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Regulation and Compliance > Legislation

Houses Passes Modified Equal Pay Bills

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The American Benefits Council says wage discrimination legislation that passed in the House today could expose pension plan sponsors to the threat of suits over benefits paid years earlier.

House members today voted 247-171 to pass H.R. 11, a bill that would reverse a 2007 U.S. Supreme Court decision that severely limited workers’ ability to sue their employers in connection with allegations of wage discrimination.

H.R. 11 would restore the law that was in place before the court handed down its decision in Ledbetter v. Goodyear.

House members then voted 256-163 to pass the Paycheck Fairness Act, H. R. 12, which would prohibit sex discrimination in employee compensation.

Observers expect the Senate to take up the bills soon.

President-elect Barack Obama has supported the passage of legislation that would reverse the effects of the Ledbetter ruling.

In 2008, an earlier effort to reverse Ledbetter failed when supporters mustered only 57 of the 60 Senate votes needed to shut off a filibuster.

Current law already prohibits employers from paying men and women unequal amounts for equal work.

In Ledbetter, the Supreme Court held that an employee would be barred forever from challenging alleged paycheck discrimination unless the employee filed a claim within 180 days after the discrimination occurred.

Under the new paycheck legislation, every paycheck or other compensation resulting, in whole or in part, from an earlier discriminatory pay decision or other practice would constitute a violation of Title VII, which prohibits discrimination on the basis of race, sex, color, national origin, and religion, supporters say.

Each discriminatory paycheck would, in effect, restart the clock for filing a claim.

“As long as workers file their charges within 180 days (or 300 days in some jurisdictions) of a discriminatory paycheck, their charges will be considered timely,” supporters write in a summary of the legislation.

Under current law, employers can avoid liability if they can prove that alleged pay discrimination was the result of any factor other than sex.

Under the proposed legislation, employers could rely on an affirmative defense only in cases in which the factors other than sex were job-related or served a legitimate business interest.

Additionally, the proposed legislation would state that, for the purpose of demonstrating discrimination, a plaintiff could compare compensation of employees who do not work in the same physical place of business in which the plaintiffs work.

The proposed legislation also would prohibit employers from retaliating against employees who share salary information, and it would increase civil penalties against employers that violate the act, make it easier to bring class actions, and authorize the labor secretary to seek additional compensatory or punitive damages.

The American Benefits Council, Washington, has thanked House members for modifying the bills to emphasize that the legislation would not change the current rules concerning when pension distributions are considered paid.

But, despite the changes, the council is still concerned that the legislation could be interpreted to allow an individual who has been retired for many years to file a charge or sue based on acts that occurred during the individual’s active service, but at a date when few, if any, individuals involved in committing the alleged discrimination are available to discuss the facts and circumstances of the case, James Klein, the council’s president, writes in a letter to House members.

As the legislation heads to the Senate, council members will continue to work to persuade lawmakers to include language addressing that concern, “to prevent confusion,” Klein writes.

Rep. Rosa DeLauro, D-Conn., chief sponsor of the Paycheck Fairness Act, says passing the bill is part of a “transformational moment.”

“With a new Congress, a new administration, we have a chance to finally provide equal pay for equal work and make opportunity real for millions of American women,” DeLauro says.

Republicans say the paycheck bills would foster lawsuits against businesses.

Passage of the bills sends a signal “that the first substantive order of business is not job creation or tax relief but rather a trial lawyer boondoggle that can put jobs and worker pensions in jeopardy,” says Rep. Howard McKeon, R-Calif., the highest ranking Republican on the House Education and Labor Committee.


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