Author: Brynn Stylinski, Contributing Member, University of Cincinnati Law Review
On September 22, 2015, Republican Senator Kelly Ayotte submitted the Gender Advancement in Pay Act (GAP Act) to the Senate.[1] The GAP Act proposes an amendment to the Fair Labor Standards Act (FLSA), as amended by the Equal Pay Act, in order to provide greater protections to women earning unequal pay to their male counterparts.[2]
The bill garnered very little attention at the time of its submission,[3] which is perhaps emblematic of the issue it addresses. It was not the first bill of 2015 to propose amending the Equal Pay Act, and in fact it falls far short of the earlier Paycheck Fairness Act in terms of protection,[4] but the fact that both Democrat and Republican senators have proposed amending the Equal Pay Act to better protect employees speaks to the shortcomings of the current law. Much work is needed, and even if the GAP Act passes, much more will need to be done. The Paycheck Fairness Act comes much closer to closing the gaps, but either way, there will be a long way to go before the wage gap disappears.
The Equal Pay Act and its Application
The Equal Pay Act was first enacted in 1963. It amended the FLSA to prohibit discrimination in pay that is based on sex.[5] It was the first federal law to address sex discrimination.[6] Under the current law, employers are prohibited from discriminating against employees by paying them at a lower rate than employees of the opposite sex for “equal work on jobs the performance of which requires equal skill, effort, and responsibility, and which are performed under similar working conditions[.]”[7] This prohibition is subject to four major exceptions. An employer may pay employees of different sexes at different rates if the differences are based on: “(i) a seniority system; (ii) a merit system; (iii) a system which measures earnings by quantity or quality of production; or (iv) a differential based on any other factor other than sex[.]”[8] The defendant has the burden of proving these exceptions as affirmative defenses to a claim of sexual discrimination.
These exceptions have grown broader over the years. “[A]ny factor other than sex” has become a wide reaching catchall provision. Though the “going market rate” is no longer a legitimate justification under the act,[9] the argument that a men’s department brings in more revenue than a women’s department has been considered sufficient to meet the exception under the act, even where the store forbade women from working in the men’s department.[10] Some courts have required that the factor other than sex be business related, but many others have found that employers are relieved of liability if there is any factor other than sex, regardless of its legitimacy to the business.[11] With the exceptions punching such large holes in the Equal Pay Act, the wage gap remains firmly in place. In 2014, the median annual earnings for women in the United States equated to only 79 percent of the median earnings of U.S. men.[12] Because of this major shortcoming in the statute, legislators have been attempting to amend the law for years.[13]
The Paycheck Fairness Act
The latest version of the Paycheck Fairness Act (PFA) was introduced in March of this year by a group of democratic senators. After listing numerous findings of fact regarding the Equal Pay Act’s shortcomings and its deviation from the original congressional intent, the PFA proposes specific amendments to the act. It proposes replacing the term “any factor other than sex” with the more specific language “a bona fide factor other than sex, such as education, training, or experience.”[14] It also specifies that the exception would only apply if the difference “is not based upon or derived from a sex-based differential in compensation,” is related to the job, is “consistent with business necessity,” and actually accounts for the difference in pay.[15] The employee would then have the opportunity to prove that there is a reasonable alternative to the employer’s chosen actions that would not result in the differential and was not employed, thus leading to liability.
The PFA also addresses some of the Equal Pay Act’s other shortcomings. It would classify any employees working for the same employer in the same county or political subdivision as working in the same establishment; thus protecting those who work in satellite offices from unequal wages.[16] It would (1) expand the anti-retaliation provision of the FLSA to protect anyone who filed a charge or caused an employer investigation;[17] (2) protect everyone who has inquired, discussed, or disclosed their wages to other employees unless they accessed the information as a part of their job and not in response to an investigation, proceeding, or hearing; (3) forbid mandatory waivers of the right to discuss pay;[18] (4) allow class actions, compensatory damages, and punitive damages under the Equal Pay Act;[19] and (5) establish a grant to teach women negotiation skills, require research and outreach on pay equity, and require employers to collect relevant data.[20]
The GAP Act
The GAP Act takes a different approach from the PFA. It would add two additional categories of exceptions to allow for pay differential based on expertise and shift differentials.[21] “[F]actor other than sex” would be narrowed to “a business-related factor other than sex, including but not limited to education, training, or experience”[22] It also tolls the statute of limitations for the non-payment of wages when suit is brought or an EEOC charge is filed under the Equal Pay Act in addition to a Title VII action.[23]
The GAP Act would amend the anti-retaliation provision of the FLSA in a similar manner to the FPA. It would add protections for those who file a charge; cause an employer investigation; inquire, disclose, or discuss wages unless obtained through one’s position and not in response to an investigation, proceeding, or hearing; or decline to discuss wages.[24] The protections for those discussing wages would be limited to situations in which there was no confidential settlement, severance agreement, non-compete, non-disclosure, non-disparagement, or other post-employment agreement. However, employers would still be prohibited from requiring their employees to waive their right to discuss wages while employed there. [25]
The GAP Act would impose additional civil penalties for employers of different sizes.[26] While the current law imposes a general civil penalty of no more than $1,100 for each violation,[27] the GAP Act would add an additional flat penalty, capped at $5,000 for those with less than 100 employees and $15,000 for those with over 500 employees, with the penalty-per-violation to be credited against the additional penalty.[28] The GAP Act would not allow for compensatory or punitive damages, which are currently only available to those who have been deprived of minimum wage or overtime payments.[29] The civil penalties would be used to fund a study on strategies for increasing women’s participation in high wage occupations and where women are unrepresented, and a submission to Congress of a report on the findings and recommendations of the study.[30]
The GAP Act Falls Short of the PFA
While the GAP Act may be a step in the right direction in some respects, in others, it falls short. Although it does attempt to limit the category of “factor other than sex,” it only requires that the factor be business related, not that it be legitimate or genuine.[31] It also creates two new exceptions to a rule which is already full of loopholes.[32] By creating new loopholes, the act undercuts its own effort to narrow the current loopholes. The additional protections from retaliation do address some of the current shortcomings in the law. However, the GAP Act focuses too much on ensuring that businesses are not overly inconvenienced by explicitly allowing them to forbid disclosure of wages in the context of post-employment agreements.[33] Wage disclosure is an essential tool for narrowing the wage gap. It brings attention to inequalities in pay and allows for greater bargaining by those who have experienced pay discrimination. Allowing employers to continue forbidding wage disclosure is counterproductive to the goals of the act.
The GAP Act also fails to allow women with unfair pay differentials to bring class actions, which the PFA would permit.[34] Class actions bring protections to workers who possess neither the resources nor the awareness to challenge their employer’s wage policies under the current Equal Pay Act. The threat of such actions would also be a greater deterrent to employers, who could simply settle out of court with an individual claimant and demand a confidentiality agreement under the terms of the GAP Act.[35]
Even the GAP Act’s imposition of the additional penalty to fund a study is of extremely limited value to the employee who has been cheated out of equal pay when compared to the compensatory and punitive damages proposed by the PFA.[36] The PFA provides for training programs as well as studies, but the GAP Act only allows for a single study of strategies to be presented before congress. [37] The GAP Act hints at improving the situation of female workers, but it does little to actively do so in light of its shortcomings.
The Need for Action
Women’s pay equity has improved a great deal since the passage of the Equal Pay Act in 1963, when women only earned 58.9 percent of what men did,[38] but very little has changed in recent years. In the last five years, women’s pay equity has improved by less than 2 percent.[39] The wage gap has even increased at certain times over the last few years. It exists at every education level, and in every age group.[40] The PFA attacks the problem on more fronts than does the GAP Act. It attempts to close loopholes while incentivizing compliance and compensating victims of discrimination through the implementation of damages. Either of the proposed bills will be an improvement by narrowing some of the loopholes and looking to the source of the problem. Unfortunately, it is likely that neither of them would lead to much immediate change. It would take time for suits to be brought and enforcement to take effect, particularly since neither bill would be retroactive. There are also systemic cultural problems that run deep—over fifty years of protective legislation has been insufficient to fill in the wage gap. No matter which proposal is passed, it is definite that new action is needed in today’s complacent society.
[1] S. 2070, 114th Cong. (2015).
[2] Id.
[3] As of October 14, 2015, a news search on Westlaw produced only two articles, one written three weeks after the bill was submitted, and a news search on Lexis produced only one article on the subject.
[4] S. 862, 114th Cong. (2015).
[5] 29 U.S.C. §206(d)(1), 215; Keiko Lynn Yoshino, Reevaluating the Equal Pay Act for the Modern Professional Woman, 47 Val. U. L. Rev. 585, 591 (2013)
[6] Yoshino at 591.
[7] 29 U.S.C. §206(d)(1).
[8] Id.
[9] Corning Glass Works v. Brennan, 417 U.S. 188, 205-207 (1974) Bridget Sasson, The Equal Pay Act: Almost Fifty Years Later, Why Wage Gap Still Exists, 15 Duq. Bus. L.J. 73, 77 (2012).
[10] Hodgson v. Robert Hall Clothes, Inc., 473 F.2d 589, 593, 597-8 (3d Cir. 1973)(finding that “women could not perform the work done by the men” making it reasonable to pay the more profitable all-male department more); Yoshino at 595-6.
[11] Sasson at 77, Yoshino at 596, E.E.O.C. v. J.C. Penney Co., 843 F.2d 249, 253 (6th Cir. 1988)( “’factor other than sex’ defense does not include literally any other factor, but a factor that, at a minimum, was adopted for a legitimate business reason.” (internal citations omitted)); Murphy v. Ohio State Univ., 549 F. App’x 315, 319 (6th Cir. 2013); Wernsing v. Dep’t of Human Servs., State of Illinois, 427 F.3d 466, 468 (7th Cir. 2005)(finding that the Equal Pay Act asks whether the employer has a reason other than sex-not whether it has a ‘good’ reason.” (citing Taylor v. White, 321 F.3d 710, 719 (8th Cir.2003))
[12] Catherine Hill, Ph.D., The Simple Truth About the Gender Pay Gap (Fall 2015), American Association of University Women, http://www.aauw.org/research/the-simple-truth-about-the-gender-pay-gap/ (last visited October 16, 2015).
[13] Variations of the Fair Pay Act and Paycheck Fairness Act have been introduced to Congress since 1994 and 2003. Yoshino at 599.
[14] S. 862 §§2-3(a)(2) (2015).
[15] Id. at § 3(a)(3).
[16] Id.
[17] This would protect those who do not file a formal complaint but make an informal report to the employer or a charge with the EEOC, who are currently not protected under the FLSA.
[18] [18] S. 862 § 3(a)(3); 29 U.S.C. § 215.
[19] S. 862 § 3(c)(4)-(d)(1)
[20] S. 862 § 4-10.
[21] S. 2070 § 2(1).
[22] Id.
[23] Id. § 2(4)
[24] Id. § 3(b)(1).
[25] Id.
[26] S. 2070 § 4(1).
[27] 29 U.S.C. §216(e).
[28] S. 2070 § 4(1).
[29] Id.; 29 U.S.C. §216(b)-(c).
[30] S. 2070 § 5(a)-(d).
[31] Id. § 2(1).
[32] Id.
[33] Id. at § 4(1).
[34] S. 862 § 3(c).
[35] S. 2070 § 3(b)(1).
[36] Id. at § 4(1); S. 862 § 3.
[37] S. 862 § 4-6, 8-9; S. 2070 § 5.
[38] Sasson at 74.
[39] In 2010, American women earned 77.4 percent of what American men made. Id. n2 (internal citations omitted).
[40] Hill.
