Why We Need The Paycheck Fairness and Fair Pay Act: Existing Employment Laws Fail to Close the Gender Wage Gap

by Deborah L. Brake

Today more than ever, American women need and deserve strong legal protections from pay discrimination. We now have abundant evidence that the gender wage gap persists and is not on track to close any time soon. This gap exists at every level of earnings from teacher's assistants where the female median salary is $15,000 or 75% of the male median of $20,000 to physicans, where the female median salary is $88,000, or 63% of the male median of $140,000.

As economists debate how much of the gender wage gap is explained by discrimination, one incontrovertible truth emerges: even when non sex-based factors are accounted for-factors such as age, education, years of work, hours worked, job tenure, occupation and jobs held-a substantial portion of the gender wage gap remains and is only explainable by sex.

The bills now under consideration, the Paycheck Fairness Act and the Fair Pay Act, would help strengthen the ability of our existing employment discrimination laws to more effectively address the gender wage gap.

The Equal Pay Act Sets A Very High Burden On Employees To Prove Unequal Pay For Equal Work. 

This Act from 1963 applies only to unequal pay for "equal work on jobs the performance of which requires equal skill, effort, and responsibility, and which are performed under similar working conditions. It's difficult for employees to identify those doing substantially equal work. And the degree of similarity required by courts makes it difficult for women to identify fellow employees even in jobs that seem very similar.

One Court described the Equal Pay Act as having greater applicability to "lower-level workers" who perform "commodity-like work" than to higher level jobs which are necessarily more unique. In one Case, a court found the jobs of an insurance company's male vice-presidents different in substance from the company's only female vice-president, who was paid less than all of the company's male vice-presidents. The court ruled that the jobs involved different responsibilities, even though they shared "a common core of substantially similar tasks" in managing divisions, the plaintiff managed the largest division, and the company's official salary administration program ranked all of the vice-presidents equally.  In fact, it seems a plaintiff can even lose an Equal Pay Act case due to job differences that give her more responsibility than her higher-paid male colleagues.

Not only must the employee show that the employer paid her less for performing substantially the same work as a male employee; she and her male comparator must also work in the "same establishment." This can be an obstacle for an employee who seeks to compare her job to a male employee in a different physical location.  In order for different sites to be counted as part of the same establishment, the plaintiff must prove "unusual circumstances," such as the exercise of centralized control in one location over important aspects of running the entire business. As more employers move to a decentralized structure, this standard is likely to become increasingly difficult to meet. The Paycheck Fairness Act would alleviate this problem by allowing the use of comparators who work for the same employer at different physical locations in the same county or similar political subdivision of a State, taking a more commonsense approach to pay inequality among persons who do equal work for the same employer.

The Factor Other than Sex Defense Excuses Far Too Much Pay Inequality

Once an employee proves that she was paid less for performing a job equal to that of a male employee in the same establishment, the employer may avoid liability by establishing one of four defenses: that the wage disparity is based :

1 a seniority system

2. a merit system

3. a system which measures earnings by quantity or quality of production

4.  any factor other than sex. It is the fourth defense that has become increasingly problematic.

Lower courts have increasingly opened the door to a broader "factor other than sex" defense that accepts virtually any superficially gender-neutral explanation for paying women less. For example, prior salaries may be used to justify a current pay disparity for employees doing equal work. The Paycheck Fairness Act would ensure that gender gaps in pay are not simply perpetuated by employers who set starting salaries based on employees' prior pay. Employers should not reflexively incorporate differences in prior salary when they hire male and female employees with similar experience and qualifications to do the same job. Otherwise, the Equal Pay Act will become little more than a rubber- stamp of the very wage disparities it was enacted to address.

Another issue on which the dispute over the scope of the defense has emerged is the role of salary negotiations in justifying a pay differential under the "factor other than sex" defense. Courts generally have allowed employers to rely on differences in how employees negotiate their salary to support pay disparities under the defense. However, a wealth of recent research suggests cause for concern. For complex reasons, men and women tend to differ in their approach to salary negotiations, and, importantly, employers tend to differ in how they respond to the men and women who attempt to negotiate their salary.  Men are significantly more likely than women to negotiate higher salaries. And women face a greater likelihood of being penalized by employers when they do attempt to negotiate salary.  Given this reality, an employer should have to demonstrate that the difference is related to the job in question and consistent with business necessity.

The Paycheck Fairness Act would help close what has become a gaping loophole in the Equal Pay Act's promise.  It would ensure that an employer's reason for paying women less is a bona fide one, such as differences in education, training or experience, that it is not based upon or derived from a sex-based differential in compensation, and that it is job-related and consistent with business necessity.

The other existing defenses to Equal Pay Act claims would continue to apply unchanged, excusing pay differentials that are based on merit, seniority, or quantity or quality of production.

The Existence of Title VII Does Not Alleviate the Need for a Strengthened Equal Pay Act

Although there is a fair amount of overlap between Title VII and the Equal Pay Act, Title VII's existence in no way alleviates the need for a strengthened Equal Pay Act. Some employees will only have access to the Equal Pay Act and not to Title VII due to differences in theirscope. Moreover, even if an employee proceeded under Title VII instead of the Equal Pay Act, the "factor other than sex" defense, also applies to Title VII.. Finally, Title VII also provides inadequate remedies to victims of discrimination because of its cap on damages.

Existing Federal Laws Provide Inadequate Remedies for Gender-Based Pay Discrimination

Currently, employment discrimination law sets up a hierarchy of remedies for employees who experience different kinds of pay discrimination. Although full and uncapped remedies are available to victims of pay discrimination on the basis of race, no federal statute provides complete remedies to women who are paid less because of their sex. Under the Equal Pay Act, an employee may recover only the amount of her unlawfully withheld wages (up to two years' back pay, or three years' back pay for "willful" violations) and an equal amount in "liquidated damages." Title VII of the Civil Rights Act of 1964 also prohibits discrimination in compensation, and a woman who wins a Title VII pay discrimination claim may obtain somewhat better relief under that statute, since Title VII authorizes compensatory and punitive damages. However, here too a woman's relief will be cut short. Title VII caps damages at very modest levels.

For example, in Lilly Ledbetter's case against Goodyear, the jury awarded over $3.5 million for Goodyear's egregious discrimination. However, the trial court was forced to cap Ms. Ledbetter's damages at $300,000, the statutory limit for combined compensatory and punitive damages applicable to large employers such as Goodyear. As a result, the jury's award was reduced to $360,000, the maximum allowable combined compensatory and punitive damages, plus an award of $60,000 in back pay-a relatively small sum considering the seriousness of Goodyear's misconduct, the deterrent value of such an award against a company like Goodyear, and the longstanding harm of the pay discrimination that continues to this day to follow Ms. Ledbetter into her retirement in the form of a lower pension.

 In contrast, a claim for pay discrimination on the basis of race falls under a different statute, which bars race discrimination in the making and enforcement of contracts, including employment contracts.  Here, a successful pay discrimination claimant receives the full panoply of legal remedies, including uncapped compensatory and punitive damages. This inequity in remedies for discrimination Congress has declared unlawful is not justified by any principle of fairness or justice. Moreover, it puts employees in a position of having to finely parse their claims into either sex- or race-based claims, with significant consequences for how the claim is categorized. Women of color face a particular bind. A woman of color who is underpaid compared to white male employees would be better off categorizing her claim as one based on race rather than sex, even though the discrimination may combine elements of both, or fit better as a gender claim. The employer, on the other hand, may be able to limit its remedies if it can convincingly argue that she was paid less because of her gender and not because of her race, thereby restricting her to the much more limited remedies available under the Equal Pay Act and Title VII. The law should not take such a rigid approach to these categories, nor should it place a lower priority on eradicating pay discrimination based on gender.

Better Access to Salary Information is Crucial to the Effective Enforcement of the Equal Pay Laws

Access to salary information is crucial for both individual employees and government enforcement agencies in order to effectively enforce the guarantees of the equal pay laws. Without salary information, employees have no way of knowing if they are paid a discriminatory wage. Lilly Ledbetter's case is typical in this respect. She worked for Goodyear for many years, unaware that she was paid less than the lowest-paid male manager until she received an anonymous note disclosing her colleagues' pay. Currently, both employees and the relevant federal enforcement agencies lack access to the salary information they need to effectively enforce federal pay discrimination laws. Both the Paycheck Fairness Act and the Fair Pay Act would improve access to the pay information that is necessary for both individual and government enforcement of the laws.

The Fair Pay Act is Needed to Address Occupational Segregation and the Devaluation of Women's Labor

The Fair Pay Act would address an aspect of the gender wage gap that existing law does not: the devaluation of jobs predominantly held by women. Neither Title VII nor the Equal Pay Act meaningfully addresses this. Occupational segregation does not fully explain the gap in men's and women's earnings; a substantial wage gap exists even controlling for occupation and job held. But some portion of the gap is attributable to the lower levels of pay drawn by workers in female- dominated occupations compared to workers in predominantly male occupations performing of work of equivalent skill, effort and responsibility. Because the Equal Pay Act applies only if male and female employees are paid differently to do substantially the same jobs, it has no application in this setting. While Title VII encompasses a broader set of claims than the Equal Pay Act, it too has a very limited applicability to the suppression of women's wages due to occupational segregation.

Pay differentials between male-dominated and female-dominated jobs involving equivalent work are not necessarily based on gender-neutral, unbiased market criteria.  A group of female clerical workers lost their Title VII case against a public university because the court found that the lower pay for those jobs compared to male- dominated jobs requiring a similar level of skill was not based on a demonstrable discriminatory intent. However, the university had rejected a consulting firm's recommendations to close this pay gap because of institutional bias favoring the male workers. In particular, the male workers were more confrontational in their dealings with the university while the clerical workers were more patient and cooperative. As a result, organizational politics and institutional bias led the university to "give selective attention to the demands of workers in predominantly male jobs," resulting in their higher pay.                  Current law does not reach this kind of institutionalized gender bias. The Fair Pay Act would bring much-needed scrutiny to these kinds of discriminatory practices. Both the Paycheck Fairness Act and the Fair Pay Act would go a long way toward strengthening the ability of existing federal discrimination laws to ensure that all American workers are paid a nondiscriminatory wage without regard to gender, race, national origin or religion.

Deborah L. Brake is a Professor of Law at the University of Pittsburgh with an expertise in employment discrimination and gender and law. She has written extensively on Title  IV.  This text is excerpted from testimony given to Congress.