On March 27, 2019, the U.S. House of Representatives passed H.R. 7, the Paycheck Fairness Act. The bill would amend the Equal Pay Act of 1963 (EPA) to expand potential damage awards for equal pay claims, limit an employer’s ability to raise the “any factor other than sex” affirmative defense in wage discrimination cases, and make it unlawful for an employer to prevent employees from discussing or comparing salaries, among other changes.¹ Given the political makeup of the Senate, this bill is unlikely to advance much further this legislative season. Because the issue of pay equity is gaining ground, however, the bill may be used as a campaign talking point as the next election approaches. In addition, states have been picking up the legislative slack, so similar bills could advance in local state houses.

What is the Paycheck Fairness Act’s History and What Would it Do?

This is not the first time the House has sought to enact the Paycheck Fairness Act. By way of background, in January 2009, Congress passed The Lilly Ledbetter Fair Pay Act, overturning a decision of the United States Supreme Court.² The Ledbetter Act generally provides that, for purposes of the statute of limitations, an unlawful employment practice occurs with respect to compensation discrimination when an employer makes a discriminatory compensation decision, or, when an employee receives a paycheck that reflects compensation discrimination.³ Also in January 2009, the House of Representatives passed the Paycheck Fairness Act. However, the 2009 bill ultimately failed in the Senate. Consistent with prior iterations of the bill, the present Paycheck Fairness Act seeks to amend the EPA in a number of ways that would make pay discrimination claims easier for plaintiffs to prove.  

Under current law, pay disparities between male and female employees doing equal work under similar conditions are lawful if an employer demonstrates that the pay disparity is based on “any other factor other than sex.” The Paycheck Fairness Act seeks to narrow this exception to require that a “factor other than sex” be job-related, consistent with business necessity, related to the position in question, account for the entire pay differential at issue, and must not be “based upon or derived from” an existing sex-based differential, such as current pay gaps or an employee’s salary history.

The bill would expand the EPA’s penalties to include unlimited compensatory and punitive damages (damages greater than those available under Title VII of the Civil Rights Act and other anti-discrimination laws).  Additionally, the bill would enhance the EPA’s anti-retaliation protections. More specifically, the bill provides specific protections relating to employees’ abilities to discuss their own wages, or the wages of other employees, and prohibits employers from retaliating against employees for engaging in such discussions. The bill would also prohibit employers from relying on a prospective employee’s salary or wage history in determining compensation or considering the individual for employment. Similarly, the bill seeks to clarify that any action brought by an employee under the EPA may be maintained as a class action consistent with the Federal Rules of Civil Procedure. This would effect a major procedural change because EPA presently permits only opt-in collective actions, whereas the Federal Rules provide for opt-out class actions. Finally, the bill would direct the Equal Employment Opportunity Commission to collect detailed employee wage and pay data from employers.  

The Paycheck Fairness Act moves next to the Senate. Given that chamber’s current make up, it is highly unlikely that the bill will be brought up for debate or advance further.

We will continue to monitor its progress, and the progress of state-level wage equity bills, and provide guidance should any state or federal initiatives become law.