 F.3d 606, 615 (6th Cir.
2005) (finding no EPA violation where male comparator negotiated higher
salary and female employee was not permitted to negotiate starting
salary); Reznick v. Associated Orthopedics & Sports Med., P.A., 104 F.
App'x 387, 391-92 (5th Cir. 2004) (finding no EPA violation where a
male surgeon negotiated higher compensation level in his initial
employment contract than the plaintiff); Dey v. Colt Constr. & Dev.
Co., 28 F.3d 1446, 1462 (7th Cir. 1994) (finding no EPA violation where
a male comparator negotiated a higher salary); EEOC v. Home Depot
U.S.A., Inc., No. 4:07CV0143, 2009 WL 395835, at *10 (N.D. Ohio Feb.
17, 2009) (finding a valid factor other than sex where male employees
were able to negotiate higher starting salaries than the plaintiff);
Hardwick v. Blackwell Sanders Peper Martin, L.P., No. 25-859-CV-W-FJG,
2006 WL 2644997, at *3-4 (W.D. Mo. Sept. 14, 2006) (finding male
comparator had negotiated a higher salary and the plaintiff did not
negotiate). But see Mulhall v. Advance Sec., Inc., 19 F.3d 586, 596
(11th Cir. 1994) (rejecting the employer's defense that wage
disparities resulted from negotiations surrounding the purchases of
comparators' businesses); Glodek v. Jersey Shore State Bank, No. 4:07-
CV-A-2237, 2009 WL 2778286, at *9 (M.D. Pa. Aug. 28, 2009) (rejecting
negotiation defense and stating ``[t]hough salary demands are not
entirely irrelevant, it would be inequitable to permit defendant to
shelter itself from liability by stating that one individual received
greater compensation than another simply because he or she requested
it''); Day v. Bethlehem Ctr. Sch. Dist., No. 07-159, 2008 WL 2036903,
at *9 (W.D. Pa. May 9, 2008) (rejecting the school district's defense
at the summary judgment stage that male comparators negotiated salaries
that were higher than the standard salary scale); Klaus v. Hilb, Rogal
& Hamilton Co., 437 F. Supp. 2d 706, 723-24 (S.D. Ohio 2006) (denying
summary judgment where the employer defended a $36,000 wage disparity
based on the male comparator's negotiation of higher salary).
55. Linda Babcock & Sara Laschever, Women Don't Ask (2003); Hannah
Riley Bowles & Kathleen L. McGinn, Gender in Job Negotiations: A Two-
Level Game, 24 Negot. J. 393, 395 (2008); Deborah A. Small, et al., Who
Goes to the Bargaining Table? The Influence of Gender and Framing on
the Initiation of Negotiation, 93 J. Personality & Soc. Psychol. 600
(2007); Lisa Barron, Ask and You Shall Receive?: Gender Differences in
Negotiators' Beliefs About Requests for a Higher Salary, 56 Hum.
Relations 635 (2003); B. Gerhart & S. Rynes, Determinants and
Consequences of Salary Negotiation by Male and Female MBA Graduates, 76
J. Applied Psychol. 256 (1991).
56. Deposition Transcript at 32-5, 75-80 (Mar. 6, 2008) (on file
with author).
57. Id. at 79-80 (emphasis added).
58. See Siler-Khodr v. Univ. of Tex. Health Sci. Ctr., 261 F.3d
542, 547 (5th Cir. 2001) (stating that the market forces defense simply
perpetuates discrimination).
59. See Brinkley-Obu v. Hughes Training, Inc., 36 F.3d 336, 344
(4th Cir. 1994) (explaining the differences in the burdens of proof for
title VII and the EPA).
60. Parada v. Great Plains Int'l of Sioux City, Inc., 483 F. Supp.
2d 777, 791 (N.D. Iowa 2007).
61. Tom Krattenmaker, Compensation: What's the Big Secret?, Harv.
Mgmt. Comm. Letter, Oct. 2002, at 3.
62. See Babcock & Laschever, Women Don't Ask: The High Cost Of
Avoiding Negotiation--And Positive Strategies For Change 98-100 (2007)
(reviewing studies that show that ``people's prejudices can powerfully
influence the ways in which they respond to men and women without their
realizing it''); Claudia Goldin & Cecilia Rowe, Orchestrating
Impartiality: The Impact of ``Blind'' Auditions on Female Musicians, 90
Am. Econ. Rev. 715, 716 (2000) (reporting that when auditions for an
orchestra were conducted with the performers behind a screen, women
were substantially more likely to advance out of the preliminary
selection round).
63. See, e.g., Barbara S. Flagg, Fashioning a Title VII Remedy for
Transparently White Subjective Decisionmaking, 104 Yale L.J. 2009
(1995); Linda Hamilton Krieger, The Content of Our Categories: A
Cognitive Bias Approach to Discrimination and Equal Employment
Opportunity, 47 Stan. L. Rev. 1161 (1995); David Benjamin Oppenheimer,
Negligent Discrimination, 141 U. Pa. L. Rev. 899 (1993); Amy L. Wax,
Discrimination as Accident, 74 Ind. L.J. 1129 (1999).
64. Babcock & Laschever, at 119-20 (``[W]omen fare better when an
evaluation process is more structured, includes clearly understood
benchmarks, and is less open to subjective judgments.'' (citing S.
Fiske & S.E. Taylor, Social Cognition (1984); M.E. Heilman, The Impact
of Situational Factors on Personnel Decisions Concerning Women: Varying
the Sex Composition of the Applicant Pool, 26 Org. Behav. & Human
Performance 386 (1980))).
65. In some cases, there is evidence of gender-based comments or
other discriminatory actions that can help to prove intent in title VII
cases. For example, Lilly Ledbetter testified that her supervisor
``threatened to give her poor evaluations if she did not succumb to his
sexual advances.'' Brief for the Petitioner, supra note 8, at 5-6. When
she questioned him about poor evaluations, he responded that it was ``a
lot easier to downgrade you. . . . You're just a little female and
these big old guys, I mean, they're going to beat up on me and push me
around and cuss me.'' Id. at 6; see also Brinkley-Obu v. Hughes
Training, Inc., 36 F.3d 336, 340 (4th Cir. 1994) (employer told
plaintiff to be an engineer or a ``mama'').
66. See, e.g., 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.''); Brewster v. Barnes, 788 F.2d 985, 987 (4th Cir.
1986) (holding defendant liable for pay discrimination under EPA, but
not under title VII).
67. 29 U.S.C. Sec. 216(b) (2006).
68. Id. (``No employee shall be a party plaintiff to any such
action unless he gives his consent in writing to become such a party
and such consent is filed in the court in which such action is
brought.'').
69. See Cunningham v. Elec. Data Sys. Corp., 754 F. Supp. 2d 638,
643 (S.D.N.Y. 2010) (internal quotations and citations omitted) (``The
similarly situated standard is far more lenient, and indeed, materially
different, than the standard for granting class certification under
Fed. R. Civ. P. 23.'').
70. See Rafael Gely, Pay Secrecy/Confidentiality Rules and the
National Labor Relations Act, 6 U. Pa. J. Lab. & Emp. L. 121, 122 n.2,
124-25 (2003).
71. Crabtree v. Baptist Hosp. of Gadsden, Inc., No. 82-AR-1849-M,
1983 WL 30400 (N.D. Ala. Dec. 7, 1983), aff 'd, 749 F.2d 1501 (11th
Cir. 1985).
72. Lilly Ledbetter received an anonymous letter informing her of
pay disparities. See Katie Putnam, Note, On Lilly Ledbetter's Liberty:
Why Equal Pay for Equal Work Remains an Elusive Reality, 15 Wm. & Mary
J. Women & L. 685, 689 (2009).
73. Margaret Heffernan, the former CEO at CMGI, told this story:
For years, I was the only woman CEO at CMBI. But it wasn't
until I read the company's proxy statement that I realized that
my salary was 50 percent of that of my male counterparts. I had
the CEO title, but I was being paid as if I were a director.--
Babcock & Laschever, at 104.
74. In one case, the plaintiff ``accidentally left her pay stub in
plain view, and some of her colleagues began laughing and making
negative remarks about her pay.'' Boumehdi v. Plastag Holdings, LLC,
489 F.3d 781, 785 (7th Cir. 2007).
75. Ledbetter v. Goodyear Tire & Rubber Co., 550 U.S. 618, 649-50
(2007) (Ginsburg, J., dissenting) (citing Goodwin v. Gen. Motors Corp.,
275 F.3d 1005, 1008-09 (10th Cir. 2002) (``[P]laintiff did not know
what her colleagues earned until a printout listing of salaries
appeared on her desk, 7 years after her starting salary was set lower
than her co-workers' salaries.''); McMillan v. Mass. Soc'y for the
Prevention of Cruelty to Animals, 140 F.3d 288, 296 (1st Cir. 1998)
(``[P]laintiff worked for employer for years before learning of salary
disparity published in a newspaper.'')).
76. See Money, Sex and Sunshine: A Market-Based Approach to Pay
Discrimination.
77. 109 Cong. Rec. 9200 (1963) (statement of Rep. Dwyer).
Senator Mikulski. Ms. Young.
STATEMENT OF ReSHONDA YOUNG, OPERATIONS MANAGER, ALPHA EXPRESS,
INC., WATERLOO, IA
Ms. Young. Chair Mikulski, Ranking Member Alexander, and
members of the committee, I want to thank you for the
opportunity to testify today and share a small business
perspective on pay equity.
My name is ReShonda Young, and I serve as operations
manager and corporate vice president for two family businesses
based in Waterloo, IA. Alpha Express is a transportation and
delivery company that hauls parts--machine parts, farm
equipment--all across the United States and into Canada, and
Alpha Services is a contracting business that provides
maintenance services to companies like John Deere.
Our business is a true family business. My father started
the company 25 years ago, and back then, it was just him and
one partner. Now, we employ about 50 people. I've also just
launched a new business of my own. It's a gourmet popcorn shop
called Popcorn Heaven in Waterloo, IA. We started in February
and already have 10 employees.
I worked in Iowa's insurance sector for more than 10 years.
But entrepreneurship is my passion. I guess you could say that
small business just runs in my blood. I want to share with you
the story of what happened when I joined my father in the
family business 8 years ago. When I started taking on H.R.
responsibilities, I found an issue with our paychecks. Women
were being paid less for the same work.
We had a woman who had been with us for 16 years. She was
the one who kept everything in order, yet she was only getting
paid a little more than half of what male employees were
making, even though she had a lot more responsibilities. I knew
I had to do something. I believe people should be paid
according to the job they're doing and the value that they
bring to the company, nothing less.
I refused to allow women to be paid less than the value we
bring to our company because of our gender. So I stuck my neck
out. I called our accountant and raised the pay of our women
workers without authorization. Now, I love my father. He's an
amazing man, and I've learned a lot from working with him these
past 8 years. I'm most grateful for that. But when I started
working with him, he was 65 years old and had an old-school
mentality about women in the workplace.
In the end, my father came around to see things as I see
them. He recognizes that the women on our team keep the
business afloat, so equal pay for equal work is one of the
commitments we make to our employees. I'm proud of this
commitment, but offering equal pay for equal work isn't just
about doing the right thing. It has a positive impact on our
business, too. It boosts our employees' morale and their
respect for the business.
It also boosts retention. Cutting down on turnover saves
our business money. It also saves us a lot of stress to know
that we have a stable team that we can count on to get the job
done. For these reasons, I know maintaining our commitment to
equal pay is good business for Alpha Express.
In February, I launched my new business called Popcorn
Heaven, and we offer more than 50 flavors of gourmet popcorn in
a happy and upbeat environment. So far, the customer response
has been great. You could say business is really popping. We've
already got 10 full-time and part-time employees, and I'm
making the same commitment to decent pay and paying living
wages and pay equity that we've made in my father's business.
I know the leading opponents of things like pay equity laws
are often big corporations. But if a startup small business
like mine can commit to equal pay and paying living wages and
make it work for our business, then I believe that bigger
companies can do the same.
As a small business owner and manager, I support the
Paycheck Fairness Act because it's in line with my values.
Because I'm committed to pay equity, I have nothing to fear
from this legislation. If other businesses are truly committed
to pay equity, they'll have nothing to fear, either. I support
it because it will be good for our local economy. Ensuring pay
equity will put more money in women's pockets to spend in
Waterloo businesses, like taking their kids out to experience a
little taste of Popcorn Heaven.
And I support it because it will level the playing field of
business competition. Small business owners don't like being
forced into a race to the bottom by big box stores and chains
that can undercut us by underpaying their women workers. Making
a national commitment to pay equity allows small businesses to
pay our workers fair wages without fear of being undercut by
low-road competitors.
As a small business owner and manager, I urge your support
for the Paycheck Fairness Act. Thank you.
[The prepared statement of Ms. Young follows:]
Prepared Statement of ReShonda Young
summary
background
My name is ReShonda Young. I serve as operations manager and
corporate vice president for two family businesses based in Waterloo,
IA. Alpha Express is a transportation and delivery company that hauls
parts all across the United States and into Canada. Alpha Services is a
contracting business that provides maintenance services to companies
like John Deere. We employ about 50 people. I've also just started a
new business, a popcorn shop called Popcorn Heaven. We already have 10
employees.
paycheck fairness at alpha express, inc
When I left corporate America and joined my dad in the family
business 8 years ago, I found an issue with our paychecks. We had a
woman who had been with us for 16 years. She was the one who kept
everything in order. Yet, she was only getting paid a little more than
half of what male employees were making, although she had a lot more
responsibilities than the male employees.
I knew I had to do something. So, I stuck my neck out: I called our
accountant and raised the pay of our women workers. In the end my
father came around to see things as I see them. Equal pay for equal
work is one of the commitments we make to our employees. I'm proud of
this commitment.
But offering equal pay for equal work isn't just about doing the
right thing--it has a positive impact on our business, too. It boosts
our employees' morale and their respect for the business. It also
boosts retention. Cutting down on turnover saves us money and it also
saves us a lot of stress.
committing to pay equity in a small business start-up
In February, I launched my new business. We offer more than 50
flavors of gourmet popcorn. We've already got 10 full-time and part-
time employees. And I'm carrying forward the same commitments to decent
wages and pay equity that we've made in my dad's business.
I know that the leading opponents of things like pay equity are
often big corporations. But if we, as a startup small business, can
commit to pay equity and make it work for our business, then I believe
the bigger companies out there can, too.
small business support for the paycheck fairness act
As a small business owner and manager, I support the Paycheck
Fairness Act because it's in line with my values. I'm committed to pay
equity so I have nothing to fear from the Paycheck Fairness Act. If
other businesses are truly committed to pay equity, they'll have
nothing to fear, either.
I support it because it will be good for our local economy.
Ensuring pay equity for women workers will put more money in their
pockets to spend in local businesses like mine and boost local
economies.
And I support it because it levels the playing field in terms of
business competition. Making a national commitment to equal pay for
equal work will allow small business owners to pay our workers fair
wages without fear of being undercut by low-road competitors who
underpay their women workers.
As a small business owner and manager, I urge your support for the
Paycheck Fairness Act. Thank you.
______
Chair Mikulski, Ranking Member Alexander, and members of the
committee, thank you for the opportunity to testify today and to share
my perspective on pay equity issues and the Paycheck Fairness Act as a
small business manager and owner.
My name is ReShonda Young. I serve as operations manager and
corporate vice president for two family businesses based in Waterloo,
IA. Alpha Express is a transportation and delivery company that hauls
parts all across the United States and into Canada. Alpha Services is a
contracting business that provides maintenance services to companies
like John Deere.
Our business is a true family business. My father started the
company 25 years ago. Back then, it was just him and one partner. Now
we employ about 50 people.
I've also recently started a new venture of my own, a popcorn shop
called Popcorn Heaven in Waterloo. We started in February and already
have 10 employees.
I hold a degree in Business Management. I worked in Iowa's
insurance sector for more than 10 years, but entrepreneurship is my
passion. I guess you could say small business runs in my blood.
paycheck fairness at alpha express, inc
I want to share with you the story of what happened when I left
corporate America and joined my dad's business 8 years ago. With the
company starting to expand and evolve, I started taking on more H.R.
responsibilities at Alpha Express. In the process, I found an issue
with our paychecks.
There was a discrepancy in what women employees in the business
were being paid. We had a woman who had been with us for 16 years. She
was the one who kept everything in order. Yet, she was only getting
paid a little more than half of what male employees were making,
although she had a lot more responsibilities than the male employees.
I knew I had to do something. For my dad and me to be able to work
together, and make his company into what he dreamed it could be, things
had to change.
I believe people should be paid according to the job they're doing
and the value they bring to a company--nothing less. I refuse to allow
myself--or other women workers--to be paid less than the value we bring
to our company because of our gender.
So, I stuck my neck out: when my concerns weren't immediately
addressed, I called our accountant and raised the pay of our women
workers . . . without authorization. There are some things you just do.
If you get in trouble, you deal with it because it's the right thing to
do.
Let me be clear, I love my dad. He is an amazing man and I've
learned a lot from working with him these past 8 years. I am most
grateful for that, but when I started working with him he was 65 years
old and had an ``old school'' mentality about women in the workplace.
In the end, my father came around to see things as I see them.
Equal pay for equal work is one of the commitments we make to our
employees. My dad recognizes that the women on our team keep the
business afloat. It wouldn't survive without us. Our pay scales were
adjusted and two-thirds of our female employees received pay raises to
be in line with their male counterparts (the rest worked in areas with
pre-set wages and pay raises).
I'm proud of the decisions we've made in our business, and I'm
committed to continuing to offer fair wages and equal pay for equal
work. We think of our employees as family, and at the end of the day I
have to be able to sleep at night. Knowing I'm doing right by them, I
can.
But offering equal pay for equal work isn't just about doing the
right thing--it has a positive impact on our business, too.
Our commitment to pay equity boosts our employees' morale and their
respect for the business. It feels good for our women employees to know
they're taking home a fair paycheck. They're happier to come in to work
and be more productive. They're willing to give more of themselves when
they know the business is giving them a fair shake in return.
Our commitment to pay equity also boosts employee retention.
Turnover has major costs for businesses, both in terms of lost
productivity and the up front costs of advertising, hiring, and
training new employees. And, as someone who's had to run the dispatch
and pick up other responsibilities in times of transition, while
continuing to carry out all my other regular job responsibilities, I
know turnover takes a toll on small business owners and managers, too.
We're the last line of defense and the ones who have to pick up
anything that isn't getting done at the end of the day. Cutting down on
turnover saves us money and it also saves us all that extra stress.
For these reasons, I know offering equal pay for equal work is good
business for Alpha Express.
committing to pay equity in a small business start-up
In February, I launched my new business, a popcorn shop called
Popcorn Heaven in Waterloo. We offer more than 50 flavors of gourmet
popcorn in a happy and upbeat environment. So far, the customer
response has been great--you could say business is popping. We just did
the Cedar Valley Baconfest this past weekend.
One of my goals for starting this business was to offer job
opportunities in downtown Waterloo, and we've already got 10 full-time
and part-time employees. And I'm carrying forward the same commitments
to decent wages and pay equity that we've made in my dad's business.
I know that the opponents of things like pay equity are often big
corporations. But if we, as a startup small business, can commit to pay
equity and make it work for our business, then I believe the bigger
companies out there can, too.
small business support for the paycheck fairness act
As a small business owner and manager, I support the Paycheck
Fairness Act.
I support it because it's in line with my values as a business
owner. I'm committed to pay equity for my employees so I have nothing
to fear from the Paycheck Fairness Act. If other businesses are truly
committed to pay equity, they'll have nothing to fear, either.
I support it because it will be good for our local economy.
Ensuring pay equity for women workers will put more money in their
pockets to spend in local businesses--like taking their kids out to
experience a little taste of heaven . . . Popcorn Heaven, that is. This
will help businesses like mine and boost local economies.
And I support it because it levels the playing field in terms of
business competition, supporting responsible businesses that treat our
employees fairly. Small business owners don't like being forced into a
race to the bottom by big box stores and chain operations that threaten
to undercut us by underpaying their women workers. Making a national
commitment to equal pay for equal work will allow small business owners
to pay our workers fair wages without fear of being undercut by low-
road competitors.
As a small business owner and manager, I urge your support for the
Paycheck Fairness Act. Thank you.
Senator Mikulski. Thank you very much for that excellent
testimony.
Ms. Sleeman.
STATEMENT OF KERRI SLEEMAN, MECHANICAL ENGINEER, HOUGHTON, MI
Ms. Sleeman. Thank you, Senator Mikulski and everyone here
today, for having us.
In 1998, I began work at an engineering company in
Michigan. When I was offered the position, they told me that
the company did not negotiate salaries. I took the job and
worked there for 5 years as a design supervisor. I managed
several other workers, mostly males. I always received glowing
reviews.
My company, an automotive supplier, was forced into
bankruptcy in 2003. Not only was I out of a job, but the
employees of the company had to go through bankruptcy court to
get our final paychecks and back vacation pay. I signed up to
receive updates about the court's list of claims and was
stunned by what I found. All of the men I had been supervising
while at the company were paid more than me.
It was heartbreaking, it was embarrassing, it was
infuriating, and it will affect me and my pay for the rest of
my life. When I finally got my wits about me several months
later, I asked my former supervisor about it. He said that the
men I supervised were the bread winners for their wives and
children, and that was probably taken into account.
The company paid those men more than me, not because of
their qualifications, not because of their experience, not
because of their performance or their productivity, but because
they were men and I was a woman. I was shocked and saddened. I
never thought that this could happen to me. In my testimony,
you'll hear a little bit more about my rave performance reviews
so that you can understand why this was so shocking.
I didn't know I was being discriminated against when I
worked there. I was rebuffed in my attempt to negotiate. I
received rave performance reviews. What more could I have done?
You can't fight back when you're not privy to the rules, and
you can't negotiate your way around this kind of
discrimination.
What happened to me is happening across the country, and
that's why we need the Senate to pass the Paycheck Fairness
Act. We're more than 50 years past the passage of the Equal Pay
Act of 1963 and still dealing with a sizable pay gap. This
clearly points to the fact that the current law is not strong
enough to get the job done. It's well overdue for a makeover.
Our economy has changed, family structures have changed, and
working women have changed. It's time for the pay gap to
finally change as well.
My co-workers and I didn't talk about our wages, because we
didn't know what would happen if we did, and none of us could
afford to get fired. The Paycheck Fairness Act would prohibit
employers from retaliating against employees who share their
salary information with co-workers or ask their employers about
wage practices. I think this is very important.
Workers, and especially women, need this protection. The
American Association of University Women did research that
drilled down beyond the infamous 77 percent stat. They found
that women just 1 year out of college, working full-time, were
paid on average just 82 percent of their male counterparts.
Even after controlling for factors commonly understood to
affect earnings, the gap remains, even amongst those with the
same major working in the same occupation. In fact, about one-
third of the pay gap remains unexplained. This gap begins early
in women's careers and is even larger for mothers and women of
color.
I've lost more than $10,000 in pay and retirement benefits.
That's money lost directly to gender-based pay discrimination.
What could I have done with this money? I might have lowered
the refinancing on my house. I know I would have been able to
pay the co-pay for my husband's heart surgery out of savings
rather than using a credit card. Or I might be able to help my
parents and my in-laws as they start their journey into
retirement.
Given the landscape, women cannot close the pay gap by
ourselves. We need policymakers to do their part in ensuring
that the protections and technical assistance of the Paycheck
Fairness Act are there to help both employees and employers
work together toward a more equitable workplace. No one should
have to go through what I've gone through, no one. For the
women and the families that you represent, I urge you to pass
the Paycheck Fairness Act without delay.
Thank you.
[The prepared statement of Ms. Sleeman follows:]
Prepared Statement of Kerri Sleeman
In 1998, I began work at an engineering company in Michigan. When I
was offered the position, they told me the company didn't negotiate
salaries. I took the job, and worked there for 5 years as a design
supervisor. I managed several other workers, almost all men, and always
received glowing reviews. My company, an automotive parts supplier, was
forced into bankruptcy in 2003. Not only was I out of a job, but the
employees of my company had to go through bankruptcy court to get our
final paycheck and back vacation pay. I signed up to receive updates
about the court's list of claims, and was stunned by what I found: all
the men I'd supervised had been paid more than me. It was
heartbreaking. It was embarrassing. It was infuriating. And it will
affect me for the rest of my life.
I asked my former supervisor about it, and he said that the men I
supervised were the breadwinners for their wives and children, and that
was probably taken into account. The company paid those men more than
me not because of their qualifications, experience, performance, or
productivity, but because they were men and I was a woman. Frankly, I
don't know how I stayed civil during that conversation.
I didn't know I was being discriminated against when I worked
there. I was rebuffed in my attempt to negotiate. I received rave
performance reviews. What more could I have done? You can't fight back
when you're not privy to the rules, and you can't negotiate your way
around such discrimination. What happened to me is happening across the
country, and it's why we need the Senate to pass the Paycheck Fairness
Act (S. 84).
We're more than 50 years past the passage of the Equal Pay Act of
1963, and still dealing with a sizable pay gap. This clearly points to
the fact that current law is not strong enough to get the job done.
It's well overdue for a makeover--our economy has changed, family
structures have changed, and working women have changed. It's time for
the pay gap to finally change as well.
My co-workers and I didn't talk about our wages because we didn't
know what would happen if we did, and none of us could afford to get
fired. The Paycheck Fairness Act would prohibit employers from
retaliating against employees who share their salary information with
co-workers or ask their employers about wage practices.
Workers, and especially women, need this protection. American
Association of University Women research drilled down beyond the now
infamous 77 percent stat. They found that women just 1 year out of
college. working full-time, were paid on average just 82 percent of
their male counterparts. Even after controlling for factors commonly
understood to affect earnings, the gap remains--even amongst those with
the same major working in the same occupation. In fact, about one-third
of the pay gap remains unexplained.* This gap begins early in women's
careers, and is even larger for moms and women of color.
---------------------------------------------------------------------------
\1\ AAUW. (2012). Graduating to a Pay Gap. Retrieved January 25,
2013, from www.aauw.org/GraduatetoaPavGap/upload/
AAUWGraduatingtoaPayGapReport.pdf.
---------------------------------------------------------------------------
I've lost more than $10,000 in pay and retirement benefits. That's
money lost directly to gender-based pay discrimination. What would I
have done with this money? I could have lowered the refinancing on my
house. I would have been able to pay the co-pay for my husband's heart
surgery out of savings instead of using a credit card, which resulted
in interest fees and constant worry.
Given the landscape, women cannot close the pay gap by ourselves.
We need policymakers to do their part, ensuring that the protections
and technical assistance of the Paycheck Fairness Act are there to help
both employees and employers work together toward a more equitable
workplace.
No one should have to go through what I've gone through. No one.
For the women and families you represent. I urge you to pass the
Paycheck Fairness Act without delay.
______
Chairman Harkin, Ranking Member Alexander, and members of the
committee, thank you for this opportunity to speak about my experience
with pay discrimination and how the Paycheck Fairness Act could have
helped me.
In 1998, I began work at a company in Michigan that designed,
built, and installed laser welding assembly systems. When I was offered
the position, I was told the company did not negotiate salaries. As
someone put it to me then, ``the offer is what it is.'' I took the job,
and I felt honored when they offered to provide me with benefits
immediately. I saw it as a sign of how much they already valued me.
I worked there for 5 years as a design supervisor. It was hard
work, but I was good at it. I managed several other workers, almost all
men, and I received glowing reviews. My supervisor told me again and
again that, ``If I could duplicate you, I'd be able to get rid of the
rest of the staff.'' I thought I'd be at that firm for many years to
come.
And then the auto industry ran into trouble. As a supplier to the
auto industry, my company also faltered. My employer was forced into
bankruptcy in 2003.
As if suddenly being out of a job wasn't hard enough, the employees
of my company had to go through bankruptcy court in order to get our
final paycheck and any back vacation pay we were owed. I wanted to keep
track of what was happening, so I signed up for a mailing list to see
the bankruptcy court's list of claims.
I recognized the names on the lists, but the numbers shocked me.
People I'd supervised, people below me in our pecking order, were
making claims for 2 weeks of pay that were much larger than mine. The
people I'd supervised were reporting they'd made more money than I did.
I honestly couldn't believe it. I remember squinting, making sure I
was looking at the right names and doing the math correctly. But there
it was, black and white on the page: all the men I'd supervised had
been paid more than I was. Even the one woman I occasionally supervised
was paid less than some of these men, who were on the same level as she
was. Men were just paid more.
It was heartbreaking. It was embarrassing. It was infuriating. And
it will affect me and my family for the rest of my life.
I was so disappointed and angry with the company. These were people
I'd known and worked with for years! Why would they discriminate
against me? I'd worked hard for my mechanical engineering degree, just
as hard as the guys in my classes, because I knew it was the way to a
good career. I worked just as hard or harder than the men I worked
with. But even being in a higher paying STEM field, and being a highly
rated supervisor on top of that, couldn't protect me from gender pay
discrimination.
Soon after I saw these numbers, I talked to my former supervisor--
the one who used to tell me, ``If I could duplicate you, I'd be able to
get rid of the rest of the staff.'' I asked him about the pay
differences. Why was I being paid less than the men I'd supervised?
He said that the people I supervised--lots of young men--were the
sole breadwinners for their wives and children, and that fact was
probably taken into account when their salaries were initially offered.
That was his justification. The company paid higher salaries to men not
based on qualifications or experience, not based on performance or
productivity, but rather because I was a working woman with no
children. The fathers were seen as more deserving of higher pay, even
though I supervised them and sometimes took over their projects because
they weren't performing up to par. My work was devalued because I was
not a male breadwinner. I was considered less worthy just because I was
a woman.
I really don't know how I stayed civil during that conversation. At
the time, I remember thinking that the worst part was not knowing if
there was anything I could have done differently. They had told me they
didn't negotiate. I was an excellent employee with a winning track
record. What more could I have done? You can't stand up for yourself
when you're not privy to the rules, and you can't negotiate your way
around such discrimination.
What happened to me is happening across the country--every day,
every week, every month, every year--to millions of Americans, and it's
why we need the Senate to pass the Paycheck Fairness Act (S. 84). My
co-workers and I didn't talk about our wages because we didn't know
what would happen if we did, and none of us could afford to get fired.
Because, you see, that's exactly what can happen currently when people
share their salary information against company rules: their employer
can punish and even fire them. This stops people from sharing
information with their co-workers, and allows discrimination to fester
and grow.
The Paycheck Fairness Act would prohibit employers from retaliating
against employees who share their salary information with other co-
workers. It doesn't require employers to ``post'' anyone's salary, like
those workplace safety posters we all see in the lunch room. It just
simply says employees can't be punished when they disclose or discuss
their wages, or ask their employer about wage practices. This seems
reasonable and fair to me, especially because these proposed anti-
retaliation protections don't apply to employees with confidential
access to wage information: human resource staffers privy to employees'
salaries may not disclose the wage information of other employees.
Workers need this protection. Women especially need this
protection.
According to the most recent statistics from the U.S. Census
Bureau, the median earnings for U.S. women working full-time, year-
round were just 77 percent of men's median earnings--a gap of 23
percent that has not budged for more than a decade. The gap is even
larger for mothers and women of color.\1\
This gap begins early in women's careers, and occurs in virtually
every occupation. According to one study:
Of the 534 occupations listed by the Bureau of Labor
Statistics, women earn more than men in exactly seven
professions. Together, these seven occupations account for
about 1.5 million working women, or about 3 percent of the
full-time female labor force. The remaining 97 percent of full-
time working women work in occupations where they earn less
than their male counterparts.\2\
Research by the American Association of University Women drilled
beyond the now infamous 77 percent stat. They found that women only 1
year out of college, working full-time, were paid on average just 82
percent of what their male counterparts were paid. Eighty-two percent!
Even after controlling for hours worked, occupation, college major,
employment sector, and other factors associated with pay, this gap
shrinks but does not disappear--even amongst those with the same major
working in the same occupation. In fact, about one-third of the pay gap
cannot be explained by these factors commonly understood to affect
earnings.\3\
This disparity is felt all over the country. In my home State of
Michigan, the 2013 median earnings for men were $49,897 compared to
women's median earnings of $36,772. That's an earnings ratio of just 74
percent.\4\ In essence, women in Michigan are potentially missing up to
26 percent of their pay. In my own congressional district, the first
district of Michigan, the earnings ratio is 75 percent.\5\ I don't know
about you, but I don't know anyone who would happily choose to forfeit
any of their wages, let alone over a quarter of their paycheck.
The wage gap has enormous consequences. Recent research\6\ has
found that 4 in 10 households with children include a mother who is
either the sole or primary earner for her family. Pay equity is not
just a matter of fairness, but the key to families making ends meet.
Because of pay discrimination, I've lost more than $10,000 in pay
and retirement benefits. Recently I was asked what I would have done
with this money if I'd had it. Some of it would definitely have gone
into my retirement savings, as I was having 15 percent of my paycheck
automatically go into my retirement account at that time. That would
have been a great boost to my retirement security. I also needed that
money when I refinanced my mortgage, so I wouldn't have had to
refinance for as much. Finally, I think I would have used it for health
care bills. If I'd had the money I lost because of gender
discrimination, I would have been able to pay the co-pay for my
husband's heart surgery out of savings instead of having to use a
credit card, thereby avoiding the interest fees and the constant worry.
I'd rightfully earned that money, my family and I needed that
money, but I won't ever get it back. That's money lost directly to
gender-based pay discrimination. Millions of American women continue to
lose more money, every day, because they're afraid to talk about wage
practices and because the current law is not strong enough to inspire
business compliance. It's time for this to end.
The Paycheck Fairness Act would improve current law, providing
incentives for employers to more fully comply as well as enhanced
Federal technical assistance and enforcement efforts. The bill updates
the Equal Pay Act of 1963. We're more than 50 years down the road and
still dealing with a sizable pay gap, which clearly points to the fact
that current law is not strong enough to get the job done. It's well
overdue for a makeover--our economy has changed, family structures have
changed, and working women have changed. It's time for the pay gap to
finally change as well. The law needs to reflect the realities of the
modem workplace. Most important to my own experience, the Paycheck
Fairness Act would protect workers from retaliation for talking about
their salary at work. Frankly, that's not too much to ask.
I'm here before you today to say this: we need the Paycheck
Fairness Act. If the Paycheck Fairness Act had been the law, I would
have talked about my salary without fear, and I likely would have known
where I stood in comparison to the men I worked with and those I
supervised. Instead, without the Paycheck Fairness Act, I wasn't able
to ask, and I made less. This disparity continues to have consequences,
and it will continue to have ramifications when I receive a smaller
Social Security check.
Since I found out I was discriminated against, I've dedicated
myself to fighting for pay equity. Working with the WAGE Project and
American Association of University Women, I lead $tart $mart workshops
on college campuses, teaching women students how to negotiate their
salaries. I believe that negotiation is critical, and I'm glad that the
Paycheck Fairness Act includes some funding for women's negotiation
programs. But we also need to remember that while helpful, simply
urging women to negotiate is not a complete solution to the pay gap.
Negotiations can backfire if a woman isn't armed with the right
information and confidence to make her case, and if laws are not strong
enough to influence an employer to respond favorably to those
negotiations.
Part of why I support the Paycheck Fairness Act is because it
requires everyone to do their part to close the gender pay gap, women
included. Sure, we can learn to better negotiate, but what if a company
refuses to negotiate like mine did? And don't get me started on the
outdated stereotypes about women's roles that clearly impact women's
wages today. I still cannot believe that I was paid less than a man for
doing the same job--actually even supervising some of them. Why?
Because my boss thought my wages weren't as important to my family.
They were. Given the landscape, women cannot close the pay gap by
ourselves. We need policymakers to do their part, ensuring that the
protections and assistance of the Paycheck Fairness Act are there to
help both employees and employers work together toward a more equitable
workplace.
No one should have to go through what I've gone through. No one.
Working with AAUW, I have managed to turn my anger into action. My
convictions have brought me here today. For the women and families you
represent, I urge you to pass the Paycheck Fairness Act without delay.
Thank you for this opportunity to testify, and I look forward to
your questions.
References
1. U.S. Census. (September 2012). Income, Poverty, and Health
Insurance Coverage in the United States: 2011. Retrieved January 22,
2014, from www.census.gov/prod/2012pubs/p60-243.pdf.
2. American Progress. (April; 9, 2013). The Gender Wage Gap Differs
by Occupation. Retrieved March 28, 2014, from www.americanprogress.org/
issues/labor/news/2013/04/09/59698/the-gender-wage-gap-differs-by-
occupation/.
3. AAUW. (2012). Graduating to a Pay Gap. Retrieved January 25,
2013, from www.aauw.org/GraduatetoaPayGap/upload/
AAUWGraduaingtoapayGapReport.pdf.
4. AAUW. (September 2013). The Gender Wage Gap: Michigan. Rerrieved
March 26, 2014, from www.aauw.org/files/2013/09/Michigan-Pay-Gap-
2013.pdf.
5. Ibid.
6. The New York Times. (May 29, 2013). U.S. Women on the Rise as
Family Breadwinner. Retrieved March 28, 2014, from www.nytimes.com/
2013/05/30/business/economy/women-as-family-breadwinner-on-the-rise-
study-says.html? _r=l&&
gwh=FlBC78FA3C98CB6D3D9FE993F83F87AF&gwt=pay.
Senator Mikulski. Ms. Olson.
STATEMENT OF CAMILLE A. OLSON, PARTNER, SEYFARTH SHAW, CHICAGO,
IL
Ms. Olson. Thank you very much.
Senator Mikulski. Ms. Olson, and to all the witnesses, I'm
going to ask unanimous consent that your full statement be in
the record. That's not in any way to curtail what you're saying
here, but I know you had an extensive review. Many did, too. So
by unanimous consent, all of those will be fully entered into
the record.
Please present your views here.
Ms. Olson. Thank you very much. Good afternoon, and thank
you, Chair Mikulski, Ranking Member Alexander, and other
members of the committee.
My name is Camille Olson, and I am testifying on behalf of
the U.S. Chamber of Commerce. I chair the Chamber's Equal
Employment Opportunity Policy Subcommittee, and I also chair my
law firm's National Complex Discrimination Litigation Practice
Group.
I'm testifying on behalf of the U.S. Chamber today. The
Chamber strongly supports equal opportunities in employment
and, specifically, equal pay for equal work. However, for all
the reasons set forth in my written testimony, the Chamber
strongly opposes the Paycheck Fairness Act because it doesn't
promote equal pay for equal work.
If passed, the act would amend the Equal Pay Act
significantly in the following substantive and procedural ways.
One, it would impose harsher lottery type penalties of
unlimited compensatory and punitive damages upon all employers
regardless of size and without a showing of intentional sex
discrimination, different than every other employment
discrimination law in this country. It would effectively
eliminate the factor-other-than-sex defense, and it would
provide a more attorney friendly class action device, among
other amendments.
The act's proponents contend that these changes are
necessary to ensure equal pay for women. But nothing could be
further from the truth, because existing laws already provide
robust opportunities to challenge discriminatory pay practices
as well as significant remedies to protect employees against
gender-based pay discrimination under both the Equal Pay Act,
title VII, and Executive Order 11246.
Today, the Equal Pay Act and title VII provide favorable
and effective remedies for pay discrimination. Those include
back pay, injunctive relief in the form of increased pay,
liquidated or double damages, attorney's fees, costs,
prejudgment interest, and up to $300,000 in compensatory and
punitive damages per employee. And if an employer is a
government contractor, as many are, it may also face sanctions
and other remedies if it discriminates in its pay practices.
Today's Federal court docket and EEOC charge and settlement
statistics confirm that aggrieved victims are taking advantage
of these multiple forms of redress currently available to
remedy pay discrimination in both single plaintiff as well as
class and collective actions across the country as well as by
raising claims with both the EEOC and the OFCCP. Despite these
protections, the act's proponents propose drastic changes that
would transform the Equal Pay Act beyond recognition, all upon
an unsubstantiated premise that any differences in wages
between men and women are the result of employer
discrimination.
Most concerning to the Chamber are the following three
issues. First, by expanding the Equal Pay Act remedies to
include unlimited compensatory and punitive damages, the
Paycheck Fairness Act ignores that it is a remedial, strict
liability statute specifically designed to compensate employees
for sex-based pay inequities without a showing of
discriminatory employer intent. It runs contrary to the entire
body of Federal anti-discrimination law that damages conceived
and intended to punish and deter wrongdoing would now apply to
claims of unintentional conduct prohibited by the Equal Pay
Act.
Second, the rewriting of the factor-other-than-sex defense
is the most significant substantive change proposed by the
Equal Pay Act. The change must be considered in tandem with the
Equal Pay Act's fundamental underpinning, balancing the
requirement of equal pay for equal work against the mandate
that the government cannot interfere with private companies'
valuations of a worker's qualifications, the work performed,
and the setting of pay rates.
Currently, under the Equal Pay Act, an employer defends a
claim by showing either a seniority or a merit system or a
system measuring quality or quantity of work or a gender-
neutral factor other than sex, including, for example,
education, experience, special skills, expertise, and external
market conditions, caused the difference. If the Paycheck
Fairness Act becomes law, the employer would be required to
prove, if there was a showing of any difference in pay, that it
paid more because of a bona fide factor that was job-related
and consistent with business necessity and that the established
factor was not derived from a sex-based differential in
compensation.
Even then, the employer remains liable if a plaintiff can
show an alternative employment practice that would serve the
same business purpose. This is true even where the employer
shows that the factor other than sex justifying the
differential in pay is education, training, or experience.
The business necessity standard developed by case law as a
disparate impact defense and confirmed as such by the Civil
Rights Act of 1991 is fundamentally incompatible with the Equal
Pay Act, which the Supreme Court has noted is designed to
address disparate treatment, not disparate impact claims.
Applying business necessity to the Equal Pay Act, an employer
is required to prove for every single wage decision that the
ultimate business goal achieved by the higher pay is essential
to the business and that the factor is essential to achievement
of that ultimate business goal.
What would be the practical impact of redefining the
factor-other-than-sex defense? Consider whether employers would
still have the freedom to hire and retain the most qualified
workforce. The act discourages employers from offering added
compensation for qualifications beyond the minimum required by
the job. Employers who are willing to match higher pay offered
by a competitor risk liability unless they are able to prove
that the outside competitor's offer is not based upon or
derived from a sex-based differential.
Finally, if an employer's financial ability to round up all
employees' wage rates qualifies as an alternative factor under
the Paycheck Fairness Act, because it is neither overly costly
nor so cost prohibitive it would threaten the survival of the
business, then any pay differential under this act would likely
automatically require a uniform raise in every single employee
in the job, regardless of variations in qualifications, such as
education, training, or experience. If this is the case, the
factor-other-than-sex defense is illusory. It wipes out all pay
differences based on qualifications.
I see that I'm over my time. I also wanted to make a note
that there are significant comments in my written statement
with respect to the concern about revising the class action
mechanism that's in the Equal Pay Act. But I'll just defer to
those comments.
In conclusion, I'll just say that the Chamber believes that
the Paycheck Fairness Act presents serious and dangerous
ramifications that far outweigh any protection offered to
victims of discrimination. The compounded effect of the act's
most problematic provisions will be to expose private
enterprise to unprecedented invasion by the judiciary under
threat of unlimited damages as well as subvert the carefully
constructed frameworks of existing anti-discrimination law.
For these reasons and the reasons contained in my written
testimony, the Chamber has serious concerns with respect to the
Paycheck Fairness Act. Thank you very much for the opportunity
to share some of these concerns with you today.
[The prepared statement of Ms. Olson follows:]
Prepared Statement of Camille A. Olson
The U.S. Chamber of Commerce is the world's largest business
federation, representing more than three million businesses and
organizations of every size, sector, and region.
More than 96 percent of the Chamber's members are small businesses
with 100 or fewer employees, 70 percent of which have 10 or fewer
employees. Yet, virtually all nation's largest companies are also
active members. We are particularly cognizant of the problems of
smaller businesses, as well as issues facing the business community at
large.
Besides representing a cross-section of the American business
community in terms of number of employees, the Chamber represents a
wide management spectrum by type of business and location. Each major
classification of American business--manufacturing, retailing,
services, construction, wholesaling, and finance--is represented. Also,
the Chamber has substantial membership in all 50 States.
The Chamber's international reach is substantial as well. It
believes that global interdependence provides an opportunity, not a
threat. In addition to the Chamber of Commerce's 96 American Chambers
of Commerce abroad, an increasing number of members are engaged in the
export and import of both goods and services and have ongoing
investment activities. The Chamber favors strengthened international
competitiveness and opposes artificial U.S. and foreign barriers to
international business.
Positions on national issues are developed by a cross-section of
Chamber members serving on committees, subcommittees, and task forces.
More than 1,000 business people participate in this process.
______
Good afternoon Mr. Chairman and members of the committee. On behalf
of the U.S. Chamber of Commerce, I am pleased to testify on S. 84, the
Paycheck Fairness Act (the ``Act'').\1\ I am Chairwoman of the
Chamber's equal employment opportunity policy subcommittee. The Chamber
is the world's largest business federation, representing more than
three million businesses and organizations of every size, industry
sector, and geographical region.
---------------------------------------------------------------------------
\1\ In July 2007, I testified before the House Subcommittee on
Workforce Protections on H.R. 1338 (also entitled The Paycheck Fairness
Act), available at http://www.gpo.gov/fdsys/pkg/CHRG-110hhrg36467/html/
CHRG-110hhrg36467.htm.
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I am also a partner with the law firm of Seyfarth Shaw LLP,\2\
where I chair the Labor and Employment Department's Complex
Discrimination Litigation Practice Group. In addition to my litigation
practice, which has specialized in representing local and national
companies in Federal court litigation involving claims of employment
discrimination, I also represent employers in designing, reviewing, and
evaluating their pay practices to ensure compliance with Federal and
local equal employment opportunity laws. I have represented business
and human resource organizations as amicus curiae in landmark
employment cases, including Dukes v. Wal-Mart, and also teach Federal
equal employment opportunity law topics at Loyola University Chicago
School of Law.
---------------------------------------------------------------------------
\2\ Seyfarth Shaw LLP is a global law firm of over 800 attorneys
specializing in providing strategic, practical legal counsel to
companies of all sizes. Nationwide, over 350 Seyfarth attorneys provide
advice, counsel, and litigation defense representation in connection
with discrimination and other labor and employment matters affecting
employees in their workplaces.
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In today's testimony\3\ I discuss the meaning and impact of the Act
on the Equal Pay Act of 1963\4\ (``EPA''). If enacted, the Act would
amend the EPA significantly in substantive and procedural ways, all
upon a fundamental yet unsubstantiated premise--namely, that throughout
the United States of America, all unexplained wage disparities existing
between men and women are necessarily the result of intentional
discrimination by employers.\5\
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\3\ I would like to acknowledge Seyfarth Shaw LLP attorneys Richard
B. Lapp, Paul H. Kehoe, Kevin A. Fritz, and Lawrence Z. Lorber, as well
as Jae S. Um for their invaluable assistance in the preparation of this
testimony.
\4\ 29 U.S.C. Sec. 206(d)(1).
\5\ The proponents of the Act have not cited any evidence
establishing that a wage gap is actually caused by employer
discrimination. They essentially propose acceptance of the existence of
the wage gap as presumptive proof. However, this unsubstantiated
syllogism does not withstand scrutiny. As labor economists and feminist
scholars have observed, any wage gap between men and women is
attributable to a number of factors bearing no relationship whatsoever
to alleged employer discrimination. See, e.g., Bureau of Labor
Statistics Report 1045, Highlights of Women's Earnings (2013); Joint
Econ. Comm., Invest in Women, Invest in America (2010); and An Analysis
of Reasons For the Disparity in Wages Between Men and Women
commissioned by the U.S. Dep't of Labor, Office of Employment Standards
Administration, and prepared in conjunction with CONSAD Research Corp.
(2009) (when accounting for factors such as: occupation, human capital
development, work experience, career interruptions, industry, health
insurance, fringe benefits, and overtime work, the 2009 Report found
that the unexplained hourly wage differences were between 4.8 and 7.1
percent).
The so-called gender wage gap ignores the complexity and documented
factors that have been identified in social science research to explain
the differences in wage rates between men and women, including the
following differences: the availability of other non-economic benefits
provided by the employer; an employees' willingness and ability to
negotiate pay; pay history; the number of hours worked; an employee's
willingness to work during certain shifts and in certain locations;
certifications and training obtained by the employee; the amount and
type of education achieved; prior experience; length of time in the
workforce; length of service with the employer; time in a particular
job; the frequency and duration of time spent outside the workforce;
job performance; personal choices regarding other family or social
obligations; occupational choice, self-selection for promotions and the
attendant status and monetary awards; and other ``human capital''
factors. Many of these factors are a function of personal choices
employees make. Reliance on this figure as sufficient evidence of
widespread employer discrimination in today's workforce runs counter to
every facet of the long-held standard of equal pay for equal work.
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On the unsupported assertion that women today earn 77 cents for
every dollar a man earns as a result of intentional employer
discrimination, the Act would impose harsher, ``lottery-type' penalties
upon all employers, in effect eliminate the factor other than sex
defense,\6\ and make available a more attorney-friendly class action
device. The Act's proponents contend that these changes are necessary
to ensure equal pay for women. Nothing could be further from the truth
because existing laws already provide robust protections and
significant remedies to protect employees against gender-based pay
discrimination (protections exist under both the EPA, Title VII of the
Civil Rights Act of 1964 (``Title VII'')\7\ as well as Executive Order
11,246). Plaintiffs are taking advantage of the multiple forms of
redress available to remedy pay discrimination through both the filing
of discrimination charges as well as Federal and State court individual
lawsuits and class actions.
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\6\ Revisions to the ``factor other than sex'' defense would render
it a nullity, allowing judges and juries to second guess employers and
the marketplace as to the relative worth of job qualifications in
individual pay decisions. The Act, in effect, requires employers to
implement a civil service philosophy with respect to all pay decisions,
eliminating individual pay advancements unless an employer can prove
its pay raise was a business necessity and it cannot be shown that a
different economic decision could have been implemented that would not
have caused a wage differential for female employees without the
pertinent job qualifications.
\7\ Title VII of the Civil Rights Act of 1964, 42 U.S.C.
Sec. 2000e, et seq, as amended by the Civil Rights Act of 1991, PL 102-
166, 105 Stat. 1071. See 42 U.S.C. Sec. Sec. 12117(a), 1981a(2)
(``Title VII'').
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Instead, in practice, the Act would: (1) impose enormous burdens
and risks on employers who base compensation decisions on factors other
than sex such as training, experience and education, or reliance on the
current market value placed on skills and experience and economic need,
(2) devalue in the marketplace enhanced skills, training and experience
(as well as other non-discriminatory factors for pay differences
between employees), and (3) expand litigation opportunities for class
action lawyers seeking millions of dollars from companies without ever
having to prove that the companies intentionally discriminated against
women.
The proposed changes to the EPA are also contrary to its most
fundamental underpinnings; the requirement of equal pay for equal work
balanced against the mandate that government not interfere with private
companies' valuation of a worker's qualifications, the work performed,
and more specifically, the setting of compensation.\8\ The proposed
changes are also inappropriate given the EPA's distinguishing features,
relative to other anti-discrimination legislation. Perhaps the most
notable difference is the lack of any requirement that a prevailing EPA
plaintiff prove intentional employer discrimination. This feature
separates the EPA from title VII, the Age Discrimination in Employment
Act,\9\ the Americans with Disabilities Act,\10\ as well as Section
1981 of the Civil Rights Act of 1866 and Section 1983 of the Civil
Rights Act of 1871.\11\ These statutes allow for the imposition of
compensatory and punitive damages, but only upon a finding of
intentional discrimination by the employer. In contrast, the EPA
currently imposes liability on employers without any required showing
that the employer intended to discriminate against the worker.
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\8\ Indeed, the Government's experience with wage setting finds its
genesis with the War Labor Board in World War II when the Board looked
to determine market rates to apply to women then entering previously
male-dominated jobs.
\9\ 29 U.S.C. Sec. 621 et seq.
\10\ Title I of the Americans with Disabilities Act of 1990
(``ADA''), 42 U.S.C. Sec. 12101, et seq. Like title VII, under the ADA,
punitive and compensatory damages are only available where intentional
disability discrimination is shown. See 42 U.S.C. Sec. Sec. 12117(a),
1981a(2). Similarly, disparate impact claims under title VII do not
subject an employer to punitive or compensatory damage claims.
\11\ 42 U.S.C. Sec. Sec. 1981 and 1983, respectively.
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Commentators and courts have often referred to this leniency in the
EPA as rendering employers ``strictly liable'' for any pay disparity
between women and men for substantially equal work unless the employer
can show that the pay differential was due to: a seniority system, a
merit system, a system measuring quality or quantity of work, or any
other factor other than sex. The irrelevancy of an employer's intent is
a defining feature of the EPA, and must be remembered as the
significant amendments to the EPA suggested by the Act are debated. By
eliminating the factor other than sex defense, and replacing it with an
unattainable standard of an affirmative employer showing that any
individual wage difference was: (1) job-related and required by
``business necessity'' and (2) not ``derived from a sex-based
differential in compensation'' the Act imports a business necessity
``plus'' standard for an employer to defend every individual pay
decision even where no evidence of discrimination is required to be
shown.\12\
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\12\ Under the Act, market forces would effectively be excluded
from consideration when an employer sets an individual's pay rates
unless an employer is able to prove a negative--that the market rate
used was not derived or influenced by a sex-based differential in pay.
Under the Act, an employee's request for higher pay to match a
competitor's offer could not be ``matched'' unless, first, the employer
proved the competitor's offer was not influenced by a sex-based
differential (practically, a very difficult burden) and second, the
employee's increase was a business necessity (how does an employer
prove that one employee's retention is a business necessity?).
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And, if the Act becomes law, a plaintiff could erase an employer's
defense and leave it open to a jury award of unlimited punitive and
compensatory damages in large mass actions on the basis of one
employee's complaint (without regard to the size of the employer).
Under the Act, employer liability attaches every time a plaintiff 's
lawyer shows an employer could have implemented an alternative
employment practice that would serve the same business purpose without
producing a differential in pay between a male and female employee.
This is true even where the employer shows that the factor other than
sex justifying the differential in pay is education, training, or
experience. The Act does not describe any examples of alternative
employment practices that would suffice to defeat the employer's
burden. If a plaintiff countered an employer's justification of
education, training, or experience by suggesting that the employer had
the financial ability to raise everyone's pay in the same job--is that
alternative an alternative employment practice that would defeat the
employer's defense (in every case, so that the Act's ``factor other
than sex'' defense is in fact a complete illusion)? In effect, the Act
suggests that the universal alternative will be to ``round up'' any
wage distinction. No answer is found in the Act; yet, there is no
question that this one issue will lead to considerable uncertainty and
litigation.
The Act's elimination of the EPA's defense of a factor other than
sex with the imposition of a statutory framework previously reserved
for application to an employer's neutral policy decisions that have a
disparate impact on minority employees (where employers are not liable
for compensatory or punitive damages) is unworkable, ill-advised, and
inappropriate as an analytical tool to judge an employer's
individualized wage decisions.
For these reasons, and all of the reasons set forth below, the
Chamber strongly opposes the Paycheck Fairness Act. We urge the
committee to carefully consider the issues raised by the Chamber and
proceed cautiously in considering the Act.
current protections against sex-based wage discrimination
Overview
Since 1963, it has been unlawful under the EPA for an employer to
pay a female employee less than a male employee for equal work. Today,
employees enjoy a substantial assortment of protections against wage
discrimination. Since 1979, the EPA has been enforced by the Equal
Employment Opportunity Commission.\13\ In addition to the protections
against wage discrimination based on sex afforded by the EPA, sex
discrimination in wages is also prohibited by title VII, many State
antidiscrimination statutes, and, for employees of Federal contractors
and subcontractors.\14\
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\13\ In 1986, the EEOC issued detailed regulations entitled
``EEOC's Interpretations of the Equal Pay Act,'' 29 CFR Sec. 1620, as
amended. In 2006, the EEOC issued regulations under the EPA, 29 CFR
Sec. 1621, as amended. Since Fiscal Year 2008, the EEOC has received
between 919 and 1,082 charges asserting violations of the Equal Pay Act
annually, representing roughly
1 percent of total charge filings. See EEOC Charge Statistics FY 1997
Through FY 2013, available at http://www.eeoc.gov/eeoc/statistics/
enforcement/charges.cfm.
\14\ Exec. Order No. 11,246, Section 202(1), 30 Fed. Reg. 12,319
(Sept. 24, 1965), as amended by Exec. Order No. 11,375, 32 Fed. Reg.
14,303 (Oct. 17, 1967).
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Today, the EPA and title VII provide a woman who prevails on her
wage discrimination claim a collection of favorable and effective
remedies. Those combined remedies include: back pay; front pay;
liquidated damages; attorneys' fees; costs; affirmative injunctive
relief in the nature of an increase in wages on a going forward basis;
prejudgment interest; $300,000 in punitive and compensatory damages. If
an employer is a government contractor, as many are, it may also face
sanctions (including, for example, debarment, the cancellation,
termination or suspension of any existing contract) and remedies (such
as elimination of practices, seniority relief, monetary and equitable
relief to identified class members, and accelerated training). These
contractor remedies exceed those available to victims of intentional
discrimination under title VII generally, the ADA, and the ADEA.
Mechanics of the EPA and Title VII
The EPA
The EPA provides that no employer shall pay employees of one sex at
a rate less than the rate at which the employer pays employees of the
opposite sex for equal work.\15\ An employee may assert an EPA claim
either by filing a charge of discrimination with EEOC or by proceeding
directly to Federal court and filing a lawsuit there.
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\15\ 29 U.S.C. Sec. 206(d).
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To prevail under the EPA, an employee must make a prima facie
showing of discrimination by presenting evidence that: (1) different
wages were paid to employees of the opposite sex; (2) the employees
performed equal work requiring equal skill, effort, and responsibility;
and (3) the employees shared similar working conditions.\16\ If the
employee makes that showing, she has established a presumption of
discrimination. The burden of persuasion then shifts to the employer,
who can only avoid liability by proving that the wage differential is
pursuant to: (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.\17\ Note, even if an employer meets this
burden, a plaintiff prevails if able to show that the employer's
proffered reason is not bona fide, but is a pretext or excuse for
paying higher wages to men for equal work. Critically, there is no
requirement under the EPA for a plaintiff to prove any discriminatory
intent or animus on the part of the employer. That element is not
present in the liability scheme under the EPA.\18\
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\16\ 29 U.S.C. Sec. 206(d)(1); Fallon v. Illinois, 882 F.2d 1206,
1208 (7th Cir. 1989).
\17\ 29 U.S.C. Sec. 206(d)(1).
\18\ See 29 U.S.C. Sec. 206(d)(1) (making clear only relevant
inquiry is whether alleged 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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The EPA is contained within the Fair Labor Standards Act
(``FLSA'').\19\ Under the FLSA, a successful EPA plaintiff may recover
back pay, front pay, prejudgment interest, and attorneys' fees and
costs. Where willfulness is shown, a plaintiff may also recover an
additional amount of back pay as liquidated (``double'') damages, and
the defendant may also be fined up to $10,000 and imprisoned for up to
6 months.\20\
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\19\ 29 U.S.C. 201 et seq.
\20\ 29 U.S.C. Sec. 216(b).
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Title VII
Similarly, under title VII, it is ``an unlawful employment practice
for an employer . . . to discriminate against any individual with
respect to [her] compensation . . . because of such individual's . . .
sex . . . .''\21\ An employee may assert a claim for sex-based pay
discrimination by filing a charge of discrimination with EEOC and then,
upon receipt of her notice of right to sue (and regardless of whether
EEOC finds ``cause'' for concluding that discrimination occurred), may
file a lawsuit in Federal court. Further, an employee need not engage
an attorney to participate in the EEOC processes, including
investigation of their allegations of discrimination under the EPA and
title VII, as well as conciliation and litigation of their claim in
Federal court (if the EEOC determines to file suit on the employee's
behalf).
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\21\ 42 U.S.C. Sec. 2000e-2(a). See also 42 U.S.C. Sec. 2000e-2(h).
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To establish that similarly situated males were more favorably
compensated, as is necessary to prevail in a disparate treatment pay
claim under title VII, a plaintiff must either provide direct evidence
of discrimination, or prove discrimination through the indirect method
by providing evidence of a prima facie case of discrimination. Once she
has done so, the employer must articulate a legitimate, non-
discriminatory reason for the wage differential. At that juncture, the
plaintiff has an opportunity to prove that the proffered reason is a
pretext for unlawful employment discrimination. The plaintiff 's burden
is higher under title VII in connection with discrimination-based pay
claims than under the EPA, where establishment of a disparity in pay
for equal work obligates the employer to prove that the disparity is
for a reason other than sex to avoid strict liability.
Comparison of EPA and Title VII
Both the EPA and title VII provide remedies for women who believe
they have been subjected to sex discrimination in pay, and we have
included examples below demonstrating that both serve as effective
mechanisms for women to redress alleged claims of sex-based pay
discrimination. From an employee's perspective, the EPA is the more
favorable and lenient of the two statutes with respect to both the ease
of pursuing a claim against an employer and the relatively low standard
for establishing liability. For example:
Under the EPA, an ``employer'' includes entities and
individuals. An employer employing as few as two employees is included
within its coverage (whereas title VII covers employers of 15 or more
employees);
Establishment of the prima facie case of pay
discrimination under the EPA entitles an employee to a legal
presumption of discrimination, with the burden of production and
persuasion moving to the employer. In contrast, under title VII, even
where a plaintiff establishes a prima facie case of pay discrimination,
she at all times retains the burden of persuasion as to discrimination.
To avoid the imposition of liability, an employer must prove that the
disparity was caused by one of four permissible reasons. As a result,
under the EPA, plaintiffs are much more successful in defeating
employer's motions for summary judgment and having their claims heard
by a jury;\22\
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\22\ King v. Acosta Sales & Mktg., Inc., 678 F.3d 470, 474 (7th
Cir. 2012) (reversing summary judgment for employer where it only
articulated, rather than proved, that education and experience
accounted for a pay differential between male and female managers);
Vehar v. Cole Nat. Group Inc., No. 06-4542, 2007 WL 3127913, at *7-8
(5th Cir. 2007) (reversing summary judgment for employer where the
differences in experience between male and female computer programmers
were not enough to support summary judgment); Boumehdi v. Plastag
Holdings, LLC, 489 F.3d 781, 794 (7th Cir. 2007) (reversing summary
judgment for employer where a genuine issue of material fact existed
regarding the justification--perceived performance and one additional
year of seniority--for a $2 per hour pay differential between male and
female press feeders); EEOC v. Health Management Group, No. 09-1762,
2011 WL 4376155, at *5-6 (N.D. Ohio Sept. 20, 2011) (denying employer's
motion for summary judgment where it argued that a pay differential
between male and female franchise distributors was based on the male's
prior negotiating skills with physicians, where a question of fact
existed regarding whether the hiring official knew of that skill). See
also, Mickelson, 460 F.3d at 1311 (``This is not to say that an
employer may never be entitled to summary judgment on an EPA claim if
the plaintiff establishes a prima facie case. But, because the
employer's burden in an EPA claim is one of ultimate persuasion, `in
order to prevail at the summary judgment stage, the employer must prove
at least one affirmative defense so clearly that no rational jury could
find to the contrary' '') (internal citation omitted).
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The EPA provides for strict liability, meaning that a
plaintiff need not show discriminatory intent on the part of the
employer to prevail, whereas a disparate treatment plaintiff under
title VII must show the existence of discriminatory intent on the part
of the employer to prevail;
There is a much longer, more generous limitations period
(2 years for a general violation, 3 years for a violation found to be
willful) under the EPA as opposed to at most 300 days for the filing of
an administrative charge of discrimination with the EEOC under title
VII (which is a prerequisite to suit in Federal court); and
Under the EPA there is no charge filing requirement with
an administrative agency.
The EPA also shares many of the advantages accorded to claimants
under title VII, including:
Plaintiffs may recover attorneys' fees and costs;
The EEOC may bring public suits to enforce the EPA,
including seeking injunctive and other remedies; and
Plaintiffs may file a charge alleging a violation of the
EPA and request the EEOC investigate the violation.
In the aggregate, these overlapping non-discrimination statutes
provide employees multiple avenues for pursuing claims of unequal pay
for equal work. They also provide employees with multiple forms of
redress with respect to alleged pay discrimination, including: a direct
right to a jury trial on their own behalf in Federal court, the filing
of a charge of discrimination with the EEOC, the right to have the EEOC
pursue a claim on their behalf in Federal court, and the right to bring
a collective action or class action on behalf of other similarly
situated employees who choose to participate in an action under the EPA
or title VII, respectively (on their own or by their attorney of
choice). It is not uncommon for a worker suing to enforce his or her
rights to equal pay under the EPA to also file a charge of
discrimination with the Equal Employment Opportunity Commission, file a
lawsuit in Federal or State court, and, if their employer is a Federal
contractor, raise a claim under Executive Order 11,246 with the Office
of Federal Contract Compliance Programs (or do all of the above).
And, of course, notwithstanding the differences between the
statutes, claimants may bring parallel claims under the EPA and title
VII to ensure that they receive the fullest protection under the law.
Indeed, they may recover under both statutes for the same period of
time provided they do not receive a double or duplicative recovery for
the same ``wrong.'' As such, a prevailing plaintiff may recover back
pay, a front pay adjustment, compensatory damages, punitive damages,
liquidated damages, and injunctive relief, among other relief. Put
simply, women who believe that they suffer wage discrimination as a
result of their sex have available to them Federal statutes that
provide significant remedies.\23\
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\23\ Barbara Lindemann & Paul Grossman, Employment Discrimination
Law, Ch. 15 (3d ed. 1996).
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concerns regarding proposed changes to the equal pay act
Inappropriate Expansion of EPA Remedies For Unintentional Wage
Discrimination to Include Unlimited Compensatory and Punitive
Damages
Critics of the EPA in its current form have observed that it is not
a ``lottery.''\24\ Indeed, it is not intended to be. Rather, its
remedial provisions are intended to compensate employees for sex-based
pay inequities, whether inadvertent (which is sufficient for the
imposition of liability) or not. Awarding compensatory and punitive
damages where no showing of intent is required would be inappropriate
and contrary to the purposes behind the allowance for compensatory and
punitive damages in cases of intentional discrimination.
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\24\ Sara L. Zeigler, Litigating Equality: The Limits of the Equal
Pay Act, 26 Rev. Pub. Pers. Admin. 199, 204 (2006).
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In passing the Civil Rights Act of 1991, Congress expanded the
forms of relief available to an individual who is the victim of
intentional discrimination under title VII so as to include
compensatory and punitive damages. Prior to passage of that Act, 42
U.S.C. Sec. 1981 ``permitted the recovery of unlimited compensatory and
punitive damages in cases of intentional race and ethnic
discrimination, but no similar remedy existed in cases of intentional
sex, religious, or disability discrimination.\25\ As then-Congresswoman
Pat Schroeder from Colorado explained in her statement during the
congressional floor debate from August 2, 1990 regarding punitive
damages for Civil Rights Act:
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\25\ Pollard v. E.I. du Pont de Nemours & Co., 532 U.S. 843, 851
(2001).
Mrs. Schroeder. Mr. Chairman, I want to answer some of the
things that we have just heard. We are hearing here that there
is something wrong with this bill because there are remedies .
. . Let me tell Members one more thing about punitive damages.
You do not get punitive damages unless there was intent. It is
all equitable, unless there is intent. It seems to me in this
country that if there is intent to discriminate, then we
certainly should be out trying to assess some kind of punitive
damages. Otherwise, someone just assigns it as a cost of doing
business.\26\
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\26\ 101 Cong. Rec. S. 1745 (daily ed. Aug. 2, 1990) (Statement of
Cong. Schroeder).
As evidenced by the above, compensatory and punitive damages serve
distinct and specific purposes. Compensatory damages are ``intended to
redress the concrete loss that the plaintiff has suffered by reason of
the defendant's wrongful conduct.''\27\ Punitive damages are ``intended
to punish the defendant and to deter future wrongdoing.''\28\ Under
title VII, ``[A] finding of liability does not of itself entitle a
plaintiff to an award of punitive damages.''\29\ ``The purpose of
awarding punitive damages is to `punish a wrongdoer for his outrageous
conduct and to deter others from engaging in similar conduct.' '').\30\
``Such an award must be supported by the record, and may not constitute
merely a windfall for the plaintiff.''\31\ It strains logic and flouts
the entire body of Federal anti-discrimination law to suggest--or, as
the Act would do, to mandate--that damages conceived and intended to
punish and deter wrongful conduct should apply to claims of
inadvertent, unintentional conduct that has the effect of violating the
EPA. It is inconsistent to introduce a concept of malice or reckless
indifference into a strict liability statute.
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\27\ Cooper Indus., Inc. v. Leatherman Tool Group, Inc., 532 U.S.
424, 432, (2001).
\28\ Id. (citing Gertz v. Robert Welch, Inc., 418 U.S. 323, 350,
(1974) (``[Punitive damages] are not compensation for injury. Instead,
they are private fines levied by civil juries to punish reprehensible
conduct and to deter its future occurrence'') and Pac. Mut. Life Ins.
Co. v. Haslip, 499 U.S. 1, 54 (1991) (O'Connor, J., dissenting)
(``[P]unitive damages are specifically designed to exact punishment in
excess of actual harm to make clear that the defendant's misconduct was
especially reprehensible'').
\29\ Yarbrough v. Tower Oldsmobile, Inc., 789 F.2d 508, 514 (7th
Cir. 1986).
\30\ Id. (internal citations omitted).
\31\ Id. (internal citations omitted).
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In sum, it is inappropriate here to amend the EPA, a strict
liability remedial statute that requires no showing of discriminatory
intent, to facilitate the imposition of unlimited punitive and
compensatory damages. It would serve no legitimate purpose, and it
would serve the illegitimate purposes of both turning the EPA into a
lottery for plaintiffs willing to roll the dice to capitalize on likely
legitimate wage differentials and to unjustly enrich plaintiffs'
attorneys.
De Facto Elimination of the ``Factor Other Than Sex'' Affirmative
Defense
Perhaps the most significant substantive revision to the EPA
contained in the Act is found in its re-writing of the ``factor other
than sex'' affirmative defense. If enacted, it would be extremely
onerous, impracticable, and prohibitively expensive for an employer to
defend against a claim that a wage differential existed on the basis of
a factor other than sex.
The EPA's existing factor other than sex affirmative defense was
explained by the EPA's primary sponsor in the House of Representatives,
Representative Charles E. Goodell, back in 1963, as follows:
We want the private enterprise system, employer and employees
and a union . . . to have a maximum degree of discretion in
working out the evaluation of the employee's work and how much
he should be paid for it. . . . Yes, as long as it is not based
on sex. That is the sole factor that we are inserting here as a
restriction.\32\
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\32\ 109 Cong. Rec. 9198 (1963) (statement of Rep. Goodell,
principal exponent of the Act).
Clearly, just as important to the EPA's sponsors of the legislation
as the goal of eliminating sex-based pay differentials was the bedrock
of free enterprise. Given how critical that concept is to the EPA--and
the fundamental importance of the factor other than sex affirmative
defense in achieving it--it is clear that this Act would not actually
``amend'' the EPA. Instead, what the Paycheck Fairness Act seeks to do
is require employers to justify individualized pay decisions on a case-
by-case basis based on vague, but clearly onerous, standards.
Today, the ``factor other than sex'' affirmative defense forms the
crux of the EPA. It provides that, where a wage differential exists,
the employer has not engaged in sex discrimination under the EPA if the
reason for the wage differential is a gender-neutral factor other than
sex.\33\ This affirmative defense enables employers to consider a wide
range of permissible, i.e., non-discriminatory, factors in setting
salaries. For example, employers may consider an applicant's or
employee's education, experience, special skills, seniority, and
expertise, as well as other external factors such as marketplace
conditions, in setting salaries. Although some circuit courts have
attempted to read a ``business justification'' or ``business
necessity'' element into this affirmative defense,\34\ the U.S. Supreme
Court, quite prudently, has never endorsed such a reading and has made
clear that the affirmative defense means what it says--any factor other
than sex.\35\
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\33\ See, e.g., Fallon v. State of Ill., 882 F.2d 1206, 1211-12
(7th Cir. 1989) (ruling that the district court prematurely rejected
the State's asserted affirmative defense that Veterans Service
Officers' requisite war-time veteran status was a factor other than sex
justifying the pay differential).
\34\ See, e.g., Aldrich v. Randolph Cent. Sch. Dist., 963 F.2d 520,
525 (2d Cir. 1992); EEOC v. J.C. Penney Co., Inc., 843 F.2d 249, 253
(6th Cir. 1988); and Glenn v. Gen. Motors Corp., 841 F.2d 1567, 1571
(11th Cir. 1988).
\35\ See Smith v. City of Jackson, 544 U.S. 228, 239 n.11 (2005).
Compare the Second, Third, Sixth, Ninth, and Eleventh Circuits'
application of a ``legitimate business reason'' standard to the Act's
``factor other than sex'' with the Fourth, Seventh, and Eight Circuits'
application of a ``gender neutral test'' requiring the ``factor other
than sex'' to be both facially gender neutral and uniformly applied.
See, Kouba v. AllState Ins. Co., 691 F.2d 783, 876 (9th Cir. 1982) with
Wernsing v. Dep't of Human Servs., 427 F.3d 466, 468 (7th Cir. 2005)
and Taylor v. White, 321 F.3d 710 (8th Cir. 2003) (court noted its
function is not to sit as a ``super personnel department'' and that
inquiring into the reasonableness of an employer's decision would
narrow the exception beyond the plain language of the statute). Smith
v. Leggett Wire Co., 220 F.3d 752, 763 (6th Cir. 2000) (``[I]t is
inappropriate for the judiciary to substitute its judgment for that of
management.''). See also Ptasznik v. St. Joseph Hosp., 464 F.3d 691,
697 (7th Cir. 2006) (holding that courts do not ``sit as super-
personnel department with authority to review an employer's business
decision as to whether someone should be fired or disciplined because
of a work-rule violation.'').
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The Act would effectively eliminate the EPA's factor other than sex
defense. Under the Act, even if an employer proved an applicant's job
experience or education was the factor considered when paying a male
applicant more than a female applicant, the employer faces liability if
it cannot prove paying the male applicant a higher starting wage based
on his greater job experience or education was a business necessity.
In addition, an employer who determines to pay an applicant or an
employee a higher wage based on market forces--i.e. matching a higher
pay offer from a competitor--does so at considerable peril. Under the
Act, payment of a wage rate as a result of a market condition is
unacceptable unless an employer can prove all of the above plus that
the market rate of its competitor is ``not based upon or derived from a
sex-based differential in compensation''. How does a small employer
demonstrate the absence of sex-based discrimination in its competitor's
setting of wages when faced with an imminent decision as to whether to
match the pay rate or lose a valuable employee? The Act provides no
guidance.
And, finally, having passed each of the above hurdles for every
individual wage decision, an employer remains liable for a violation of
the Act, if a plaintiff responds to the job-related, business
necessitated prior job experience, prior training, or education reason
for the higher starting wage rate for the male applicant by
``demonstrat[ing] that an alternative employment practice exists that
would serve the same business purpose without producing such
differential and that the employer has refused to adopt such
alternative practice.''\36\ If an employee demonstrates that an
employer was not required to employ a worker with the most experience
in the business, or has the financial ability to pay all employees in
that position a higher starting wage rate, does the employee satisfy
this burden and eliminate the employer's defense? The Act provides no
guidance.
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\36\ S. 84, 113th Cong. (2013-14).
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Having shown an employer could have adopted another employment
practice instead of paying a male applicant a higher wage rate because
of their greater experience, education or training, the Act seals the
liability of the employer for unlimited compensatory and punitive
damages for paying a male applicant a higher wage rate that was job-
related, consistent with business necessity, and not the result of sex
discrimination, because in retrospect, years later, a jury determined
it could have chosen an alternative employment practice.
If the Act were law, it would be imprudent and highly risky for an
employer to ever reward applicants or employees in a job title for
their individual educational, training, or experience,\37\ without
providing that same reward to all employees in the job, regardless of
their inferior business-related qualifications. Yet, what is the
purpose of compensation? Is it to fairly compensate employees for work
performed as well as to enable employers to attract the skills and
experience necessary to promote the enterprise? The Act looks to the
first concept (though it minimizes the importance of education,
experience and training by saddling any wage payment differential based
on these examples with other prerequisites before they can be used to
justify a wage increase), but ignores the second. By placing an
employer's decision to value intangible skills and experience under a
business necessity test, the Act motivates employers to lean toward
compensation practices of an earlier industrial age where many jobs
were fungible and skills and education were not regarded as valuable.
These concepts have long since been rejected, but the Act will
resurrect them as national policy.
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\37\ For example, under this replacement for the factor other than
sex affirmative defense, an employer who wishes to pay a higher wage to
an employee who has 5 years more experience than another employee may
not be able to do so because a court finds that the differential in
experience could be overcome by in-house training over an extended
period of time. That is a judgment that employers should have an
ability to retain in order to have an effective, efficient workforce
and in order to achieve their own specific business objectives and
priorities.
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As such, the Act places judges and juries in the human resources
offices of American businesses to determine whether sex-neutral factors
were appropriate considerations--and appropriately considered in an
employer's wage-setting decisionmaking. As the Seventh Circuit Court of
Appeals aptly observed with respect to questions of relative job
valuation,
``Our society leaves such decisions to the market, to the
forces of supply and demand, because there are no good answers
to the normative question, or at least no good answers that are
within the competence of judges to give.''\38\
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\38\ Sims-Fingers v. City of Indianapolis, 493 F.3d 768, 771 (7th
Cir. 2007).
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Application of A Disparate Impact Defense to EPA Disparate Treatment
Claim is Inappropriate
Section 3(a) of the Act would alter the ``factor other than sex''
affirmative defense by requiring employers to prove, in order to
counter the presumption of wage discrimination, that the factor
responsible for a wage differential is a bona fide factor other than
sex, job-related, consistent with business necessity, and is not based
upon or derived from a sex-based differential in compensation.
The job-related and consistent with business necessity defense,
however, is an offshoot of disparate impact law under title VII,
intended to address the effects of an employer's neutral policies that
disproportionately impact a protected group.\39\ A helpful key to
explaining the improper application of the business necessity standard
to EPA defendants can be found in the supposition of discrimination
uniquely afforded to the EPA plaintiff. To establish a prima facie case
of disparate impact under title VII, a plaintiff must not only
demonstrate that a disparity exists, but also identify a specific
policy or practice and establish a causal relationship between the
disparity and the policy or practice.\40\ It is in direct response to
this challenged, specific, particular policy or practice identified by
the title VII plaintiff that title VII defendants must demonstrate the
business necessity of the specific practice. In contrast, EPA
plaintiffs are already free from this requirement of specificity, as
EPA claims directly challenge an employer's pay practices based on the
existence of a pay disparity alone.
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\39\ See 42 U.S.C. Sec. 2000e-2(k)(1)(A)(i)-(ii) which provides ``a
complaining party demonstrates that a respondent uses a particular
employment practice that causes a disparate impact on the basis of
race, color, religion, sex, or national origin and the respondent fails
to demonstrate that the challenged practice is job-related for the
position in question and consistent with business necessity or the
complaining party makes the demonstration described in subparagraph (C)
with respect to an alternative employment practice and the respondent
refuses to adopt such alternative employment practice.'' Notably, the
job-related and consistent with business necessity defense was left
undefined in the Civil Rights Act of 1991.
\40\ See 42 U.S.C. Sec. 2000e-2(k)(1)(B)(i), which provides that
``the complaining party shall demonstrate that each particular
challenged employment practice causes a disparate impact . . .''
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Courts have long held that these frameworks are not compatible. In
Wernsing, the Seventh Circuit found that ``[a]n analogy to disparate-
impact litigation under title VII does not justify a ``business
reason'' requirement under the Equal Pay Act, however, because the
Equal Pay Act deals exclusively with disparate treatment. It does not
have a disparate impact component.''\41\ As the Ninth Circuit explained
in Spaulding v. University of Washington:
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\41\ 427 F.3d 466, 469 (7th Cir. 2005). See also Smith v. City of
Jackson, 544 U.S. at 239 n.11 (2005) (noting in EPA, Congress intended
to prohibit all disparate impact claims).
The [disparate impact] model was developed as a form of
pretext analysis to handle specific employment practices not
obviously job-related . . . As the court in Pouncy v.
Prudential Insurance Co. of America, 668 F.2d 795, 800 (5th
Cir. 1982) (Pouncy), made clear: ``[t]he discriminatory impact
model of proof . . . is not, however, the appropriate vehicle
from which to launch a wide ranging attack on the cumulative
effect of a company's employment practices.'' The [Plaintiff-
Appellant] unconvincingly cites cases for the proposition that
``the disparate impact analysis has been applied to wage
discrimination cases.'' They do not involve wide-ranging
allegations challenging general wage policies but rather
challenges to specific employer practices.\42\
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\42\ 740 F. 2d 686 (9th Cir. 1984) (overruled on other grounds).
See also Wards Cove Packing Company, Inc. v. Atonio, 490 U.S. 642, 655-
58 (1989).
Attaching a disparate impact framework onto a disparate treatment
claim is fundamentally illogical, because it removes the intermediary
step of identifying the practice or policy, whose application allegedly
serves as the basis for the assertion of employer discrimination. In
other words, EPA claims challenge pay practices directly rather than
identifying a policy that results in the pay disparity, because under
the EPA, discrimination is presumed to exist once a disparity is shown.
It is important to note that the plain text of Act proposes to
apply the ``bona fide'' determination to factors including education,
training, or experience. And where such tests have been permitted by
courts in pay discrimination cases under title VII, the question has
always pertained to a limited threshold test: whether the non-
discriminatory factor is truly necessary and inseparably intertwined
with the performance of duties and responsibilities of a job. In other
words, title VII applies the business necessity test to questions that
result in a binary answer: either a factor is necessary to job
performance or it is not. For instance, the Griggs court found that a
high school diploma was not necessary to job performance; and it is
from this business necessity showing that courts infer whether
defendants are able to produce explanations that are ``bona fide''
factors, rather than merely a pretext for discrimination that would
exclude certain groups. In that sense, the business necessity test as
established by the Griggs court and applied to title VII claims since
then upholds the equality of opportunity explicitly protected by the
Civil Rights Act and implicitly promised by the principles that have
guided this country since its founding.
In contrast, the Act would now apply standards of job-relatedness
and business necessity to questions that require economic valuations of
an unlimited number of factors. The Act essentially invites employees
and employers to dispute in court whether certain qualifications,
including education, training, or experience, are justifications for
disparities in compensation. In that sense, the Act represents an
unprecedented intrusion of government into the independent business
decisions of private enterprises by eroding the fundamental purpose of
compensation;\43\ in reality, compensation functions not only as a
means to remunerate employees for work performed, but also to enable
employers to attract the skills and experience likely to promote the
competitiveness of the enterprise. In contrast to its usage in title
VII and ADA claims, the business necessity test as applied by the
amended EPA would sacrifice the autonomy of private enterprise because
the statute uniquely presumes discrimination merely on the basis of
unequal outcomes.
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\43\ The Act's business necessity test takes standards of rigor
designed to measure and justify the impact of a specific policy to bar
certain groups from access to employment and impose the same standards
on individualized compensation decisions. As such, the Act improperly
thrusts onto the judiciary an untold number of fact-finding exercises
with respect to whether certain qualifications result in incremental
performance gains that justify the challenged pay differential. For
example, if a law degree is not necessary to the performance of duties
and responsibilities of a policy analyst, title VII will provide
appropriate protection if it is used as an inappropriate barrier to
employment. However, application of the Act would place members of this
legislative body at risk for unlimited damages for paying a higher
salary to a male analyst with a law degree as well as a Master of
Public Policy degree in comparison with a female analyst without a law
degree. In response, the hypothetical defendant would bear the burden
of showing that the second degree is indeed a bona fide factor that
justifies added compensation, and would face the risk of a judicial
body determining otherwise, or determining that, even if so, there was
another employment decision that could have been made that would lead
to a lesser pay differential between the two policy analysts (i.e.,
paying both the same pay regardless of the fact one had different
qualifications). However, the Act invites such disputes into
courtrooms, forcing the judiciary to weigh the merits of the economic
judgments of employers.
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The EPA's Collective Action Mechanism in Section 216(b) Should Not be
Amended to Incorporate Fed. R. Civ. P. 23
Section 3(c)(4) of the Act allows an action brought to enforce
section 6(d) to be maintained as a class action under the Federal Rules
of Civil Procedure. Like multi-plaintiff actions under the FLSA and the
ADEA, EPA actions brought by women on behalf of themselves and others
similarly situated under the collective action mechanism of section
216(b) require interested parties to file with the court a consent that
they wish to ``opt-in'' to the case before becoming part of the action,
including before becoming affirmatively bound by any adverse rulings
against the employees' interests adjudicated in the case. FLSA, ADEA,
and EPA collective actions, as they are known under section 216(b),
provide employees with a generally more lenient standard with respect
to a plaintiff 's initial showing of being similarly situated to fellow
employees than that required under Federal Rule of Civil Procedure
23(a), which is applicable to class actions sought under title VII, and
proposed by the proponents of the Paycheck Fairness Act as the
applicable new class action mechanism to apply to EPA claims. The
Chamber submits that the Act's proponents have not articulated a
compelling reason for any change in the current collective action
mechanism available to plaintiffs under the EPA.
Under Rule 23, to bring a class action a plaintiff must first meet
all of the ``strict requirements'' of Rule 23(a) and at least one of
the alternative requirements of Rule 23(b). Under Rule 23(a) a
plaintiff must show: the class is too numerous to join all members;
there exist common questions of law or fact; the claims or defenses of
representative parties are typical of those of the class members; and
the representative parties will fairly and adequately represent the
class. Once these requirements are satisfied, a plaintiff must also
satisfy one of the subsections of Rule 23(b). Rule 23(b) requires that
a plaintiff show either: that prosecution of individual actions would
result in inconsistent holdings or that adjudications would be
dispositive of the interests of those not named in the lawsuit, that
the party opposing the class has acted on grounds applicable to the
entire class making relief appropriate for the class as a whole, or
that questions of law or fact common to the members of the class
predominate over questions affecting only the individual members of the
class and that certification is superior to other available methods for
fairness and efficiency purposes. When conducting the required analysis
under Rule 23, courts must perform a ``rigorous analysis'' of plaintiff
's ability to meet each of Rule 23's requirements.\44\
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\44\ See e.g., Rhodes v. Cracker Barrel Old Country Store, Inc.,
213 F.R.D. 619, 671 (N.D. Ga. 2003).
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Conversely, under section 216(b), while some courts use the Rule 23
approach to the extent those elements do not conflict with section 216
(such as numerosity, commonality, typicality and adequacy of
representation), many courts use a less stringent standard, requiring
plaintiff to show only that she is similarly situated to other
employees.\45\ The similarly situated requirement is met through
allegations and evidence of class wide discrimination. Courts generally
apply a lenient standard to conditional certification of an EPA claim.
A person is considered a member of a collective action under section
216(b) and is bound by and will benefit from any court judgment upon
merely filing a written consent with the court and affirmatively
``opting into'' the suit. This requirement was added to collective
actions under section 216(b) to ensure that a defendant would not be
surprised by their testimony or evidence at trial.\46\
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\45\ See Hipp v. Liberty Nat'l Life Ins. Co., 252 F.3d 1208, 1217
(11th Cir. 2001) (at the notice stage, the court makes a decision using
a fairly lenient standard that typically results in ``conditional
certification'' of a collective or representative action); Grayson v.
K-Mart Corp., 79 F.3d 1086 (11th Cir. 1996); Garza v. Chicago Transit
Auth., No. 00 C 0438, 2001 U.S. Dist. LEXIS 6132, at *5 (N.D. Ill.
2001) (citing Woods v. New York Life Ins. Co., 686 F.2d 578 (7th Cir.
1982)).
\46\ Portal-to-Portal Pay Act, 29 U.S.C. Sec. 256(b); Allen v. Atl.
Richfield Co., 724 F.2d 1131, 1134 (5th Cir. 1984).
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Courts regularly face and grant requests to certify both Federal
Rule of Civil Procedure 23(a) class actions alleging wage disparity
based on sex, as well as Rule 216(b) collective actions under the
EPA.\47\ When faced by facts presenting a close call as to whether a
purported class of workers is similarly situated under the EPA's
section 216(b) and title VII's Rule 23 mechanisms, and otherwise
appropriate for mass action treatment, it is generally the EPA
collective claim that survives opposition to a motion to certify a
class alleging sex discrimination in pay.\48\ The reason is clear--
section 216(b) contains a more lenient standard for a plaintiff who is
attempting to bring a claim on behalf of herself and other similarly-
situated women for unequal pay. Specifically, it is viewed by many
courts as encompassing a more liberal standard for conditional
certification relative to Rule 23. For all of these reasons, the
Chamber submits that this collective action mechanism should not be
amended to conform to Rule 23 requirements as proposed by the Paycheck
Fairness Act.
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\47\ See, e.g., Jarvaise v. Rand Corp., No. 96-2680 (RWR), 2002
U.S. Dist. LEXIS 6096, at *5 (D.C.C. Feb. 19, 2002) (class
certification granted under EPA and title VII to all female employees
in exempt positions who did not make compensation decisions); Garner v.
G.D. Searle Pharm. & Co., 802 F. Supp. 418, 422-24 (M.D. Ala. 1991)
(EPA collective action motion granted on behalf of female medical sales
representatives).
\48\ See, e.g., Rochlin v. Cincinnati Insurance Co., No. IP 00-
1898-C H/K, 2003 U.S. Dist. LEXIS 13759, at *49-51, 64 (S.D. Ind. July
8, 2003) (Rule 23 class certification of sex discrimination in pay
claim denied, but section 16(b) collection action claim allowed to
proceed as a class action as the standard is more lenient under the
EPA).
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Other Concerns
In addition to the concerns discussed above, the Act raises other
serious concerns. Some of those concerns are noted below:
Reinstatement of The EO Survey
Section 9(b)(3) of the Act reinstates the EO Survey, originally
adopted in late 2000 for the primary purpose of effectively targeting
OFCCP compliance review resources pursuant to Executive Order
11246,\49\ However, the EO Survey was a flawed tool as it failed to
accurately target contractors whose pay practices were either compliant
or noncompliant. Indeed, in April 2000, Bendick and Eagan Economic
Consultants Inc. reported serious concerns to the OFCCP regarding the
results of the pilot program and recommended that the survey be
validated before implementation.\50\ The OFCCP failed to conduct the
recommended study.\51\ In 2002, OFCCP contracted with Abt Associates to
evaluate the reliability and usefulness of the EO Survey.\52\ Abt
determined that the EO Survey's predictive power was only slightly
better than chance, with a false positive rate (identifying compliant
contractors as non-compliant) of 93 percent and a high rate of
classifying true discriminators as non-discriminators.\53\ Based on the
EO Survey's limited reliability, the Department of Labor rescinded the
EO Survey in 2006.\54\
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\49\ The stated objectives of the EO Survey were ``(1) To improve
the deployment of scarce Federal Government resources toward
contractors most likely to be out of compliance; (2) To increase agency
efficiency by building on the tiered-review process already
accomplished by OFCCP's regulatory reform efforts thereby allowing
better resource allocation; and (3) To increase compliance with equal
opportunity requirements by improving contractor self-awareness and
encourage self-evaluations.'' Affirmative Action and Nondiscrimination
Obligations of Contractors and Subcontractors, 65 Fed. Reg. 68,039
(Nov. 13, 2000).
\50\ Affirmative Action and Nondiscrimination Obligations of
Contractors and Subcontractors, 71 Fed. Reg. 53,033 (Sept. 8, 2006).
\51\ Id.
\52\ Id.
\53\ Id.
\54\ Id.
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Data Collection Requirements and Regulations
In 2010, the EEOC requested that the National Academy of Sciences
convene a panel to review methods for measuring and collecting pay
information by gender, race and national origin.\55\ The panel
concluded that collecting earnings data would be a significant
undertaking for the EEOC and a potential increased burden for
employers.\56\ The panel also found that the EEOC had ``no clearly
articulated plan of how the data on wages could be used in the conduct
of enforcement responsibilities of the relevant agencies.''\57\ In
addition, the panel determined that existing studies of the cost
effectiveness of an instrument for collecting wage data and the
resulting burden [were] inadequate to assess any new program.''\58\
Given the real budgetary and personnel constraints facing the EEOC and
the current backlog of pending investigations, simply adding a
requirement to adopt regulations and collect data is unwise. The EEOC
simply does not have the personnel or the expertise in analyzing this
data.
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\55\ See Panel On Measuring And Collecting Pay Information From
U.S. Employers By Gender, Race, And National Origin et Al., Collecting
Compensation Data From Employers, (National Academies Press 2013).
\56\ Id. at 2.
\57\ Id.
\58\ Id.
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OFCCP Program Initiatives
Under the innocuous title ``Reinstatement of Pay Equity Programs
and Pay Equity Data Collection,'' Section 9 of the Act instructs the
Director of the OFCCP to ensure that OFCCP employees, among other
things, use a full range of investigatory tools and not to require a
multiple regression analysis or anecdotal evidence in a compensation
discrimination case. In 2006, the OFCCP adopted two enforcement
guidance documents, commonly known as the ``Compensation Standards''
and ``Voluntary Guidelines.'' Among other items, the Compensation
Standards only compared ``similarly situated individuals,'' required
OFCCP to use multiple regression analysis, and required that
statistical showings be supported with anecdotal evidence of
discrimination. Effective February 29, 2013, the OFCCP rescinded these
common sense guidelines.
Two provisions are worth particular note: the provisions relating
to the agency's analysis of systematic compensation discrimination and
the provisions targeted toward surveying the Federal contractor
community.\59\
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\59\ A full discussion of these issues is beyond the scope of this
testimony. Extensive comment by the Chamber on related issues is
available on the Chamber's Web site at: www.uschamber
.com.
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Section 9 of the Act appears to be designed to statutorily mandate
that the OFCCP refrain from requiring the adoption of multiple
regression analysis or anecdotal evidence for a compensation
discrimination case, among other things. Notwithstanding that the OFCCP
recently rescinded the above-noted 2006 Compensation Standards and
Voluntary Guidelines, the Chamber opposes the utilization of pay grade
analysis as a method for proving that systemic compensation
discrimination exists for one very simple reason: it doesn't work.
Assuming individuals in the same pay ``band'' are similarly situated is
simply too crude a statistical tool. Multiple regression analysis, on
the other hand, is the widely accepted method by which plaintiffs and
defendants make their case. Robust statistical tools like this are
necessary to analyze the many factors that determine compensation and
determine whether pay differentials are due to discrimination or some
other factor. Statistical techniques will result in the OFCCP alleging
discrimination more frequently, without adequate proof, forcing
employers to unnecessarily incur legal costs and wasting OFCCP's
resources. One perverse result of making such a change will be that
employers will choose to settle with OFCCP based on such an inadequate
statistical analysis would open themselves up to charges of reverse
discrimination under title VII or State law.\60\
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\60\ See 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 and that there was a manifest
imbalance in faculty salaries.''); see also Rudebusch v. Hughes, 313
F.3d 506, 515-16 (9th Cir. 2002) (reverse discrimination case based on
allegedly insufficient multiple regression analysis, ultimately
resulted in a ruling requiring the employer to pay male faculty members
$1.4 million); Smith v. Virginia Commonwealth Univ., 84 F.3d 672, 676-
77 (4th Cir. 1996) (reverse discrimination claim based on inadequate
multiple regression analysis).
---------------------------------------------------------------------------
Section 9(b)(3) appears to statutorily mandate the OFCCP equal
opportunity survey. It should be noted that the OFCCP's survey, which
was intended to help identify Federal contractors that should be
audited by the OFCCP, was substantively flawed, failed to serve as a
useful enforcement tool of the agency, and placed a significant,
unnecessary burden on contractors. Years ago, a neutral study of the
survey was conducted by Abt Associates as part of the OFCCP's review of
the survey. That study conclusively demonstrated that the survey
provided no useful data and was extremely burdensome (with a
conservative estimate that the study cost contractors approximately $6
million per year). Imposing this burden, which has been proven to do
nothing to help identify or eradicate discrimination, on the Federal
contractor community cannot be justified.
Permitted Inquiries About Wages
Section 3(c) of the Act appears to provide an unprecedented broad
right to employees under the EPA. Employees would have the right to
``inquire about wages of the employee or another employee . . .''
without fear of any adverse action by an employer. The new right does
not appear to be narrowed in any way by relevancy to the employee's pay
or by confidentiality concerns of an employer. This language goes far
beyond any rights enjoyed by non-unionized and unionized employees
under the National Labor Relations Act (``NLRA'').
For example, under the NLRA, non-unionized employees have the right
to discuss their own wages with other employees, but do not otherwise
have the right to obtain written documentation about the wages of any
other employees. Although unionized employees, as part of an employer's
duty to bargain in good faith, have the right to inquire about wage
information for bargaining purposes, this right is not without
boundaries and not without safeguards. In International Business
Machines Corp. and Hudson, the National Labor Relations Board
(``NLRB'') held that employees could discuss their own wages with each
other, but could not access or distribute company-compiled information
as the company had a valid business justification for its rule against
distribution of wage data compiled and classified as confidential.\61\
Instead, the NLRB explained that the employer had a valid business
justification for discharging an employee who disclosed wage
information in violation of the company's rule. In contrast, here, the
Paycheck Fairness Act provides an open door for an employee's inquiries
in the wages of all employees, without any balancing of an employer's
need for confidentiality and other legitimate concerns.
---------------------------------------------------------------------------
\61\ 265 NLRB 638 (1982).
---------------------------------------------------------------------------
New Definition of ``Establishment''
Section 3(a) of the Act appears to redefine and expand the
definition of equal work, by amending the EPA to allow an employee to
raise a claim of denial of equal pay for equal work if the inequality
between men and women pay exists between men and women who work at
different physical places of business within the company. Currently, in
keeping with the EPA's prohibition against denying employees equal pay
for equal work because of their sex, the EPA requires an employee to
compare their wages earned against other employees within the physical
place of business in which they work. According to the Regulations
issued by EEOC to construe the EPA, ``establishment'' ``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.''\62\ We urge the committee to
consider the difficulty and impropriety of comparing jobs across
locations and geographical regions in determining whether equal pay is
being paid for equal work, and reject the unworkable proposal contained
within the Act.
---------------------------------------------------------------------------
\62\ 29 CFR Sec. 1620.9(a).
---------------------------------------------------------------------------
conclusion
In conclusion, the Chamber has serious concerns with the Paycheck
Fairness Act. Mr. Chairman and members of the committee, we thank you
for the opportunity to share some of those concerns with you today.
Please do not hesitate to contact me or the Chamber's Labor,
Immigration, and Employee Benefits Division, if we can be of further
assistance in this matter.
Senator Mikulski. That was all excellent testimony and very
content rich, each one, with either these compelling personal
stories and the information. The way we're going to proceed
here is in the order of arrival. Often, in the old days, the
seniority people--we're going to make equal attendance here or
something.
I note that the very first person to come was Senator
Alexander. Ordinarily, I would go first, but I was one of the
latest arrivals. I will be the last person. I'll be the wrap-up
questioner. I'm going to turn to Senator Alexander. Then it's
Senators Warren, Baldwin, and Casey.
Murray, Franken, and Murphy have left but will come back.
Should they not come back, their full statements will go into
the record, and any questions they might have for the record
will be in.
Senator Alexander, if there are any members of your side of
the aisle that wish to submit statements or questions, we would
also welcome those for the record as well. So I will turn to
you now, sir.
Senator Alexander. Thank you, Madam Chairman. I want to say
what is obvious. I appreciate the firm and the fair way that
the Senator from Maryland chairs a hearing, and I enjoyed
working with her on the Child Care Block Grant last week. Those
watching might notice the ideological differences that are
here. I would say that the HELP Committee produces more
legislation than anybody else, despite that, because we know
how to work together to get a result when we can do that.
We're hoping that the Appropriations Committee beats us
this year when Chairman Mikulski passes all 12 appropriations
bills on the Senate floor, which I want to help her do. So
that's what we're looking forward to.
Ms. Olson, you did a good job of pointing out that for 50
years, Equal Pay for Equal Work has been the law. Actually,
there's been two laws. The one that we're not touching is Title
VII of the Civil Rights Act. And there are lots of different
ways that a person who feels aggrieved may go forward with a
lawsuit, damages that can be collected, back pay that can be
collected. In the case of Title VII of the Civil Rights Act,
you can go to EEOC, and they may do your legal work for you.
So it's the law, and you can sue, and you can go both to
the Federal agency and to the courts. So that's already in the
law. You made a strong point of something that I was talking
about, which is what the proposed change here does to
flexibility for employees in the workplace.
For example, let's say you have a dry cleaner with six
people, and there are three night shifts and 3 day shifts.
There's a manager and six people, and three night shifts and 3
day shifts, or three later shifts and three earlier shifts. And
three of the employees have young children, and they say,
``We'd like the flexibility of more time off or more
flexibility in our schedule.'' Could you pay some men different
than some women based upon a flexible work schedule in the new
regime set up by the so-called Paycheck Fairness Act?
Ms. Olson. An employer who does so risks, under the
Paycheck Fairness Act, unlimited compensatory and punitive
damages if they're not able to show it was a business
necessity.
Senator Alexander. He'd have to show the cleaner couldn't
operate well unless he did that.
Ms. Olson. That it would have been--you're exactly right,
Senator.
Senator Alexander. And then assuming he could do that under
this law, then the other side, whoever is doing the suing,
could come in and say, ``Well, but I can think of a way that
you could have done it.'' That's the alternative employment
plan. Is that correct?
Ms. Olson. Right. And the other way is, ``You could have
just raised all of our pay by a dollar,'' unless to do so, you
would go bankrupt.
Senator Alexander. Well, let me go to a school. I assume
this would apply to schools. Is that right?
Ms. Olson. Yes.
Senator Alexander. Let's say a principal wanted to inspire
girls to go into math and science, and in order to attract
outstanding female teachers, he had to pay them more than the
men. Could he do that?
Ms. Olson. Under this act, the answer is no. Both males and
females can raise a claim under the Equal Pay Act. And, again,
any difference that is paid that is different than the minimum
amount that you paid someone else of another sex, you've got to
be able to justify by business necessity. And you've got to be
able to show, even if it was a business necessity, that you
didn't have the ability to pay everybody the higher rate.
Senator Alexander. Is the employer in a school situation
the school district, or is it the principal of a particular
school?
Ms. Olson. The employer is generally the school district.
Senator Alexander. So what if there was a school in a rough
section of town and a school in an upscale section of town, and
you wanted to pay men in the rough section of town a higher
wage and women teachers less in the upscale section of town?
Would that be a business necessity under the new rule? Would
that be difficult to do?
Ms. Olson. The way this new act would roll out is before an
employer determined to pay extra for that particular reason,
that difference in the job, the employer would be required to
prove that it was a business necessity, that they couldn't
otherwise get individuals at the lower rate of pay.
Senator Alexander. My time is about up. I think you've made
an excellent point of pointing out how existing law makes it
clear that if an employer pays a female less than a male
counterpart and a male less than a female for the same work,
that's against the Federal law, and there are plenty of
opportunities to redress that, and that this would expand
litigation. But please make any comment you could about the
effect this might have on the ability of an employer to be more
flexible in recognizing different circumstances among
employees.
Ms. Olson. What this really does is it eliminates an
employer's consideration of the marketplace. It eliminates an
employer's consideration of different qualifications between
individuals in the same job.
For example, if a female applicant meets the minimum
qualifications for an applicant, but a male applicant actually
meets the minimum qualifications but let's just say has 2 years
more experience and 2 years more training, to pay that male
employee more--and if that male applicant says, ``I won't take
the job unless I'm paid an extra 50 cents. That's what I'm paid
an hour more at my current job--the employer would have to show
that that was a business necessity to employ that individual,
and that, in fact, their valuation of the value of those
enhanced qualifications that are described of that new
applicant are such that they were appropriate under the law.
And even if so, again, a plaintiff could erase the defense
and hold the employer liable under the Paycheck Fairness Act if
the plaintiff can show that you had the money to increase
others, even though they didn't have the same qualifications,
to that same rate of pay in the job.
Senator Alexander. Thank you, Madam Chairman.
Senator Mikulski. Senator Warren.
Statement of Senator Warren
Senator Warren. Thank you, Madam Chair, and thank you for
holding this hearing. I can't believe we're debating equal pay
for equal work in 2014. I just really can't believe this. Women
still only earn 77 cents for every dollar a man earns, and some
women can be fired for asking the guy across the hall how much
money he makes. So what I'd like to ask about today is a little
bit more about the defense that employers have under the
current law and what's proposed under Paycheck Fairness.
So if I could, could I start with you, Professor Eisenberg?
Could you just talk a little bit more about the current law and
how some employers are using the factor-other-than-sex defense
under today's law?
Ms. Eisenberg. Certainly. That's a great question. You
know, the current law allows--I just want you to keep in mind
that the first threshold that plaintiffs need to prove is that
the jobs in question are equal in terms of skill,
responsibility, and effort. And then the burden shifts to the
employer to disprove discriminatory intent by showing the
actual reason for the pay disparity.
So one of those--the catch-all factor other than sex, as
currently interpreted by a majority of courts, is still in a
majority of courts supposed to be job and business related. So
this proposal in the Paycheck Fairness Act is codifying that
majority view.
Senator Warren. So in a majority of courts, there's no
change at all in the law in that fundamental sense----
Ms. Eisenberg. That's right.
Senator Warren [continuing]. Other than a woman can now
ask, and she will be protected and can't be fired for asking
what the guys make.
Ms. Eisenberg. That's right.
Senator Warren. But, please, there'll be some change in
some courts.
Ms. Eisenberg. There'll be some--two Federal circuits, the
Seventh Circuit and the Eighth Circuit Court of Appeals, have
interpreted the factor other than sex to really mean anything
under the sun, even if it doesn't relate to the qualifications
of the two employees in that job or to a business-related
reason.
Let me give you two examples. One common factor other than
sex that is accepted by some courts but rejected by others is
the happenstance of prior salaries. So if a woman and a man are
coming to the exact same job, and a woman is coming from a
prior employer where her salary happened to be lower, but she
is equally as qualified, and a man is coming from a different
job where his salary happened to be higher, they will be paid
based on their prior salaries rather than their comparable
qualifications and the fact that they're doing comparable work.
Senator Warren. So if she had been discriminated against in
the past, that can now be a defense for discriminating against
her in the present and in the future.
Ms. Eisenberg. Absolutely. It perpetuates the very
discrimination that the Equal Pay Act was supposed to address.
And the other thing that I've seen in some cases--and, again,
there's a split among courts--is this so-called market forces
argument. In some cases, if the employer is able to show actual
market compensation data on which the employer relied, then
that is accepted by courts.
Some courts, however, have accepted sort of vague and
illusory defenses that this is required by the market. And upon
closer examination of actual market data, the men are being
paid above market rates, and the women are being paid below
market rates. I've had that in cases that I've litigated.
The other thing as far as the market forces defense is that
sometimes it's sort of just a subjective value judgment, sort
of a subjective hunch on the part of a supervisor. It's not
really any sort of objective market data that they're referring
to.
Senator Warren. So just so I'm sure that I understand this,
kind of the basic things we talk about, about differences in
how employees get paid, like seniority, merit, the quality of
your work, a different job description where you have perhaps
more flexible hours in your job than someone else does--would
those under Paycheck Fairness be legitimate grounds for paying
someone differently?
Ms. Eisenberg. Absolutely. And even in the majority of
circuits that have already adopted the job-related and
business-related standard that the Paycheck Fairness Act
codifies, those defenses are allowed, and they've been
accepted. So this does not change that at all.
Senator Warren. Thank you very much. I just want to
remember that women earn less than men in nearly every
occupation, and that today, in 99.6 percent of all occupations,
men are earning more than women. That's not an accident. That's
discrimination, and women are tired of it. What this bill does
is gives us a chance to fight back.
Thank you, Dr. Eisenberg.
Senator Mikulski. Senator Baldwin.
Statement of Senator Baldwin
Senator Baldwin. Thank you. I want to pick up where Senator
Warren just left off. When I graduated from college, I had the
opportunity to work on a study of the issue of comparable
worth, somewhat distinguishable from equal pay for equal work,
where you look at comparable--is there comparable pay for
comparable work. And why would one undertake such an inquiry?
We don't always have pay inequities that exist from people
working side by side. I've often walked into a private sector
setting where, say, I've taken a tour, and one part of the
facility has a female dominated workforce doing similar things,
maybe 80 percent or 90 percent female, and then there might be
another part of the job where it's 50-50 in the workforce, and
then you might see another part of the operation where it's
predominantly males engaged.
The State of Wisconsin in the mid-1980s decided to sort of
ask the question in State government service: How do so-called
pink collar jobs compare to others. And they started doing, I
think, stealing from the private sector, as Ms. Olson was
talking about, a valuation of the range that certain
occupations ought to pay based on not the future incumbent in
that position, but things like degree of academic preparation
required for the job and the skill set required and how many
people you supervise, if any at all, and the consequence of
making a mistake or an error. You know, does somebody die when
you make a mistake? Does somebody get harmed? Is somebody
denied justice? And what are the consequences of certain
mistakes?
And what they found in studying female-dominated positions
versus male-dominated positions is that there was an
unexplained pay gap. It was just--you compare all of that data
collected, and there was just this element that wasn't
explained by anything except the gender of the predominant
incumbents in these positions.
It's proven a really difficult issue to rid our society of
that. I can't remember the exact quote, but I think Margaret
Mead was talking about that half a century ago in a very
different place in the world, how we value work done by men
versus by women.
So I'm really pleased, Madam Chairwoman, that we're
pursuing this, that we will be fighting to pass this
legislation. And I guess I do have a question about the warning
we hear often from those who oppose this legislation that it
may open the doors for a flood of litigation. I think my own
State provides a bit of an example.
Professor Eisenberg, I don't know if you have state-by-
state reviews, et cetera, but we had an equal pay law, more
like a paycheck protection act, and it was recently repealed,
regrettably, in the State. Our Governor led a repeal effort,
and it was repealed in 2012. I thought it was a real step
backward.
But they repealed it. And, in part, the debate surrounded
the potential flood of litigation. It had been in effect for
some years, and there was just no record to suggest that.
Professor Eisenberg, could you respond to that set of
arguments?
Ms. Eisenberg. That's a great question. I'm proud to say my
own home State of Maryland has an Equal Pay Act, and I should
say that there's no catch-all factor-other-than-sex defense.
It's very strict, actually. Seniority, merit, ability, skill--
an enumerated list, and also has a class action procedural
availability, and very few cases are ever filed, even under the
Maryland Equal Pay Act.
I think something to keep in mind is that it is very
difficult to come forward and sue an employer. It could be
career suicide. It takes an enormous psychological toll. So
what this act really does is give women some more leverage
about their rights so that, hopefully, they can take that to
the employer and advocate for themselves and nip it in the bud.
I've also done a study of every Equal Pay Act case in the
Federal district courts from 2000 to 2011 that made it to a
summary judgment decision in the court. I found that there were
only 50 cases, about 50 cases per year, on average, for each of
those 11 years. That's an average of one per State. So there
already is not a lot of Equal Pay Act litigation out there.
I don't see that this is going to open the flood gates.
Perhaps more cases will make it past summary judgments. There
is an enormous problem right now in the Federal courts with
summary judgment and the real impact that summary judgment has
that's sort of stopping cases at the starting gate. They don't
make it to juries.
About half of Equal Pay Act cases are dismissed based on
the prima facie standard, the equal work standard, and of those
cases that remain, the remaining half have been dismissed on
summary judgment based on the factor-other-than-sex defense. So
only about one-third are sort of sneaking past and actually
making it to a merits decision in front of a jury.
Senator Baldwin. Thank you.
Senator Mikulski. Excellent questions.
Professor Eisenberg, I have a question for you, and then
I'll have some for the others. There are those who say we
really don't need this bill. What we need is better enforcement
of the existing legislation. There are those who say, ``Who
wants to discriminate? That's just not America. That's just not
fair.'' So they say we already have the Equal Pay Act, we
already have title VI, and we just need to enforce those laws
better.
What do you think about that from the perspective of a law
professor who has really studied this?
Ms. Eisenberg. I've spent a lot of time reviewing sort of
the State of women's wages in the modern economy. What is so
alarming to me is that if you dig deeper, beyond sort of the
aggregate pay gap statistic, it becomes even more alarming when
you compare occupation to occupation. So women in every
occupational category experience a wage gap. Although women are
becoming better educated, the gap widens as they get more
education.
The myth that the aggregate wage gap is because more women
work part-time isn't true, because the aggregate statistic only
includes full-time, year-round workers, not part-time workers.
And, in fact, part-time women earn more than their part-time
counterparts, because more men in the part-time sector tend to
be younger and at the beginning of their careers. The
statistics also show that if women work harder, the gap doesn't
go away. The wage gap----
Senator Mikulski. What does that have to--I appreciate that
data. What I asked----
Ms. Eisenberg. Is discrimination real?
Senator Mikulski. No, I didn't ask if discrimination is
real. I asked do we need this law, or do we need to simply
enforce--not simply--enforce the Equal Pay Act or title VII and
really fully fund the EEOC, which, by the way, was hit by
sequester, was hit by slam-down shut-down. They have a
tremendous backlog in their cases. So is the law necessary when
we have these two other laws on the books?
Ms. Eisenberg. I would agree with you that the EEOC is
under-resourced and under-staffed, so that would be a big help.
We do need the Paycheck Fairness Act, and what is so important
about this law is that it deals with some of the deficiencies
in the current remedy. It allows for a fuller remedy for all of
the multiple harms of pay discrimination.
Right now, for employers, it's sort of a cost of doing
business. If the wage disparity is discovered, then they pay
the amount of the wage and maybe liquidated damages under the
Equal Pay Act. So this will give a fuller remedy, which is very
important. My research has shown that the Equal Pay Act is not
working very well, that most women who exercise their rights
under this law are not able to get a remedy.
As far as title VII, title VII is a very difficult law for
pay discrimination because of its requirement of intent,
intentional discrimination. And I should say that the myth that
the Equal Pay Act does not involve intent is actually not true.
It's just that the intent is examined at the affirmative
defense stage. And the employer bears that burden, because the
employer has a monopoly on the information about how these
wages were set.
Senator Mikulski. A monopoly on the information.
Ms. Eisenberg. Exactly.
Senator Mikulski. Thank you very much.
I'd like to turn to Ms. Young. It sounds like you had a
wonderful father and a pretty terrific mother for you to have
such a verve and vitality and this sense of entrepreneurship.
This is what makes America great, initiative, enterprise, and
so on. We come from a family of small businesses, too. My
father started a small grocery store. So I can appreciate, you
know, fathers saying, ``Up and at `em, girl,'' you know.
But let's talk about the real world. You have small
businesses that I know have to operate close to the margin. One
of the things we say is, you know, ``Senators, get real.
Understand the real world and the market.'' So here's my
question, Ms. Young. When you stepped in and, as you say, you
took that bold action when your dad was running the show.
Ms. Young. Right.
Senator Mikulski. Was this negative in terms of the bottom
line? In other words, what was the impact? Most people would
say if they did what you did, your father would want a walk in
the woodshed or the equivalent, and the second would be that it
would really pull down the earnings.
So what happened when you did that? You talked about the
dynamics with your dad. Let's talk about the dynamics of the
business.
Ms. Young. Sure. When I did that, it truly did increase the
morale of the women who were working there. The turnover for
our women workers is next to none. It did not affect our bottom
line, and the companies are still profitable. There was no
negative effect of me doing that.
Senator Mikulski. So that's pretty significant.
Ms. Young. Right.
Senator Mikulski. That's a very interesting point.
Ms. Olson, I'd like to turn to you and your very content-
rich presentation. But my question is: Is the Chamber opposed
to the bill totally? Or if the bill was amended and so on, the
Chamber would consider passing it? Do you have suggestions for
amendments or kind of--where are you?
Ms. Olson. Thank you very much for your question.
Senator Mikulski. Are you a flat no? Or are you a let's see
what we can really do here?
Ms. Olson. Thank you very much for your question, Senator
Mikulski. The answer to----
Senator Mikulski. And that's not in any way a negative
question.
Ms. Olson. I understand. The answer to it is the Chamber is
very much opposed to the three significant concerns that were
raised today. And I want to make a point, if I may, because I
think this one is very important.
With respect to the issue of the revision to the factor
other than sex, the Paycheck Fairness Act does not track the
majority of circuits that have described the factor other than
sex as the articulation of a legitimate business reason. That
is a far different standard than the standard that has been
proposed in this act.
To your question, the answer is there is no question that
the Chamber would welcome the opportunity to work with yourself
and Senator Alexander with respect to the issues that we're
discussing today.
Senator Mikulski. Very good. My time is up.
Senator Alexander, do you have any other questions? Does
anybody else have any?
Senator Alexander. I could ask just one.
Senator Mikulski. Sure.
Senator Alexander. It seems to me that this is--and I thank
all of the witnesses for coming. I spent a lot of time in
Waterloo several years ago, and it's a lovely town in Iowa.
The law already is equal pay for equal work. That's the
law, and there are already remedies for it. This bill seems to
me, Ms. Olson, to be more of a proposal, as was said, about a
different remedy, and in the view of those who support it, a
more effective remedy. But it's about, in effect, more
litigation, more opportunities for lawyers to represent people
who feel they're aggrieved and have a chance to assert their
claims.
Let's take an example, and let me understand exactly how--
the laws that now exist apply to every business, right? As long
as you've got two employees, and one is a man and one is a
woman, you're covered by this. Is that right?
Ms. Olson. Correct.
Senator Alexander. And there's strict liability, which
means you don't have to prove intent. All you have to prove is
the fact that the woman made more than the man for the same
work or vice versa, and you've got a----
Ms. Olson. A prima facie case.
Senator Alexander [continuing]. A violation of the law.
Ms. Olson. Correct.
Senator Alexander. And the way it is today, you can have a
defense, which has been variously described here, but it gives
the employer some room to present a justification for that.
Under the proposed change, take me through exactly what would
have to happen with a specific example of a man and a women.
And let's take an example of where the man is being paid less
than the woman in this case, because this law is not just about
women. It's about men and women.
Ms. Olson. Correct. An employer would have to prove--it has
the burden of proof under the law whenever there's a difference
in pay--that the woman was being paid more because of a factor
other than sex, such as a qualification, an advanced degree,
let's say, or more experience, and not just that that was the
reason, but that using that reason was a business necessity,
which is a very high standard. Courts have described business
necessity as the employer being required to hire that
particular employee to perform the job with those requirements
to be able to sustain it.
Once an employer is able to sustain that, if it is a
business necessity to pay the woman an additional dollar, let's
say, because of her higher qualifications, the man could still
prevail in the case if the man was able to show that it
wouldn't be impossible for that business, that the business
would survive, and it wouldn't be cost prohibitive to raise his
pay as well, even though he would admit he didn't have that
same qualification.
Senator Alexander. Do you believe that the provision in the
proposed Paycheck Fairness Act to allow for unlimited
compensatory and punitive damages for claims and to allow class
actions to be brought on behalf of an employee, whether the
employee knows it or not, giving the employee an opportunity to
opt out--do you believe that those proposed changes would
increase litigation significantly?
Ms. Olson. There's no question it would increase
litigation, and not only increase it, but prolong it, because
there's an open-ended high top in terms of what the value of
that claim is. You can't value it anymore based on what the
economic damages are, or a limit on compensatory or punitive--
like under title VII. It's limitless.
I think that there's no question that the issue of moving
from the collective action to the Rule 23 context, which would
be different than every other class case that's brought under
the Fair Labor Standards Act, which the Equal Pay Act is part
of, would do one thing. It would make it harder, necessarily,
to necessarily certify a claim, but it would allow plaintiff 's
class action lawyers to have much bigger claims, because it's
not the people who are sending in their written consent,
saying, ``Yes, I want to join that claim.'' It's everybody's in
unless you tell me otherwise. That's a very, very big
difference in terms of the size of the class actions and the
cost of the litigation.
Senator Alexander. Thank you very much.
Thank you, Madam Chairman.
Senator Mikulski. Senator Franken.
Statement of Senator Franken
Senator Franken. First of all, I'd like to apologize to
everyone. I had some other pressing stuff, and I'm sorry that I
missed this, because it's very important to me. I think it's
just fundamental that people should be paid the same for the
same work, and that's based on race and religion and national
origin and gender. I just think that's a fundamental right. So
I'm a co-sponsor, an original co-sponsor, of this act.
I'm sorry I haven't been here for this whole hearing, and
I'll read the transcript afterwards. But the Ranking Member,
who I respect enormously, talked about this undermining
flexibility in the workforce or in the workplace. I don't
understand that, and maybe I should just later ask the Ranking
Member.
But it seems to me that you can--dads want to go to soccer
games, and moms want to go to soccer games. Dads want to be
able to have their kid in a daycare center at the school. I
think that's a wonderful business you did with Captain
Kangaroo. I tried to team up with Mr. Green Jeans, but he
wouldn't do it.
[Laughter.]
Professor Eisenberg, would this affect flexibility in the
workplace, this law?
Ms. Eisenberg. Based on my reading, I don't think that it
would. Remember, the catch-all factor other than sex is still
there, but it has to be related to the job and the business. So
that leaves the field wide open, in my opinion, that employers
can still base compensation and give flexibility in their
workforce in a way that matters most for their particular
business.
Senator Franken. I'm not sure what questions have been
asked and not been asked. So I'm going to go to one that
probably no one asked, because I saw something, Ms. Olson, in
your testimony. You state that--this is a quote from your
testimony--
``If enacted, the act would amend the EPA
significantly in substantive and procedural ways, all
upon a fundamental yet unsubstantiated premise, namely,
that throughout the United States of America, all
unexplained wage disparities existing between men and
women are necessarily the result of intentional
discrimination by employers.''
Basically, what you're saying is that the fundamental
premise of this is that all unexplained wage disparities are
necessarily the result of intentional discrimination by
employers, that that's the premise of this. Could you expand on
that a little?
Ms. Olson. Yes. There's been a lot of discussion by
proponents of this bill that there is a significant wage gap.
At footnote 5 of my testimony, I include a discussion of
various economists. I'm not an economist. I'm here as a lawyer
today--but many economists that describe that when you take
into account personal choices and the number of different
considerations that are all detailed in that footnote, many
economists, and many government studies show that the wage gap
decreases to between somewhere around 4.9 percent to somewhere
up to 7.9 percent--some studies say 12 percent. It depends.
There are a lot of studies. Some of them track the same
person. Some of them don't. Some look at median wages without
taking a look at--I'm going to just give you one example--
lawyers. Lawyer's aren't going to make--someone who graduates
from law school, 5 years out, in that category, isn't going to
make the same amount as somebody else.
A big factor is going to be: Do I work for a private law
firm? Do I work for a public interest group? Do I work in a
public setting in terms of a public governmental institution?
Do I work inside a company? But none of those factors are being
considered. The point of my testimony that I submitted that you
referenced is that to the extent there is a wage gap, there has
been no evidence that that wage gap is the result of employer
discrimination.
Senator Franken. But there still exists a gap, even when
you control for every other factor. But here's the thing. When
I read Professor Eisenberg's testimony, it seemed quite at odds
with what I read from your testimony. Did you read Professor
Eisenberg's testimony?
Ms. Olson. I did, Senator Franken.
Senator Franken. So were you struck by what I was struck
by?
Ms. Olson. I was struck by it, but----
Senator Franken. I just would like to ask her about it
since I'm running out of time.
Ms. Olson. Sure.
Senator Franken. Can I ask just this one question of
Professor Eisenberg?
Senator Mikulski. You can wrap up with it.
Senator Franken. In your testimony, you state that it is
your firm belief that, ``firm belief that most employers try to
comply with the law and do not set out to intentionally
discriminate against women.'' That seems to be very at odds
with Ms. Olson. Could you comment on her comment and explain
the difference in viewpoints?
Ms. Eisenberg. Right. I think most employers do try to do
the right thing. But there's no question that there are some
outdated attitudes in some workplaces. And one need only hear
the stories here today to show that, and many other women have
come before this committee to share that.
Just to give you an example, managers at Walmart told women
that men would always make more because God made Adam first,
and so women would always be second to men. And one manager
said, ``Bring in your household budget so I can see if you
deserve to be paid as much as men.'' So there's this real bias
in some workplaces that----
Senator Franken. That almost makes Ms. Olson's point. That
sounds pretty intentional.
Ms. Eisenberg. Yes. And then the second part is sort of--so
there is still intentional discrimination is the point. But
there's also unconscious biases, especially against working
mothers, that seep into the wage setting process. So some of
those stereotypes are a real problem as well.
Senator Franken. OK. I apologize for going over, Madam
Chair.
Senator Mikulski. It was a good exchange.
We want to thank all of our witnesses.
And, Ms. Sleeman, we want to thank you for telling your
personal story. I didn't ask you a question because it was
complete in and of itself.
I ask unanimous consent that a letter from a constituent of
mine, Latoya Weaver, who suffered discrimination as well, be
entered into the record.
[The information referred to follows:]
March 31, 2014.
Senator Barbara Mikulski,
503 Hart Senate Office Building,
Washington, DC 20510.
Dear Senator Mikulski: My name is LaToya Weaver. I grew up and
still live in Great Mills, MD. I currently work in guest services at a
hotel. But back in 2012 I had to file a discrimination complaint
against my former employer, Extended Stay Hotels, because they had paid
me less than two male employees who held the same job as me.
I started working full-time as a Guest Services Representative at
Extended Stay Hotels in Lexington Park, MD in July 2007. Most weeks I
worked 40 hours. When I started there I was only paid $8.00 per hour,
even though I had already gained more than 2 year's worth of hotel
guest services experience at a Best Western. I worked at Extended Stay
until May 2012. At that point my pay had increased to $8.88, because
every year I would ask for an annual raise and the hotel would give me
a raise of 10 or 15 cents at a time.
In the spring of 2012 I had an offer for a customer service job at
a doctor's office that would pay more than I was making at Extended
Stay. I therefore asked for a raise to $9.50 per hour. However, my
manager turned me down because she said that the hotel was undergoing
construction. I decided to take this other job.
While I was working at Extended Stay the employees were told that
we were not supposed to discuss our pay with each other. However,
shortly before I left the hotel I saw some papers that my manager had
left sitting out that showed that two men who had recently been hired
as Guest Services Representatives were each making $10.00 per hour. I
was very upset to discover this, and so I decided to file a pay
discrimination complaint with the Equal Employment Opportunity
Commission.
After the EEOC investigated, it came out that a number of other
women working as Guest Services Representatives for the hotel were also
being paid less than these two men. The EEOC filed a lawsuit against
Extended Stay Hotels for the discrimination that we all had
experienced. The hotel eventually agreed to settle the lawsuit and
compensate us for the years of paying us less.
Being paid fairly for all those years would have made a huge
difference to me and my family. I am a single parent to three children,
and all three of them were in day care at that time. Even though I had
a subsidy to help me with paying for a day care center, I still had to
spend $100 per week out of my own pocket. Paying that cost along with
the rest of my bills was a huge challenge. And in order to finally get
work that would pay me more, I had to travel to a job 45 minutes from
my house.
I was fortunate enough to finally get a remedy for the
discrimination that I experienced. But I am concerned about all the
other women who will continue to face unfair treatment in the future
because our laws are not strong enough and do not prevent employers
from discriminating.
Sincerely,
LaToya Weaver,
Great Mills, MD.
Senator Mikulski. The record will be open for 10 days for
additional statements. But, also, members are allowed to ask
followup questions and submit them for the record.
This has been a very excellent hearing. I like the fact
that it was about real work, not just about fireworks at a
hearing. I think we've all learned a lot by listening to each
other. We need to continue the discussion and move the
legislation forward.
This concludes the hearing.
[Additional Material follows.]
ADDITIONAL MATERIAL
Seyfarth Shaw LLP,
Chicago, IL 60603,
April 7, 2014.
Hon. Tom Harkin, Chairman,
Committee on Health, Education, Labor, and Pensions,
U.S. Senate,
731 Hart Senate Office Building,
Washington, DC 20510.
Hon. Lamar Alexander, Ranking Member,
Committee on Health, Education, Labor, and Pensions,
U.S. Senate,
455 Dirksen Senate Office Building,
Washington, DC 20510.
Hon. Barbara Ann Mikulski, Member,
Committee on Health, Education, Labor, and Pensions,
U.S. Senate,
503 Hart Senate Office Building,
Washington, DC 20510.
Re: Supplemental Testimony Submitted for April 1, 2014 Senate HELP
Committee Hearing: ``Access to Justice: Ensuring Equal Pay with the
Paycheck Fairness Act''
Dear Chairman Harkin, Senator Alexander and Senator Mikulski: This
supplemental testimony is presented on behalf of the U.S. Chamber of
Commerce by Camille A. Olson. It is provided to the Senate Committee on
Health, Education, Labor, and Pensions regarding S. 84, the Paycheck
Fairness Act (``PFA''), pursuant to the statements made on the record
by Hearing Chair, Senator Mikulski at the hearing entitled ``Access to
Justice: Ensuring Equal Pay with the Paycheck Fairness Act'' on April
1, 2014. This supplemental testimony responds to two specific issues
addressed by another witness in response to specific questions by
Senators during the April 1, 2014 hearing.\1\
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\1\ The fact that the Chamber has not commented on other parts of
the testimony presented at the hearing on April 1, 2014 should not be
viewed as an indication that it agrees with the other testimony.
Issue #1. Does the PFA Change the Equal Pay Act's (``EPA'') factor
other than sex defense as it is currently interpreted by a majority of
---------------------------------------------------------------------------
courts in the United States?
Hearing Testimony: No; it is the same test.
Supplemental Testimony: Yes; the test under the PFA is materially
different from the test most often used by courts to interpret the
factor ``other than sex'' defense under the Equal Pay Act. In fact, no
court in the United States has adopted the language of the PFA as
current law under the Equal Pay Act.
a. hearing testimony
Senator Warren: ``Professor Eisenberg, and could you just talk a
little bit more about the current law and how employers are using the
factor other than sex defense under today's law.'' [1:30:04-1:30:17]
Witness Eisenberg: ``Certainly, that's a great question. . . . the
catchall factor other than sex, as currently interpreted by a majority
of courts, is still in a majority of courts supposed to be job and
business-related. So this proposal in the Paycheck Fairness Act is
codifying that majority view.'' [1:30:17-1:31:13]
Senator Warren: ``So in a majority of courts, there's no change in
the law, in that fundamental sense.'' [1:31:13-1:31:15]
Witness Eisenberg: ``That's right.'' [1:31:15].
b. supplemental testimony by chamber of commerce
The PFA rewrites the Equal Pay Act's factor other than sex defense.
PFA is a radical departure from the current interpretations of the
Equal Pay Act in all courts in the United States.
First, no circuit court has interpreted the EPA to mean an employer
must prove that the factor other than sex is: job-related and
consistent with business necessity;
Second, no circuit court has interpreted the factor other than sex
defense to require an employer to prove the factor other than sex was
not based upon or derived from a sex-based differential in
compensation; and
Third, no circuit court has ever held that an employee prevails
under the EPA if the employee shows that an
``alternative employment practice exists that would serve the
same business purpose without producing such differential and
that the employer has refused to adopt such alternative
practice.''
Yet, all of the above requirements are contained in the PFA in
proposed section 206(d)(1)(B), as set forth below:
The bona fide factor defense described in subparagraph
(A)(iv) shall apply only if the employer demonstrates that such
factor (i) is not based upon or derived from a sex-based
differential in compensation; (ii) is job-related with respect
to the position in question; and (iii) is consistent with
business necessity. Such defense shall not apply where the
employee demonstrates that an alternative employment practice
exists that would serve the same business purpose without
producing such differential and that the employer has refused
to adopt such alternative practice.
Five of twelve regional circuit courts of appeals\2\ have held that
the ``factor other than sex'' defense must be business-related: the
Second, Third, Sixth, Ninth and Eleventh Circuits. Three circuit courts
have held that the factor other than sex must be sex-neutral and
uniformly applied.\3\ Four circuit courts have not defined the factor
other than sex defense in the EPA. Thus, less than half of the circuit
courts have ruled that a factor other than sex must be a business-
related factor.
---------------------------------------------------------------------------
\2\ The Thirteenth Circuit Court of Appeals--the Federal Circuit--
does not have jurisdiction over EPA claims, and thus is not included in
this analysis.
\3\ Brinkley v. Harbour Recreation Club, 180 F.3d 598, 613 (4th
Cir. 1999); King v. Acosta Sales & Mktg., Inc., 678 F.3d 470, 474 (7th
Cir. 2012); Taylor v. White, 321 F.3d 710, 718 (8th Cir. 2003).
---------------------------------------------------------------------------
The business-related factor other than sex test used by five
circuit courts is, contrary to the Hearing's testimony, significantly
different than the new language contained in the PFA.
The Second Circuit Court of Appeals explains that,
``. . . to successfully establish the `factor other than sex'
defense, an employer must also demonstrate that it had a
legitimate business reason for implementing the gender-neutral
factor that brought about the wage differential.''\4\
---------------------------------------------------------------------------
\4\ Belfi v. Prendergast, 191 F.3d 129, 136 (2d Cir. 1999).
Applying the current EPA's ``factor other than sex'' test, the
Third Circuit explained: ``the district court was correct to hold in
this case that economic benefits to an employer can justify a wage
differential;'' because the differential was based on a legitimate
business reason.\5\
---------------------------------------------------------------------------
\5\ Hodgson v. Robert Hall Clothes, Inc., 473 F.2d 589, 596 (3d
Cir. 1973).
---------------------------------------------------------------------------
The Sixth Circuit rejects the PFA's requirement that the employer
show its factor other than sex does not perpetuate historic sex
discrimination, explaining that such a requirement creates ``an
impossibly high standard.'' Indeed, contrary to the PFA, the Sixth
Circuit described the factor other than sex defense as:
Conversely, the [lower] court refused to place an impossibly
high standard on the employer by requiring it to show that the
factor used does not ``perpetuate[] historic sex
discrimination.'' The court required instead that the employer
show only that the factor was adopted for a legitimate business
reason and used reasonably in light of the employer's stated
purpose.
* * *
We now hold that the legitimate business reason standard is
the appropriate benchmark against which to measure the ``factor
other than sex'' defense.\6\
---------------------------------------------------------------------------
\6\ E.E.O.C. v. J.C. Penney Co., Inc. 843 F.2d 249, 253 (6th Cir.
1988) (citations omitted).
Contrary to the PFA, the Ninth Circuit Court of Appeals defined the
---------------------------------------------------------------------------
factor other than sex as follows:
An employer thus cannot use a factor which causes a wage
differential between male and female employees absent an
acceptable business reason.
* * *
The Equal Pay Act entrusts employers, not judges, with making
the often uncertain decisions of how to accomplish business
objectives.
* * *
A pragmatic standard, which protects against abuse yet
accommodates employer discretion, is that the employer must use
the factor reasonably in light of the employer's stated purpose
as well as its other practices.\7\
---------------------------------------------------------------------------
\7\ Kouba v. AllState Ins. Co., 691 F.2d 873, 876-77 (9th Cir.
1982).
Contrary to the PFA, the Eleventh Circuit Court of Appeals defined
---------------------------------------------------------------------------
the factor other than sex as follows:
The burden to prove these affirmative defenses is heavy and
must demonstrate that ``the factor of sex provided no basis for
the wage differential.'' Further, the employer must show that
none of the decisionmakers, whether in middle or upper
management, were influenced by gender bias. [citation omitted]
Although an employer may not rely on a ``general practice'' as
a factor ``other than sex,'' it may consider factors such as
the ``unique characteristics of the same job; . . . an
individual's experience, training or ability; or . . . special
exigent circumstances connected with the business.''\8\
---------------------------------------------------------------------------
\8\ Steger v. General Electric Company, 318 F.3d 1066, 1078 (11th
Cir. 2003) (citations omitted).
Strikingly, none of the five Circuit Courts of Appeals relied upon
for the ``majority'' view by proponents of the PFA at the Hearing
require an employer to show the factor was job-related and consistent
with business necessity, nor do those courts require that the employer
prove the negative contention--that the factor was not based upon or
derived from a sex-based differential in compensation. Similarly none
of the other circuit courts allow the employer's factor other than sex
defense to be erased by a showing that an alternative employment
practice exists that would serve the same business purpose without
producing a pay differential between employees. As such, an analysis of
circuit court decisions does not support the Hearing testimony that in
a majority of courts the PFA would not change the Equal Pay Act.
By introducing the concepts of a job-related and consistent with
business necessity requirement into the EPA's factor other than sex
defense, the PFA is importing title VII disparate impact law applicable
to validating neutral general practices into the EPA which deals with
an employer proving that an individual pay difference between employees
was based on a factor other than sex. But the EPA is concerned with
disparate treatment, not disparate impact, thus it is not appropriate
to impose upon an employer a disparate impact burden to disprove an EPA
disparate treatment claim. In practice, the job-related and consistent
with business necessity burden is placed on an employer when a
plaintiff brings a disparate impact claim under title VII, only after a
plaintiff has shown that a general qualification standard or test
disparately impacts a minority group. In litigation, only after a
plaintiff satisfies this specific burden of proof is an employer
required to justify the general practice causing the group disparity by
proving the group practice is job-related and consistent with business
necessity. Both prerequisites to invoking the job-related and
consistent with business necessity standard in disparate impact title
VII litigation are missing in EPA litigation. Hence requiring an
employer prove a decision was job-related and consistent with business
necessity is inappropriate under the EPA. In title VII disparate impact
litigation, EEOC and Plaintiffs' trial attorneys argue that the
employer, at the time the test was implemented was required to validate
the test as an important indicator of job performance usually through a
formal validation study conducted by an expert in the field.
Both practically and analytically, this disparate impact showing
cannot be done with respect to an individualized employee pay decision
every time a pay decision is made (i.e., engage an expert to perform a
study or otherwise prove it is a business necessity to pay Employee A
20 cents an hour more than Employee B because of Employee A's greater
experience, training, or education). In disparate impact analysis it is
not applied that way (instead it is applied to a general practice, not
every application of the practice). In fact, the Supreme Court has
noted that disparate impact analysis is incompatible with disparate
treatment claims under the Equal Pay Act. See Smith v. City of Jackson,
544 U.S. 228, 239 n.11 (2005). The statutory language of title VII also
explicitly rejects application of the business necessity defense to a
disparate treatment claim under title VII (42 USC 2000e-2(k)(2)).\9\
---------------------------------------------------------------------------
\9\ Further, damages applicable if an employer is unable to prove
job-related and consistent with business necessity under a title VII
disparate impact claim are limited to back pay, interest, attorneys'
fees and costs. Failure to prove job-related and consistent with
business necessity under title VII does not entitle a plaintiff to any
punitive or compensatory damages. Whereas, under PFA, a Plaintiff who
has not proven discriminatory intent is entitled to unlimited
compensatory and punitive damages, in addition to the already available
remedies under the EPA of back pay, interest, attorneys' fees and costs
and liquidated (or double) damages. The PFA's factor other than sex
limitations and damages provisions are internally inconsistent and
incongruous with the principles underlying other Federal employment
discrimination laws as well as the EPA, and for the reasons stated
above, inappropriate to graft onto EPA claims. To make clear, the type
of disparate treatment analysis used under the EPA is not the same as
that under title VII.
---------------------------------------------------------------------------
Applying the PFA's version of the ``job-related and consistent with
business necessity'' test to the EPA, an employer would be required to
prove for each wage decision that the ultimate business goal achieved
by the higher pay is significantly correlated with the job's
requirements and bears a demonstrable relationship to the successful
performance of the job. In addition, an employer would be required to
prove that a pay differential was justified at the time that the
decision was made.\10\ A highly onerous and unrealistic burden to apply
to everyday individual pay determinations for all employees is
something never before required by any court under the Equal Pay Act.
For these reasons and the reasons provided by the Chamber in its
submitted written and verbal testimony, the Chamber opposes the
proposed modifications to the factor other than sex defense in the
Equal Pay Act proposed by PFA.
---------------------------------------------------------------------------
\10\ See Uniform Employee Selection Guidelines Interpretation and
Clarification, http://uniformguidelines.com/questionandanswers.html, at
Question 50.
Issue #2. Should employees and employers be allowed to negotiate
pay and should an employer be allowed to consider the market's price
---------------------------------------------------------------------------
for an employee's wage in setting wages?
Hearing Testimony: No, because setting pay based in part on
negotiations harms women who do not fare as well as men in pay
negotiations and because the free market may be affected by
discrimination at other employers.
Supplemental Testimony: Yes, employees and employers should be
allowed to negotiate pay and take into consideration the free market's
forces in connection with the setting of pay without requiring an
employer prove that the market rates set by other employers were not
tainted by sex discrimination.
a. hearing testimony
Witness Eisenberg: Professor Eisenberg supported the language of
the PFA which includes modifying the factor other than sex defense to
require an employer prove that the wage paid was ``not based upon or
derived from a sex-based differential in compensation.'' The Witness
generally criticized all employer's use of prior salaries of employees
and market data ``as not really any sort of objective market data
they're referring to'' and ``the happenstance of prior salaries'' when
men and women come from different employers into a new workplace as
inappropriate theorizing the different salaries from different
employers ``absolutely . . . perpetuates the very discrimination the
Equal Pay Act was supposed to address''. [1:32:36-l :33:39)
b. supplemental testimony by chamber of commerce
``Neither law nor logic deems the free market system a suspect
enterprise.''\11\
---------------------------------------------------------------------------
\11\ Am. Fed'n of State, Cnty., & Mun. Employees, AFL-CIO (AFSCME)
v. State of Wash., 770 F.2d 1401, 1407 (9th Cir. 1985) (quoting the
Circuit Court's opinion written by U.S. Supreme Court Justice Anthony
Kennedy). See also, UAW v. State of Michigan, 886 F.2d 766, 768-69 (6th
Cir. 1989).
---------------------------------------------------------------------------
In the United States, prices of goods and services are based on the
fundamental economic principles of supply and demand. Highly competent,
qualified and talented employees--whether male or female--are in
greater demand, yet smaller supply, which creates competition for their
services. Under the PFA, an employer would not be able to match a
competing offer to retain an employee when other employees of the
opposite sex in the job category would make less, unless the employer
could prove that the competing offer of a competitor was without sex
bias--an impossible task. In effect, the PFA creates a presumption of
market discrimination by requiring an employer to show that the
competing offer or market price is not ``based upon or derived from''
historic discrimination without any showing by the plaintiff that there
is, in fact, any such discrimination. Instead, in effect, the PFA
ultimately requires employers to ignore the realities of the
marketplace and an employee's expectations regarding pay based on their
prior wage rates.
Many circuit courts have noted that neither title VII nor the EPA
are substitutes for the free market, which historically determines
labor rates.\12\ Circuit courts have also noted that there is no reason
to believe that judges or juries are well-equipped to resolve
intelligently the issues of the value of an employee's qualifications
to the enterprise. The Ninth Circuit Court of Appeals, for example, has
noted that Federal discrimination laws were not intended to prevent
employers from competing in the labor market.
---------------------------------------------------------------------------
\12\ Roberts v. Segal Co., 125 F. Supp. 2d 545, 551 (D.D.C. 2000)
(mere failure to rectify market wage disparities in the workplace is
not actionable); Burns v. Republic Say. Bank, 25 F. Supp. 2d 809, 824
(N.D. Ohio 1998) (``[d]iscriminatory intent may not be inferred from
the employer's failure to depart from free-market parameters or failure
to rectify traditional wage disparities.''); Am. Fed'n of State, Cnty.
& Mun. Employees, AFL-CIO (AFSCME) v. Cnty. of Nassau, 799 F. Supp.
1370, 1414 (E.D.N.Y. 1992) (holding that reliance on the market system
does not give rise to title VII liability).
---------------------------------------------------------------------------
An employer must be allowed to pay the wages necessary for it to
compete in the marketplace for the best qualified applicants. Employees
must be allowed to live up to their potential, and earn compensation
based on their qualifications and value. Ignoring market competition in
a labor market would also erode an employer's ability to develop and
implement effective retention policies.
In conclusion, the Chamber's position is that PFA's definition of
factor other than sex is substantially different from the definition
applied to factor other than sex by circuit courts throughout the
United States and is inappropriate. Instead of an ``Anything Under the
Sun'' criticism of the current legislative scheme, the PFA factor other
than sex defense is a ``Nothing Under The Sun'' defense, hurting both
valued employees and employers. Mr. Chairman and members of the
committee, thank you for the opportunity to provide this supplemental
testimony. Please do not hesitate to contact me or the Chamber's Labor,
Immigration, and Employee Benefits Division if we can be of further
assistance in this matter.
Respectfully submitted,
Camille A. Olson, Chair,
U.S. Chamber of Commerce,
Equal Employment Opportunity Subcommittee.
______
Response by Deborah Thompson Eisenberg to Questions
of Senator Alexander and Senator Franken
senator alexander
Last week, the President attempted to recognize equal pay issues by
announcing a new Executive order that prohibits Federal contractors
from retaliating against employees who discuss wages with other
employees. The President also directed the Department of Labor to
collect employee compensation data based on race and sex from Federal
contractors. According to the White House, these actions were taken to
``ensure equal pay for equal work.'' Despite this, the American
Enterprise Institute (AEI) recently found the median salary in 2013 for
female White House staffers was $65,000, compared to $73,729 for male
staffers--or a 12 percent pay gap.
Question 1. Assuming that White House staff are covered by the
Equal Pay Act if it were passed, would the White House be subject to a
lawsuit for paying male staffers more than female staffers, based on
the data AEI presented--yes or no? Please provide a detailed
explanation of your answer.
Answer 1. The Equal Pay Act was passed in 1963 and the Federal
Government is not exempt from its provisions. To determine whether a
claim under the Equal Pay Act exists, a plaintiff must identify a
comparator of the opposite sex who performs work that is substantially
equal in terms of skills, responsibility, and effort, and performed
under similar working conditions, and that they are paid different
amounts. The AEI data does not specify comparators performing
substantially equal work so it is not possible to make any conclusions
about whether a prima facie claim under the Equal Pay Act exists. It is
doubtful, however, because generalized pay disparities among an entire
workforce or category of workers, standing alone, are not actionable
under the Equal Pay Act (and would not be actionable under the Paycheck
Fairness Act if it were passed).
Question 2. On April 7, the President's press secretary, Jay Carney
defended the White House's pay gap by saying ``[the pay gap] was better
than the national average.'' You state in your written testimony that,
``It is simply smart business and good corporate governance for an
employer to be more thoughtful about how its pay awards relate to the
job and business.''
Based on your statement, was the White House being thoughtful in
its defense of its own pay gap? If the Paycheck Fairness Act became
law, could an employer successfully argue their pay gap between male
and female employees were ``better than the national average'' as a
defense to avoid liability?
Answer 2. This question misunderstands the requirements of stating
a claim under the Equal Pay Act. One cannot sue an employer based
solely on an across-the-board ``pay gap'' among all male and female
employees. A plaintiff must identify a specific comparator of the
opposite sex who is performing substantially equal work in terms of
skills, responsibility, and effort, under similar working conditions.
Claims that fail to identify specific comparators of the opposite sex
performing equal work and being paid unequal amounts are not viable,
even if the Paycheck Fairness Act passed. Hypothetically speaking,
however, if there was a prima facie showing that men and women
performed substantially equal jobs as defined under the Equal Pay Act
(which is not the case with the AEI's generalized aggregate data), the
employer would have to show that unequal pay for equal work was caused
by one of the four affirmative defenses delineated in the law: (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. This analysis focuses on the characteristics of the employee
who are being compared and the actual reasons for the differing pay. It
does not examine how an employer's generalized gender pay gap compares
to that of other employers because such generalized pay disparities are
not actionable under the Equal Pay Act or the Paycheck Fairness Act.
Question 3. Further, Mr. Carney contributed the White House's pay
gap to the possibility that the lowest paid positions are filled with
more women than men. A day later Mr. Carney clarified, ``that women are
recruited for more junior positions so that they're put in the
pipelines for senior positions in the future.'' Under the Paycheck
Fairness Act, is this a legitimate argument in explaining the White
House's pay gap?
Answer 3. Again, ``pay gaps'' generally speaking are not violations
of the Equal Pay Act or the Paycheck Fairness Act. In the scenario
presented, any claim under the Equal Pay Act (even if amended by the
Paycheck Fairness Act) would not satisfy the demanding prima facie
threshold of showing specific employees of the opposite sex who are
performing substantially equal jobs in terms of skills, responsibility,
and effort, under similar working conditions, with more pay.
Hypothetically speaking, however, if such a claim survived a motion to
dismiss or motion for summary judgment by the employer (which is highly
unlikely based on my research of Equal Pay Act case law), the employer
would prevail if it showed that women were paid less because of
differences in the jobs held between the male and female employees
being compared.
In other words, paying women who work in junior positions less than
men who are working in senior positions is not unlawful under the Equal
Pay Act or the Paycheck Fairness Act. In fact, many employers have
prevailed in Equal Pay Act cases by showing that plaintiffs were
working in lower level or less significant positions than their
comparators,\1\ or that employees who had the same job title
nevertheless had different levels of responsibility or job duties and
could not be compared.\2\ Many other examples of similar equal pay
cases are cited in my scholarship. See Shattering the Equal Pay Act's
Glass Ceiling, 63 SMU L. Rev. 17, 39-41 (2010).
---------------------------------------------------------------------------
\1\ See, e.g., Stopka v. Alliance of Am. Insurers, 141 F.3d 681
(7th Cir. 1998) (finding that a female executive was not part of the
``core business'' like her male comparators); Goodrich v. Int'l Bhd. of
Elec. Workers, 815 F.2d 1519 (D.C. Cir. 1987) (finding that male union
contract analysts performed tasks that were ``significant and essential
to the operations and mission'' of the union).
\2\ See, e.g., Wheatley v. Wicomico County, 390 F.3d 328 (4th Cir.
2004) (holding that male and female department heads of different
agencies could not be compared under Equal Pay Act); Berg v. Norand
Corp. 169 F.3d 1140 (8th Cir. 1999) (holding female department manager
did not perform equal work as all other male department managers, who
earned on average $6,000 to $8,000 more); Sprague v. Thorn Ams., Inc.,
129 F.3d 1355 (10th Cir. 1997) (holding assistant manager jobs not
equal and could not be compared under Equal Pay Act); Ratts v. Bus.
Sys. Inc., 686 F. Supp. 546 (D.S.C. 1987) (female vice president could
not be compared to four other male vice presidents).
Question 4. The White House has consistently cited the statistic
that a woman earns an average of $.77 for every $1 a man earns. The
White House's Web site has also said that ``there is good evidence that
discrimination contributes to the persistent pay disparity between men
and women.'' Do you agree with that statement? If so, is the White
House's pay disparity a signal that the Obama administration
discriminates against female staffers?
Answer 4. I agree that there is evidence that intentional
discrimination contributes to the persistent pay gap between men and
women performing similar work, even after controlling for so-called
``choice'' factors such as occupational category, job position, skills,
responsibility, performance, geographical location, etc. As I have
explained in my research, I think that there are other factors that
have contributed to pay differentials among employees who are
performing substantially equal jobs and have comparable qualifications,
experience, and performance, including pay secrecy combined with
ambiguous or wholly subjective pay practices that tend to disadvantage
women (see my answer to Senator Franken's second question above and my
written testimony).
Equal Pay Act cases are extremely fact-intensive. Whether a
particular employer's overall pay disparity among its entire workforce
signals facially unlawful discrimination against women under Federal
law will depend upon whether there are male comparators who perform
substantially equal jobs in terms of skills, responsibility, and effort
and receive more pay. This question does not provide any facts of pay
differentials between specific employees performing equal jobs that
would suggest unlawful discrimination under the Equal Pay Act.
senator franken
Question 1. In your testimony, you highlight the importance of
addressing the pay gap for working mothers, their families, and their
children. As you note in your testimony, half of all mothers work full-
time and more and more families are relying on two earners. At the same
time, more and more women are attaining college and advanced degrees.
Yet the pay gap has persisted. Why hasn't more education been enough to
close the wage gap?
Answer 1. That is a good question. In my scholarship, I explore how
women who earn higher levels of education and professional status tend
to experience a larger pay gap than women who work in more
standardized, lower-wage jobs. I think there are several factors that
contribute to the problem. First, many women experience a ``motherhood
penalty'' in their wages, with working mothers likely to receive lower
pay and working fathers likely to receive higher wages. Second,
compensation for employees in upper-level and professional jobs is more
likely to be set through ambiguous and wholly subjective processes that
tend to disadvantage women's pay. Pay disparities tend to be the
greatest for discretionary elements of pay, such as bonuses and stock
options, which comprise larger portions of compensation for women in
some higher-level and professional occupations. Based on my research
and experience, the more subjective, informal, and unguided the
compensation-setting process--which might be the case for many women
with higher levels of education--the more likely there will be
unjustified pay disparities between men and women who are performing
substantially equal jobs. My answer to your next question elaborates on
why that might be happening.
Question 2. In her testimony, Ms. Olson stated that,
``If enacted, the Act would amend the EPA significantly in
substantive and procedural ways, all upon a fundamental yet
unsubstantiated premise--namely, that throughout the United
States of America, all unexplained wage disparities existing
between men and women are necessarily the result of intentional
discrimination by employers.''
However, in your testimony, you state that it is your ``firm belief
that most employers try to comply with the law and do not set out to
intentionally discriminate against women.'' Can you comment on the
argument that the Paycheck Fairness Act is based on an erroneous
premise that most pay discrimination is intentional on the part of
employers?
Answer 2. It is shocking that some cases still involve blatant
sexist attitudes that men deserve more pay as the family
``breadwinners,'' or that mothers should not be working. But there are
other complex dynamics that can cause pay discrimination even among
otherwise fair-minded employers.
First, my scholarship has explored how unequal pay for equal work
happens in the modern economy because of pay secrecy combined with
compensation practices that are overly subjective or arbitrary. Pay may
be based on the happenstance of prior salaries at previous employers,
rather than the qualifications and performance of employees in the new
job. It's more typical today for compensation for some jobs to result
from a negotiation process that tends to result in lower pay for women.
There are complex cognitive, psychological, and social factors at play
that can place women in Catch-22 situations when it comes to
negotiating their salaries. Women are negotiating in the larger context
of societal norms and expectations about gender roles. Sometimes women
are prevented from negotiating at all (as Kerri Sleeman testified
happened to her and as women in other equal pay cases report). Other
times, if women negotiate, or negotiate too ``hard,'' they may violate
the notion that women should be ``friendly and agreeable,'' which can
penalize them in the workplace. Studies have shown that women who have
identical qualifications and negotiate just as skillfully as men will
sometimes wind up with lower starting salaries.
Second, the more ambiguous and ill-defined pay processes are, the
more likely women's pay will be lower because of unconscious biases
that can infect pay decisions even in the absence of what we might
consider ``intentional'' discrimination. Working fathers tend to be
rewarded with more pay, and working mothers tend to earn less because
of deeply ingrained, subconscious stereotypes that wives perform
``extra'' work and their husbands are the family ``breadwinners,'' or
that working mothers will have more ``work-life'' conflict and not be
as committed to working hard, even when that is not true.
To top it all off, as we know from the stories of Lilly Ledbetter,
Kerri Sleeman and many others, pay secrecy makes most gender pay
discrimination hidden from sight. Pay disparities may start small and
snowball over time, undetected and undeterred.
I think the Paycheck Fairness Act starts to address some of these
dynamics that can cause unequal pay for equal work even in the absence
of intentional sex-based animus by: (1) allowing employees to discuss
wages and compare notes about what employees in similar positions are
paid without retaliation; (2) requiring that the ``any factor other
than sex'' defense under the Equal Pay Act relate to business and job-
related factors (rather than, for example, the happenstance of salaries
at previous employers or vague claims about ``market forces''); (3)
providing negotiation training to help address the Catch-22 in which
women sometimes find themselves when they negotiate pay; and (4)
requiring reporting of wage data by sex so that employers will be more
aware of, and hopefully motivated to correct, unjustified pay
disparities before they turn into a lawsuit.
______
Seyfarth Shaw LLP,
Chicago, IL 60603,
April 29, 2014.
Hon. Tom Harkin, Chairman,
Committee on Health, Education, Labor, and Pensions,
U.S. Senate,
731 Hart Senate Office Building,
Washington, DC 20510.
Hon. Lamar Alexander, Ranking Member,
Committee on Health, Education, Labor, and Pensions,
U.S. Senate,
455 Dirksen Senate Office Building,
Washington, DC 20510.
Hon. Barbara Ann Mikulski, Member,
Committee on Health, Education, Labor, and Pensions,
U.S. Senate,
503 Hart Senate Office Building,
Washington, DC 20510.
Re: Response to Supplemental Questions for April 1, 2014 Senate HELP
Committee Hearing: ``Access to Justice: Ensuring Equal Pay with the
Paycheck Fairness Act''
Dear Chairman Harkin, Senator Alexander and Senator Mikulski: This
Response provides answers to Supplemental Questions provided to the
undersigned following the April 1, 2014 Hearing, and is presented on
behalf of the United States Chamber of Commerce by Camille A. Olson. It
is provided to the Senate Committee on Health, Education, Labor, and
Pensions regarding S. 84, the Paycheck Fairness Act (``PFA''), in
conjunction with the hearing entitled ``Access to Justice: Ensuring
Equal Pay with the Paycheck Fairness Act'' on April 1, 2014. This
response provides answers to four questions, as set forth below.
______
Question 1. Assuming that White House staff are covered by the
Equal Pay Act (as amended by the Paycheck Fairness Act if it were
passed), would the White House be subject to a lawsuit for paying male
staffers more than female staffers, based on the data AEI presented--
yes or no?\1\ Please provide a detailed explanation of your answer.
---------------------------------------------------------------------------
\1\ For purposes of the answers provided to the four Supplemental
Questions, the undersigned assumes, as the questions request, that the
White House is covered by the Equal Pay Act (as amended by the Paycheck
Fairness Act, if passed).
---------------------------------------------------------------------------
Answer 1. No. The AEI median pay statistic by gender compares the
pay of all White House female staffers with male staffers regardless of
their job. Because the White House's ``88 cents gender pay gap'' does
not compare the pay rates of employees performing equal work requiring
equal skill, effort, and responsibility, under similar working
conditions (``equal work''), it is irrelevant to a plaintiff 's Equal
Pay Act (``EPA'') claim (even if amended by the PFA). Under the EPA and
PFA, the only relevant wage comparisons are between employees
performing equal work. This is true even though, overall, the median
wage statistics show that the White House pays male staffers more than
female staffers.
However, as explained below, the White House is subject to a
lawsuit for paying female White House staffers in the positions of
Calligrapher, Associate Counsel and Deputy Director of Scheduling less
than male staffers in those positions, if the male and female employees
in a position perform equal work. No amendment to the EPA is necessary
for these female White House staffers to bring this lawsuit under the
EPA.
aei analysis of median data does not support an epa or pfa claim
against the white house
Relying on salary data made public by the White House in its 2013
Annual Report to Congress, the American Enterprise Institute (``AEI'')
data described an 11.5 percent ``gender pay gap'' in favor of male
White House staffers based on a comparison of median salary with female
White House staffers. According to AEI, female White House staffers'
median salary is $65,000; whereas male White House staffers' median
salary is $73,729. The median female salary figure is 88.16 percent of
the median male salary figure. The median is described as follows:
without any consideration of job responsibilities performed,
qualifications, seniority, or hours worked, one-half of female White
House staffers are paid a salary exceeding $65,000, and one-half of
male White House staffers are paid a salary exceeding $73,729.
AEI's data--describing differences in the median salary of White
House staff, depending on their sex--is not relevant to a claim of pay
discrimination, under either the EPA or the EPA as amended by the PFA
(``PFA''). Under both the EPA and the PFA, a plaintiff must show
unequal wages were paid to employees of the opposite sex who performed
equal work. Because the White House's ``gender pay gap'' does not
compare the pay rates of employees performing equal work, it is
irrelevant to a plaintiff 's EPA claim. It is impossible to tell from
this specific statistic alone--median salary--whether employees
performing the same work are paid equally. Nor is there any information
that informs the AEI data as to whether any wage differences amongst
employees who are performing the same work are the result of factors
other than sex such as seniority, experience, education or merit. As a
result, based on the AEI analysis of median data alone, the White House
would not be subject to a lawsuit under the EPA.
The White House has repeatedly referenced a 77 cent median pay
statistic as evidence of sex discrimination by employers in the United
States.\2\ Inconsistently, responding to AEI's analysis showing the
White House's own ``gender pay gap,'' White House Press Secretary Jay
Carney admitted the median wage statistic was not evidence of sex
discrimination, explaining that a comparison of median pay rates for
employees by gender without regard to their jobs and other relevant
factors is not evidence of pay discrimination for any employee.
Specifically, Mr. Carney stated:
---------------------------------------------------------------------------
\2\ President Obama has repeatedly referenced a 77 cents median pay
statistic as evidence of sex discrimination by employers. Those
references include, but are not limited to his: June 4, 2011 remarks on
equal pay for equal work, February 18, 2013 State of the Union Address,
January 28, 2014 State of the Union Address and April 8, 2014 remarks
on equal pay for equal work. Meanwhile, as noted infra, at page 8,
Betsey Stevenson, a Member of the White House Council of Economic
Advisers, recently admitted that the 77 cents figure is misleading,
stating that, ``There are a lot of things that go into that 77 cents
figure, there are a lot of things that contribute and no one's trying
to say that it's all about discrimination.''
And here at the White House equal pay legislation deems that
there should be equal pay for equal work, and that's what we
have--men and women in equivalent roles here earn equivalent
salaries . . . I think that those studies [comparing median
wages by gender, including, AEI], look at the aggregate of
everyone on staff, and that includes from the most junior
levels to the most senior. . . . [W]omen who do the same work
as men have to be paid the same, there is no question that that
is happening here at the White House at every level.\3\
---------------------------------------------------------------------------
\3\ See Press Release, White House Press Secretary Jay Carney,
Daily Press Briefing (Apr. 7, 2014), http://www.whitehouse.govi-the-
press-office/2014/04/07/daily-press-briefing-press-secret-
ary-jay-carney-040714.
In short, discussions of a raw median wage gap by gender--whether
77 cents in general census data referenced repeatedly by the White
House and proponents of the PFA\4\--or 88 cents in White House AEI
data--does not inform the conversation of whether private or public
employers are paying women unequal wages for equal work.
---------------------------------------------------------------------------
\4\ The 77 cents statistic was referenced at the April 1, 2014
Senate HELP Committee Hearing on Equal Pay during Senator Warren's
testimony (1:29:44). Additionally, Witness Eisenberg referenced the
statistic in her written testimony at p. 6.
---------------------------------------------------------------------------
a detailed analysis of aei's white house data by job classification
shows female staff in certain positions have a prima facie case of sex
discrimination under the epa
Female White House staff in the positions of Calligrapher,
Associate Counsel and Deputy Director of Scheduling earn less than
males performing work in their same job classification. As a result, if
they perform equal work as their male counterparts, these White House
staffers would meet their prima facie burden under the current EPA, and
the White House would be subject to lawsuits under the current EPA for
paying them lower wages than males in the same job classification.
Under the EPA and PFA, an appropriate review of the available data
requires comparison of salaries by sex within jobs requiring equal
work. Although detailed information relating to job responsibilities
and qualifications is not available, relying on the White House's job
classifications leads to the following examples where the White House
is subject to EPA claims for wage discrimination--under the current EPA
(as well as the EPA as amended by the PFA).
The White House employs 2 individuals in the position of
``Calligrapher''--a male whose annual salary is $94,372 and a female
whose salary is $85,953. Assuming the Calligraphers perform equal work,
the White House is subject to a lawsuit by the female White House
Calligrapher being paid 8.9 percent less than her male counterpart.
The White House employs 2 individuals in the position of
``Associate Counsel''--a male whose annual salary is $134,999 and a
female whose salary is $112,000. Assuming the Associate Counsels
perform equal work, the White House is subject to a lawsuit by the
female White House Associate Counsel being paid 17 percent less than
her male counterpart.
The White House employs 3 individuals in the position of
``Deputy Director of Scheduling''--two males, both paid a salary of
$68,000 and a female whose salary is $60,000. Assuming the Deputy
Directors of Scheduling perform equal work, the White House is subject
to a lawsuit by the female Deputy Director of Scheduling being paid
11.8 percent less than her male counterparts.
Whether any of these female White House staffers will be successful
in their claims of unequal pay for equal work depends on whether the
White House can satisfy the very different burdens under the EPA and
PFA, as described below. What is clear is that the female White House
staffers have a prima facie case of sex discrimination today, under the
EPA, if they perform equal work to those male staffers in the positions
of Calligrapher, Associate Counsel or Deputy Director of Scheduling.
Question 2. On April 7, the President's Press Secretary, Jay
Carney, defended the White House's pay gap by saying ``it [the pay gap]
was better than the national average.'' Deborah Thompson Eisenberg
stated in her written testimony that, ``it is simply smart business and
good corporate governance for an employer to be more thoughtful about
how its pay awards relate to the job and business.''
Based on Ms. Eisenberg's statement, was the White House being
thoughtful in its defense of its own pay gap? If the Paycheck Fairness
Act became law, could an employer successfully argue their pay gap
between male and female employees were ``better than the national
average'' as a defense to avoid liability?
Answer 2. No. Under the current EPA and the PFA, a favorable
comparison to the ``national average'' is not a legitimate employer
defense to a prima facie case of sex discrimination in the White
House's pay practices.
Assuming we are discussing equal work as defined by the EPA, a pay
disparity may not be defended by asserting ``it's better than the
national average.'' Under the EPA, once equal work and unequal pay are
established, the burden shifts to the employer to show the disparity is
owing to (a) a seniority system, (b) a merit system, (c) a system based
on quantity or quality of production, or (d) a factor other than sex.
A meaningful evaluation of the thoughtfulness of the White House's
defense of its own pay gap also necessitates a discussion on what
constitutes thoughtfulness in compensation practices. Certainly,
thoughtful consideration of how pay awards relate to the job and the
business is a component of ``smart business and good corporate
governance.''
Yet, the PFA is far more likely to hinder, rather than promote,
smart business and good corporate governance. Imposing narrow
limitations on compensation decisions impedes employers' ability to
exercise business judgment in formulating and executing human resource
strategy. Such edicts are premised upon outdated and simplistic models
of the relevant factors encompassed by compensation decisions,
harkening back to earlier social and economic structures where a
greater proportion of the job market was comprised of unskilled
laborers. Today's business environments are becoming increasingly
complex as we face continuing globalization of business and technology-
driven transformations to our labor markets, and in turn, a greater
emphasis on knowledge workers and information flow. In short, a myopic,
isolated approach to analysis of each disparate job is inconsistent
with the demands of our changing workplaces.
Contemplating a hypothetical defense to an EPA claim based on the
pay disparity in the White House Associate Counsel position, and a
comparison of current law to the proposed PFA, sheds light on the
faulty mechanics of the PFA, particularly in its proposed amendments to
the factor other than sex defense. Public salary data indicates that
the male Associate Counsel is a detailee, rather than an employee of
the White House,\5\ and that immediately before his current position of
Associate Counsel, he was employed as an Assistant Deputy Attorney
General in the Department of Justice (with an accompanying Senior
Executive Service Level, and salary range between $119,554 and
$179,700).\6\ Thus, it appears the male White House Associate Counsel
was detailed from the Department of Justice on a temporary or detail
White House assignment (and is being paid based on his DOJ salary).
Under the EPA, the factor other than sex defense allow employers the
freedom to institute a salary retention policy of maintaining
employees' current salaries upon temporary changes of assignment. If
the 17 percent pay disparity in favor of the male Associate Counsel did
indeed arise from the detailee's regular (or former) rate of pay in his
standing position with the Department of Justice, the White House could
advance a ``factor other than defense'' under the EPA.\7\
---------------------------------------------------------------------------
\5\ White House, 2013 Annual Report to Congress on White House
Staff (Jun. 28, 2013).
\6\ See Office of Personnel Management, 2011 Pay Tables for
Executive and Senior Level Employees (2011), http://www.opm.gov/policy-
data-oversight/pay-leave/salaries-wages/2011/executive-senior-level/.
\7\ Such a scenario would be analogous to the fact pattern in
Taylor v. White, 321 F.3d 710 (8th Cir. 2003), where the Eighth Circuit
found that such a retention policy qualified as a factor other than
sex, after undertaking careful examination of the facts, noting that
``a case-by-case analysis of reliance on prior salary or salary
retention policies with careful attention to alleged gender-based
practices preserves the business freedoms Congress intended to protect
when it adopted the ``factor other than sex'' affirmative defense.
---------------------------------------------------------------------------
Whereas, if the PFA was enacted, even if the White House could
prove that a retention policy concerning salaries of detailees caused
the pay disparity, the White House would not meet its burden with
respect to an affirmative defense to the wage disparity if it stopped
there. If the pay disparity arose from a higher salary paid to the male
detailee in his standing position by the Department of Justice--a
factor independent of the detail assignment--the White House would most
likely fail to make a showing of ``job-relatedness with respect to the
position in question.'' Whether the White House could advance a theory
of business necessity centered on its need to detail this specific male
to the Associate Counsel position is also doubtful. As to the required
showing that the disparity is not based upon or derived from a sex-
based differential in compensation, it is also doubtful that the White
House would be inclined to attempt, or even could undertake, an
investigation into the salary history of the male detailee and what
factors controlled his compensation in positions before the detail--
another requirement under the PFA for the White House to justify the
wage disparity.\8\
---------------------------------------------------------------------------
\8\ And, finally, even if the White House satisfied all of these
defenses, it remains liable under the PFA for sex discrimination if the
female Associate Counsel shows that the White House could have utilized
another employment practice to minimize the pay disparity--i.e.,
increased her pay rate.
Question 3. Further, Mr. Carney attributed the White House's pay
gap to the possibility that the lowest paid positions are filled with
more women than men. A day later Mr. Carney clarified, ``that women are
recruited for more junior positions so that they're put in the
pipelines for senior positions in the future.'' Under the Paycheck
Fairness Act, is this a legitimate argument in explaining the White
House's pay gap?
Answer 3. For the reasons set forth in response to Question 1, the
``88 cent pay gap'' is irrelevant to an EPA or PFA claim. Thus, to
answer this question, it must be put into the framework of the EPA and
PFA, as set forth below.
The White House's defense is, in essence, that the median pay of
female White House staffers is less than the median pay of male White
House staffers due to diversity efforts at the White House that favor
hiring women into entry level positions that pay less. In other words,
this is the factor other than sex that explains the disparity.
Under the EPA, assuming an 88-cent pay gap between men and women
performing equal work at the White House, Mr. Carney's explanation may
be a legitimate reason other than sex that explains why the 88-cent pay
gap between men and women exists in certain circumstances. If the White
House hired women into a job classification that met the minimum
qualifications, but who had less qualifications than men hired into the
job classification, lesser qualifications would be a legitimate reason
for paying the women in the job classification less than men in the job
classification.
Under the PFA, assuming an 88-cent pay gap between men and women
performing equal work at the White House that occurred as a result of
hiring women to fill positions who met the minimum qualifications, but
who had less qualifications than men hired into the same job, Mr.
Carney's explanation would not satisfy an employer's burden of proving
the reason was job-related or consistent with business necessity. For
example, Mr. Carney's articulated reason was not related to the
specific job at issue, but an articulated goal of increasing gender
diversity in other higher level jobs at the White House. And, Mr.
Carney has not shown that the hiring of men with qualifications above
the minimum was a ``business necessity,'' nor that paying them a higher
rate of pay for those higher qualifications was necessary. Mr. Carney's
explanation does not satisfy this burden.
In addition, if a female staffer shows that an ``alternative
employment practice exists that would serve the same business purpose
without producing such differential and that the employer has refused
to adopt such alternative practice'' Mr. Carney's proffered reasons
would not shield the White House from PFA liability. Here, for example,
if a female staffer shows that the White House could have paid the same
higher salary to all staffers in a job classification who met the
minimum qualifications even though they did not have the superior
classifications of male staffers within the job classification, Mr.
Carney's articulated reason would not shield the White House from PFA
liability.
Taken at face value, Mr. Carney's explanation of the wage gap in
the White House is a plausible explanation for why the 12-cent pay gap
might exist despite the absence of gender discrimination. Indeed, many
private sector companies have adopted gender-balance objectives similar
to that offered by Mr. Carney's explanation. A 2012 white paper by
McKinsey & Company, prepared for the Wall Street Journal, validates the
funnel approach described by Mr. Carney as a valid path to success in
advancement of female employees to senior positions within the
organization.\9\ Unfortunately, the diversity goals of the White House
articulated by Mr. Carney are not, in and of themselves, a legitimate
employer defense to a claim under the PFA.
---------------------------------------------------------------------------
\9\ Joanna Barsh and Lareina Yee, Unlocking the Full Potential of
Women at Work, McKinsey & Company for The Wall Street Journal (Apr 30,
2012). Retrieved from http://www.mckinsey
.com/careers/women/ /media/Reports/Women/
2012%20WSJ%20Women%20in%20the%20
Economy%20white%20paper%20FINAL.ashx.
Question 4. The White House has consistently cited the statistic
that a woman earns an average of $.77 for every $1 a man earns. The
White House's Web site has also said that ``there is good evidence that
discrimination contributes to the persistent pay disparity between men
and women.'' Do you agree with that statement? If so, is the White
House's pay disparity a signal that the Obama administration
discriminates against female staffers?
Answer 4. The answers to all three subparts of Question #4 is No.
First, the median statistics cited do not show that women earn $.77
for every $1 a man earns for equal work.
Second, there is no evidence that employment discrimination caused
pay disparities between men and women that are present in national
median wage statistics data.
Third, as explained in response to Question #1 above, the White
House's median pay disparity between female and male White House
staffers of ``88-cents to a dollar'' is irrelevant to the question of
whether men and women are paid equally for equal work, as White House
representative Carney was forced to admit when the White House's
compensation practices were analyzed through the same median statistic.
The national median pay statistic of ``88-cents to a dollar'' is as
irrelevant to a claim under the EPA and PFA as is the White House
median pay statistic of ``77-cents to a dollar'' figure is to a claim
under the EPA and PFA.
The ``77-cents to a dollar'' statistic is irrelevant to the
question of whether a woman makes the same wage as a man for equal
work. Serious scholarly studies have discarded reliance on the median
wage gap as a meaningful barometer for women's economic prospects for
almost two decades. Academic studies have long found much stronger
correlations in factors including, but not limited to, individual
choices relating to education, occupation, childbearing, childcare, and
human capital variables including quantity, quality, and substance of
education and experience. These correlations also support the
continuing narrowing of the adjusted wage gap as women reap continued
benefits from increased access to education and other job-related
training. More recently, some have cited gender disparities, both in
willingness to engage in negotiation and overall effectiveness in
negotiation, as factors that contribute toward the continued existence
of the wage gap.
Instead, both the ``77-cents to a dollar'' and the ``88-cents to a
dollar in the White House'' gaps are median ratios. The nationwide
figure represents the median from wages earned by all full-time, year-
round female workers and compares it to the median from wages earned by
all full-time, year-round male workers. The raw wage gap does not
consider: quantity of work performed, such as hours worked; nature of
work performed, such as occupation, sector, industry, and attendant
market factors; quality of work performed, such as output, results
delivered, or other performance metrics; human capital factors like
training, education and experience; or other factors including union
status and attendant protections. Like the 77-cent figure, the 12-cent
gap in the White House is a median ratio, and is not a meaningful
indicator of discrimination in the White House recruitment or
compensation practices. The mere existence of a pay disparity along
gender lines in a workforce that is heterogeneous in job
responsibilities as well as qualifications, experience, and performance
cannot support a credible presumption of discrimination.
Neither the White House nor the proponents of the PFA have ever
produced any empirical evidence that ``discrimination contributes to
the persistent pay disparity between men and women.'' The idea that the
persistence of an aggregated showing of disparity--which only indicates
unequal outcomes between men and women in an incredibly complex and
interrelated environment of numerous self-interested actors--is derived
from employer discrimination is unsupported in scientific literature.
Decades of social science research have produced varying estimates of
the wage gap and advanced a number of differing interpretations as to
the cause of any wage gap. In the entire body of academic literature on
the wage gap, two clear themes emerge on which almost all scholars
agree: (1) numerous, interrelated factors contribute to the persistence
of wage disparities, and (2) precise accounting and portioning of the
present wage gap to various causal factors present a very difficult
challenge. In other words, the ``good evidence'' cited by the White
House is nothing more than a product of inductive reasoning, and the
unsupported hypothesis that in the absence of other explanations,
discrimination must be the cause.
Despite its prominence in the national discourse, the raw wage gap
contributes very little to the exploration of the employment
opportunities currently available to women or the endeavor to support
their increased participation and advancement in the workplace. The
current administration's Council of Economic Advisors' member, Betsey
Stevenson, recently admitted the ``77 cents to a dollar'' statistic
often quoted by proponents of the PFA does not represent differences in
pay between men and women for equal work and apologized for any earlier
comments that may have been misleading:
If I said 77 cents was equal pay for equal work, then I
completely mis-spoke, so let me just apologize and say that I
certainly wouldn't have meant to say that . . . Seventy-seven
cents captures the annual earnings of full-time, full-year
women divided by the annual earnings of full-time, full-year
men. There are a lot of things that go into that 77-cents
figure, there are a lot of things that contribute and no one's
trying to say that it's all about discrimination, but I don't
think there's a better figure.\10\ (emphasis added)
---------------------------------------------------------------------------
\10\ Ashe Schow, White House: The '77 Cents' Wage Gap Figure Isn't
Accurate, But They'll Use It Anyway, Washington Examiner (Apr. 7,
2014), http://washingtonexaminer.com/white-house-the-77-cents-wage-gap-
figure-isnt-accurate-but-theyll-use-it-anyway/article/2546914.
Ms. Stevenson's remarks make crystal clear that the raw wage gap of
``77 cents'' fails to meet the standards of pay discrimination as it
has been always defined: equal pay for equal work.
Serious scholarly studies have discarded reliance on the median
wage gap as a meaningful barometer for women's economic prospects for
almost two decades.\11\ Academic studies have long found much stronger
correlations in factors including but not limited to individual choices
relating to education, occupation, childbearing, childcare, and human
capital variables including quantity, quality, and substance of
education and experience. These correlations also support the
continuing narrowing of the adjusted wage gap as women reap continued
benefits from increased access to education and other job-related
training.
---------------------------------------------------------------------------
\11\ See, e.g., Francine Blau and Lawrence Kahn, National Bureau of
Economic Research, Gender Differences in Pay (June 2000) (attributing a
majority of the wage gap to differences in human capital variables,
industry, occupation, and union status based on a 1997 study); Howard
J. Wall, The Regional Economist, The Gender Gap and Wage
Discrimination: Illusion or Reality (Oct. 2000) (finding a 6.2-cent
unexplained wage difference after controlling for human capital
variables, differences in industry, occupation, and union status);
Diana Furchtgott-Roth & Christine Stolba, Women's Figures: An
illustrated Guide to the Economic Progress of Women in America (Aei Pr;
2 Sub edition 1999) (finding that of childless workers aged 27 to 33,
women's median hourly earnings were 98 percent of men's median hourly
earnings, before adjusting for differences in human capital and other
variables, which would presumably further narrow the 2-cent gap)
---------------------------------------------------------------------------
Misapplication of statistics like the 77-cent figure distorts the
economic realities facing the labor force and serves to impede both
private-sector and public-sector endeavors to promote advancement of
equal opportunities. Such statistics do not warrant a presumption of
rampant discrimination, nor do they imply that existing legal remedies
and protections are not working, particularly when paired with an
overreliance on the judicial system as a panacea for real or imagined
social ills. Scholars of law and economics have warned against
``economic social consequences that are generated by the
antidiscrimination laws.''\12\ In particular, laws that impose controls
on labor pricing may bring greater capacity for unintended consequences
in contrast to statutes governing access to employment.
---------------------------------------------------------------------------
\12\ Richard A. Epstein, Forbidden Ground: The Case Against
Employment Discrimination Laws (First Harv. U. Press, 1995) (arguing
that even in the presence of discrimination, market forces pressure
discriminating employers to hire from ``the disfavored pool'').
---------------------------------------------------------------------------
For the same reason that the existence of a 12-cent gap fails to
prove discrimination by the White House, the 23-cent gap in our
national labor force does not provide sufficient evidence to presume
either a widespread infection of discrimination by employers or the
obsolescence of the anti-discrimination statutes in effect today.
Respectfully submitted,
Camille A. Olson, Chair,
U.S. Chamber of Commerce,
Equal Employment Opportunity Subcommittee.
[Whereupon, at 4:29 p.m., the hearing was adjourned.]