Thursday, January 31, 2013

Paycheck Fairness Act (S.84 And H.R. 377) Promotes Strict Liability, Would Force Employers To Prove That Lesser Pay For Women Is Not Due To Discrimination

A piece of legislation currently enrolled in both houses of Congress is designed to forbid employers from firing employees who disclose and discuss their salaries publicly. But it goes too far, and also imposes a strict liability legal environment upon employers by imposing the burden of proof upon them to prove that lesser pay for women is not due to sexual discrimination if challenged.

The legislation is entitled the "Paycheck Fairness Act". The Senate version is S.84, which was introduced by Sen. Barbara Mikulski (D-MD) on January 23rd, 2013. As of this post, S.84 has 33 co-sponsors, all but one a Democrat, and they include Alaska Senator Mark Begich.

The House version of the Paycheck Fairness Act is H.R. 377, which was introduced by Rep. Rosa DeLauro (D-CT3) on January 23rd, 2013. As of this post, there are 150 co-sponsors, all Democrats. This means Alaska Congressman Don Young is not one of the co-sponsors.

Since the language in both bills is essentially identical, let's cite Sen. Mikulski's published justification for her bill:

The Paycheck Fairness Act builds upon the landmark Equal Pay Act signed into law in 1963 by closing loopholes that have kept it from achieving its goal of equal pay. The bill would require employers to show pay disparity is truly related to job-performance – not gender.

It prohibits employer retaliation for sharing salary information with coworkers. Under current law employers can sue and punish employees for sharing such information. In addition, it strengthens remedies for pay discrimination by increasing compensation women can seek, allowing them to not only seek back pay, but also punitive damages for pay discrimination.

Finally the bill empowers women in the workplace through a grant program to strengthen salary negotiation and other workplace skills and requires the Department of Labor to enhance outreach and training efforts to eliminate pay disparities.

State-by-state data on the wage gap is available here.

There are several problems with this legislation. Using the Senate version, the first problem is an unproven assumption in Section 2, Findings:

(2) Despite the enactment of the Equal Pay Act in 1963, many women continue to earn significantly lower pay than men for equal work. These pay disparities exist in both the private and governmental sectors. In many instances, the pay disparities can only be due to continued intentional discrimination or the lingering effects of past discrimination.

This language shows that Congress is presuming the worst -- that they assume pay disparities must be due to intentional discrimination. This reflects a fundamental difference between Democratic and Republican thinking. While most Republicans are willing to trust the people up to a certain point, Democrats are not willing to trust the people at all. Democrats believe people will do evil unless coerced preemptively to do what they call "good". While Republicans still believe liberty and equality are co-equal, Democrats clearly favor allowing equality to trump liberty.

In Section 3, Enhanced Enforcement of Equal Pay Requirements, the strict liability clause emerges, where the burden will be upon the employer to prove that there is not sex discrimination.

‘(B) 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.

Under the Equal Pay Act, an employer may avoid liability by proving that the wage disparity is justified by one of four affirmative defenses — that is, that the employer has set the challenged wages pursuant to (1) a seniority system; (2) a merit system; (3) a system which measures earnings by quantity or quality of production; or (4) a differential based on any other factor other than sex. The Paycheck Fairness Act would narrow the definition in number (4) by ensuring that employers relying on the “factor other than sex” defense may not pay men and women doing substantially equal work different wages unless the wage differential is justified by a job-related reason, such as education, training or experience, and consistent with business needs

And finally, under paragraph 3c, Enhanced Penalties, notice that the federal government imposes a lower standard of accountability upon itself than it does on other employers. They exempt themselves alone from punitive damages.

(1) by inserting after the first sentence the following: ‘Any employer who violates section 6(d) shall additionally be liable for such compensatory damages, or, where the employee demonstrates that the employer acted with malice or reckless indifference, punitive damages as may be appropriate, except that the United States shall not be liable for punitive damages.

Supporters of the Paycheck Fairness Act demonstrate lack of understanding of market forces. For example, Jezebel publishes the following:

"Why is a housekeeper worth less than a janitor? Eighty-nine percent of maids are female; 67 percent of janitors are male. While the jobs are equivalent, the median weekly earnings for a maid is $387; for a janitor $463. Computer support workers – a job that is 72 percent male – have median weekly earnings of $949. In contrast, secretaries and administrative assistants — which is 96 percent female – have median weekly earnings of $659. Why do we value someone who helps with computers more than someone who makes an entire office function? This is not to say men are overpaid. It is to say that jobs we consider 'women's work' are underpaid.

How do we know that the job descriptions for a housekeeper and a janitor are identical? A janitor may have additional tasks to perform that are not levied upon housekeepers. That's why they have different job titles. And computer support workers are paid more because as a rule, they must have greater technical skills than secretaries and administrative assistants, which would explain why they have different job titles. So proponents of these equal pay nonsense aren't merely concerned with equal pay; they presume interchangeability between different jobs and even want to redefine job titles and descriptions. Furthermore, a preponderance of women in one occupation and men in another occupation may indicate personal choice, unless we are prepared to presume that the preponderance of blacks in the National Basketball Association is solely due to discrimination against whites.

The intent of both versions of the Paycheck Fairness Act is to promote both equal opportunity AND equal outcome. This is an impossible task since to guarantee equal outcome, one must "game" opportunity. The civil rights revolution is supposed to be about opportunity; too many other variables, such as individual choice and initiative, affect outcome. This bill is redundant and intrusive, and will increase the bureaucratic burden upon business.

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