Business community opposes Paycheck Fairness Act

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As the Obama administration continues to work toward economic recovery, the Senate will be debating the Paycheck Fairness Act next week — a bill that the business community says is both unnecessary and sure to hurt job creation, but that others contend is necessary to ensure gender equity in the workplace.

According to business groups, on its face the bill seems innocuous enough. After all, who wouldn’t be in favor of gender equity in the work place?

However, they say, the bill — already approved 256-163 in the House last year —would try to ensure pay equity by restricting employers salary decisions, making it easier to file suit against employers believed to be engaged in sex-based pay discrimination and requiring businesses to disclose detailed salary information to the government.

Many further argue that the legislation is superfluous, as the Equal Pay Act and Title VII of the Civil Rights Act already provide protection against gender-based wage discrimination.

Michael Layman, labor and employment manager for the Society for Human Resource Management (SHRM), stressed that, with a membership that is about 70% female, SHRM takes pay discrimination very seriously but that the Paycheck Fairness Act would be excessive and overly burdensome.

“Whether you are a small business owner or a corporation with an entire human resources department, the business uses their professional judgment in the marketplace to make salary offers and pay decisions,” Layman told The Daily Caller. “There is no ‘correct wage’ for any given employee, so the Paycheck Fairness Act touches on the subjective nature of salary to make the employer easier to sue than they are under the existing two federal gender pay discrimination laws.”

The U.S. Chamber of Commerce shares that sentiment. Mike Eastman, the Chamber’s executive director of labor law policy, told TheDC that the Chamber is concerned about the harm it will cause to American business.

“It’s a bill we really don’t like,” Eastman said, pointing to the onerous restrictions, regulations and potential for frivolous lawsuits he says the bill creates. “As a practical matter it is just one more thing that creates a disincentive to do business here in the United States. If you are looking at where to open a new business, it is going to be a factor.”

Eastman continued by noting that the potential for high priced litigation is among the more worrisome aspects of the bill.

“This would be the first law in the EEOC’s (Equal Employment Opportunity Commission) jurisdiction that would have unlimited punitive damages at their disposal,” he said. “And they are notorious for engaging in bad faith and using heavy handed tactics to get employers to cave in. If now there is no limit on the punitive damages, you can imagine the threat to business.”

In a letter to then-director of the Office of Management and Budget Peter Orszag in June, the Business Roundtable and The Business Council cited the Paycheck Fairness Act as an example of pending legislation that would hurt economic growth and stifle job creation.

“[Paycheck Fairness] would open companies to potentially crippling employment litigation without adding significant benefit to workers, since current law already addresses the discrimination issue,” the letter read.

In spite of the concerns coming from the business community, women’s groups, labor organizations, and even the president insist that the Paycheck Fairness Act is essential to ensure that women are treated fairly in the workplace.

“So today,” President Obama said on July 20th, “I thank the House for its work on this issue and encourage the Senate to pass the Paycheck Fairness Act, a common-sense bill that will help ensure that men and women who do equal work receive the equal pay that they and their families deserve. Passing this bill is one of the [Middle Class] Task Force’s key recommendations, and I hope Congress will act swiftly so that I can sign it into law.”

The National Organization for Women (NOW) points to the country’s wage gap as an obvious reason this legislation is needed.

In a letter the group sent to senators in September, NOW urged lawmakers to support the bill. “On average, the pay gap costs women about $11,000 each year in lower income, more than $400,000 over a lifetime. Every month women lose nearly a full week’s pay due to sex-based wage discrimination. Loss of that income may mean the difference between paying the mortgage or losing the family home,” the letter read.

Some, however, have taken issue with the premise that the wage gap is even a product of discrimination. In a New York Times op-ed, Christina Hoff Sommers explained that the gender wage discrepancy is largely a function of individual choice.

“[A] 2009 analysis of wage-gap studies commissioned by the Labor Department evaluated more than 50 peer-reviewed papers and concluded that the aggregate wage gap ‘may be almost entirely the result of the individual choices being made by both male and female workers,’” she highlighted.

Sommers went on to detail the disparity in professional values that also account for pay differences, such as the propensity for women to leave the workplace to care for children and the fact that women tend to gravitate toward job benefits over a higher salary. “In fact,” Sommers writes, “there were so many differences in pay-related choices that the researchers were unable to specify a residual effect due to discrimination.”

Whether the wage gap is a function of discrimination or personal choices, in the long run, legislation such as this will be harmful to women, says the former chair of the National Small Business Association, Keith Ashmus, a partner at the law firm Frantz Ward in Cleveland.

“It will discourage businesses to hire, especially women, because of the dangers that are associated with this Act. I think the increased litigation will scare small businesses, and other businesses…will spend all their time looking at how not to get sued instead of how to make money and hire more people,” he said.

When the lame duck Congress convenes next week, the Paycheck Fairness Act will be on the Senate’s agenda.