Earlier today, I visited with John Dankosky on his wonderful WNPR show, "Where We Live".  You can listen to the replay on its website here.  

In the discussion, we touched on a variety of topics including the proposed Paycheck Fairness Act, which did not get through a procedural vote last week.

As I’ve said on this blog before, there is no doubt that gender discrimination still exists in our society and must be eliminated.  Indeed, there is also no debate that there is a median wage gap between men and women when looking at the raw statistics.

The issue we discussed today is: Why? Why do women tend to make less than men?  Is gender discrimination the reason? (No, according to a recent U.S. Census study and a 2009 study commissioned by the United States Department of Labor.)

If persistent gender discrimination isn’t the reason (or the main reason) for the gender wage gap, then are new laws, like the Paycheck Fairness Act bill necessary or a solution?

(As readers will no doubt know, this blog has continued to taken an avidly apolitical stance focusing instead on what the impact on any proposed legislation might be on employers so I leave it to politicians to debate the merits of the actual bill.)

But the suggestion that we do not have laws on the books to protect equal pay for equal work is a false one.   We already have an existing strict liability law on the books (the Equal Pay Act) that prohibits employers from treating men and women differently in the workplace except in limited circumstances. Here’s the key text:

No employer…shall discriminate… between employees on the basis of sex by paying wages to employees in such establishment at a rate less than the rate at which he pays wages to employees of the opposite sex in such establishment for equal work on jobs the performance of which requires equal skill, effort, and responsibility, and which are performed under similar working conditions, except where such payment is made pursuant to (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…

Notably, a seniority system is one area where an employer IS allowed to treat employee differently. This most often occurs in a union environment where an employee who may be doing the same job as an employee 30 years younger will get paid more because of seniority.  If the older employee is male and the newer employee is female, then that would explain a wage gap.  Would unions go along with changing seniority systems to close the gender wage gap as well? 

These are complicated and nuanced issues. Everyone agrees that the gender wage gap can’t be closed with legislation alone and its important to discuss the other factors that everyone agrees also leads to this wage gap: job choices, negotiations, time out of the workplace to raise a family, etc.

Here are a few resources if you’d like more background on the subject:

Overall, nearly a third of the gender pay gap (27.4 percent) can be explained by differences in occupations, one-fifth (21.9 percent) can be explained by industry, and 10.5 percent can be explained by labor force experience.
This means that if women worked in the same jobs as men and had the same educational and experience levels, same propensity to be in a union, same racial and ethnic make-up as men—all factors we can measure—the gender pay ratio would rise from 80 percent to 91 percent of men’s pay levels. In other words, most of gender pay inequity can be explained by these factors.

Hopefully, today’s show can continue  to elevate the discussion of the gender wage gap into one of substance, rather than one where people are either "for" or "against" equal pay.  I thank John Dankosky for inviting me to appear.

 

The long-discussed Paycheck Fairness Act failed to clear a key Senate hurdle today, effectively killing the prospects for the bill in this Congressional session and likely for the foreseeable future.  The Washington DC Employment Law Update has further details here.  

Long-time Congresswoman Rosa DeLauro (D-Conn, 3rd) has been a leading sponsor of the bill and she has a long and distinguished career in the House.

The bill would have amended federal law by removing many of the defenses that employers can use to justify a difference in salary between a male and female worker.  

With a Republican majority in the upcoming House session, it is unlikely that this bill will see passage anytime soon. 

While Huey Lewis may croon about "The Power of Love", I choose to praise "The Power of the Internet" today. 

Case in point: On Friday, the Hartford Courant came out with a provocatively titled article: "Gender Wage Gap in Connecticut  is Higher Than National Average."  The article raised a lot more questions than it answered and it’s through the power of the Internet that we can dig deeper. 

And so, with all the talk about the Paycheck Fairness Act this week, you’d probably think that the article concludes that gender discrimination is the main culprit in this statistical disparity.  

And you’d be wrong.

Indeed, according to a statistician for the U.S. Census, employment discrimination isn’t a factor:

Jennifer Day, a statistician with the U.S. Census, the source for all this data, detailed the gaps within jobs. The lingering effects of employment discrimination 35 and 40 years ago isn’t the answer — the proportion of women among the older workers in a job did not determine the relative pay, she found.

So, if employment discrimination isn’t the answer, what is? For that, I sent a tweet to Stephanie Thomas, Ph.D., who runs The Proactive Employer blog in her spare time as an economic and statistical expert.  Stephanie has written before about these statistics and why using these numbers to support the Paycheck Fairness Act is inappropriate. To Stephanie, it’s an issue of using numbers for advocacy without understanding their meaning.

Stephanie posted her response to my tweet this morning.  As she notes, the pay gap issue isn’t as simple as comparing "the typical earnings of men and women and subtracting." Multiple factors are at work, including "industry, occupation, education, work experience, union status, hours worked, and the choices made by individuals…." 

So where might  the answer lie? As she notes, "The answer to Connecticut’s larger-than-typical gender wage gap may lie in its larger-than-typical gap between the rich and poor. As noted in the article, ‘Famously, the state has more than its share of super-earners — and they tend to be men.’"

Stephanie goes on to give a great example explaining the differences between "averages" and "medians" and why and how the statistics can get manipulated.  It’s definitely worth a read.

What conclusions should we reach about this? Numbers themselves may not tell an entire story. Thus, the next time you hear about the gender wage gap use the power of the Internet to get a complete story. 

Back in July, the proposed Paycheck Fairness Act, whose lead sponsor is Connecticut’s own Rep. Rosa DeLauro, was still just being tossed around. At the time, I noted that there was criticism of the statistics being used to justify the law.

Now, numerous outlets are suggesting that the bill is close to passage (here, here and here.) Jon Hyman, of the Ohio Employer’s Law Blog, has previously provided this excellent recap of the five significant changes that employers should be aware of in this bill.  They include modifications to the defenses can use, enhanced damages, new non-retaliation provisions, changes from an opt-in to an opt-out class action status, and new reporting obligations. 

The topic is one that is of interest to our current Connecticut senators. In March 2010, Sen. Dodd held a hearing on the subject here.  For more background, you can see all of my posts related to the subject here. 

In the meantime, employers should keep tabs on this new legislative initiative.

— There are three kinds of lies: lies, damned lies, and statistics

                                                                                     —– Mark Twain

Given that Mark Twain is one of Hartford’s most famous residents (now "celebrating" 100 years since his death), it seems appropriate to invoke another one of his famous sayings.

Time and again, statistics keep getting raised to the forefront of public discourse. This time, it’s in the context of why we need the Paycheck Fairness Act — a proposed bill in Congress that I’ve discussed before.

Notably for those in Connecticut, the bill’s lead sponsor is Representative Rosa DeLauro (D-Conn3.)

This week, Stephanie Thomas — an economic and statistical consultant specializing in EEO issues — published a thought provoking piece about one statistic being raised in support of the bill:  that women still only earn 77 cents for each dollar earned by men.

As Stephanie notes, when most people hear that statistic, they assume that gender discrimination must be the reason for the difference. But Stephanie says that discrimination cannot be the reason when you look at the data.

She goes to the original source for the statistic and found that well over half of the difference can be explained by non-discriminatory factors:

[In the study, the researchers] found that 59% of the gender differential could be explained by non-discriminatory things: experience, chosen occupation, chosen industry, etc. So the "77 cents" statistic can’t be due to discrimination:

  • Estimated wage gap based on "77 cents" statistic = $0.23 per hour
  • Amount explained by nondiscriminatory factors = $0.14 per hour
  • Amount NOT explained = $0.09 per hour

According to [the study], the most that could be attributed to discrimination is $0.09 per hour. And this assumes that their model accounts for ALL legitimate nondiscriminatory factors.

She notes that there may be other reasons for the difference as well such as negotiating skills.

Of course, that’s not to say that there may not be yet compelling reasons for changes in the law. But as Stephanie is wise to point out — using this statistic as the basis isn’t one of them. 

(Photo courtesy of Library of Congress Flickr photostream)

It’s a big holiday today. So, let me be the first to say: Happy Evacuation Day — at least to my fellow blogger at Compliance Building.  To everyone else, a Happy St. Patrick’s Day

Its been some time since my last look around the employment law universe, so here’s some quick hits of what else has been going on this month:

Another feature of the CHRO is its generous and unproductive employee work schedules. I remember getting steamed one time during a fact-finding investigation when we were told we’d have to come back on another day to finish up, even though it was mid-afternoon and we were but two hours away from concluding the evidence. The investigator had one of those democratic work schedules that allowed her to skip out in mid-afternoon to attend to one of her kids. I was forced to schlep to Waterbury again. Thousands more in fees on both sides because a normal work day is anathema to liberals.

  • The U.S. Supreme Court has asked for the Solicitor General’s views on the Connecticut case of Amara v. CIGNA, a significant case I’ve discussed at length before that discusses what the obligations are to make disclosures of changes to a pension plan. The Supreme Court is presently considering petitions from the company and the group of former employees that brought suit to take the matter.  A decision from the Supreme Court on whether to accept the petitions is expected by June 2010.
     
  • Finally, are you looking for some new labor & employment law blogs to add to your reading list? The Workplace Prof blog recently compiled a list of such blogs.  It contains many of my must-reads in the morning. Take a peek. 

As those who have been following my tweets know, I have been at the American Bar Association’s House of Delegates and midyear meetings. There’s lots of substance to these meetings and you can certainly follow along with the ABA Journal.

Among the topics discussed today, was the Paycheck Fairness Act now pending in Congress. If you are not familiar with it, you should be because by all accounts, it’s moving front and center this year as an important piece of legislation for the Obama Administration and others.  Rep. Rosa DeLauro of Connecticut is the primary sponsor of the bill in the House of Representatives.

John Phillips reported on this recently. As a result, employers should take stock of their compliance programs and certainly begin a review (if it is not done regularly) of your current compensation procedures.

What does the bill do? John has a good summary but some of the key changes would be to revise the remedies for sex discrimination in the payment of wages by permitting uncapped punitive and compensatory damages and limit employers’ ability to defend against EPA claims. The bill would also prohibit an employer from retaliating against an employee who inquires about, discusses, or discloses his/her own wage or that of another employee unless the disclosing employee has access to that wage information as part of his/her essential job function. 

 

 

There’s a relatively new children’s book out now entitled, "The Wolf Who Cried Boy". It’s a humorous take on the old fable and I read it outloud one evening this week at home.  

I can’t help but be reminded of both the classic and new story, reading all of the hyperbole and hype of the last 24 hours regarding the new Ledbetter Fair Pay Act and those who are quick to predict that the floodgates of employment litigation are now open. 

Let’s clarify a few issues up front: 

  • Is the Ledbetter Fair Pay Act important for employers to understand? Sure, just as all changes to employment laws are important. 
    .
  • Does it dramatically change the law? Not really.  Before this law, employers still weren’t allowed to engage in pay discrimination; it’s just that the time frames for bringing suit under some pay discrimination claims had been defined narrowly by the U.S. Supreme Court in 2007.   This Act extends the time frame for bringing suit by treating each new paycheck as a basis for a discrimination lawsuit, rather than just the original decision to discriminate. 
     
  • Will this lead to a dramatic upturn in pay discrimination lawsuits? The jury is definitely still out on this one.  

Here’s the greater perspective.  Before the U.S. Supreme Court decision in 2007, women could bring pay discrimination lawsuits under both Title VII’s overall scheme, or the Equal Pay Act.  For reasons that are still not fully known (though discussed by National Journal’s Stuart Taylor here (H/T Point of Law)) , Ms. Ledbetter did not pursue her Equal Pay Act claim on appeal after it was dismissed on the merits (effectively forfeiting it).  The U.S. Supreme Court ruled only that for pay discrimination claims brought under Title VII, a 180-day statute of limitations applied to pay discrimination decisions.Courtesy of the White House

Thus, after Ledbetter, if the employer’s discriminatory pay decision occurred in 2007, the employee was out of luck now to sue under Title VII.  Each new paycheck was not an "act" of discrimination. 

The new law treats each paycheck as a new "act" of discrimination, effectively re-starting the statute of limitations each time a paycheck is issued.

But here’s why the fuss about the new act is overblown. The employee still could sue under the Equal Pay Act. Indeed, employers should be much more concerned about the Equal Pay Act — which was unaffected by the Fair Pay Act —  when it comes to pay discrimination claims.  

Unlike Title VII pay discrimination claims, employees do not need to file their Equal Pay Act claims with the EEOC, and claimants have two years in which to file their claim under the Act (three years if the violation is willful).

But here’s the kicker for Equal Pay Act claims: The employee does not need to prove discriminatory intent, unlike Title VII.  In fact, the Equal Pay Act focuses on disparity in pay for substantially similar work; contrast that with Title VII which focuses on a discriminatory action that causes a disparity in pay.  So, when the employee is paid less than similarly situated employees of the opposite sex, an Equal Pay Act claim can arise without showing that the employer intended to discriminate. 

Does this mean that employers have no reason to be concerned about the Ledbetter Fair Pay Act? Of course not. The act has the potential of opening of employers to older claims of discrimination against managers and supervisors who have long since gone. But remember, employees will still need to show that the employer intended to discriminate — a burden that is not insignificant.  And former employees are not going to be able to revive a claim of pay discrimination without a recent "paycheck" to go along with it. 

It’s difficult to get exact numbers of pay discrimination claims and look at the numbers of claims filed both before and after the Ledbetter decision came out, but a cursory review of the statistics published by federal agencies under the No Fear Act doesn’t seem to reflect a big downturn in the numbers of pay discrimination claims after Ledbetter.  In fact, the United States Postal Service reports more pay discrimination claims being made in 2008 (after Ledbetter), than 2007.  Thus, with Ledbetter effectively being overturned, it’s hard to believe that the Act will impact the numbers of claims significantly. 

There is another bill that would change the underlying law that employers should follow closely — the Paycheck Fairness Act (H.R. 12). The Paycheck Fairness Act would limit an employer’s ability to justify paying different salaries to workers based in different locations with different costs of living. The bill would lift the caps on compensatory or punitive damages for which employers would be liable, in addition to current liability for back pay. These damage penalties would apply to even unintentional pay disparities.

The House passed that bill as part of the Ledbetter Fair Pay Act bill, but the U.S. Senate did not take that up.  Backers of that bill, including Rep. Rosa DeLauro of Connecticut, will continue to press on

For employers, the Ledbetter Fair Pay Act should just be another reminder to be vigilant in the monitoring of your compensation practices.  The EEOC’s Compliance Manual (H/T Moore) gives some suggestions on the issues that employers can review to determine their compliance with the applicable laws.  

There’s little reason for employers to cry "wolf" or "boy" over this latest Act. Stay focused and use this current annual review season to ensure that your pay practices are supported by accurate data and are fair. 

Earlier today, President Obama welcomed Lilly Ledbetter to the White House and signed the Lilly Ledbetter Fair Pay Act.  You can find the text of the act here and even leave your comments on it. You can read the President’s remarks here. And you can find the White House blog entry on the subject here.

In signing the bill, the President said:

So signing this bill today is to send a clear message: that making our economy work means making sure it works for everybody; that there are no second-class citizens in our workplaces; and that it’s not just unfair and illegal, it’s bad for business to pay somebody less because of their gender or their age or their race or their ethnicity, religion or disability; and that justice isn’t about some abstract legal theory, or footnote in a casebook. It’s about how our laws affect the daily lives and the daily realities of people: their ability to make a living and care for their families and achieve their goals.

Ultimately, equal pay isn’t just an economic issue for millions of Americans and their families, it’s a question of who we are — and whether we’re truly living up to our fundamental ideals; whether we’ll do our part, as generations before us, to ensure those words put on paper some 200 years ago really mean something — to breathe new life into them with a more enlightened understanding that is appropriate for our time.

I’ve covered the bill extensively in prior posts, which you can find here, but some final remarks on this new law for now are worth mentioning:

The new law, because it would apply to cases still pending that were filed the day before the Court’s ruling, or thereafter, it has the specific effect of overturning the Ledbetter decision. It cannot alter any case that has been finally decided, however. Congress had the authority to overturn the Ledbetter ruling because that was based only on the Court’s reading of a statute, and not a constitutional provision.

  • The bill’s main purpose is to extend statute of limitations on compensation decisions. But the effect of the bill will be to allow for a potential look back on compensation decisions for several years — and perhaps much, longer.

To the surprise of absolutely no one, the U.S. House of Representative overwhelmingly passed two employment law bills addressing compensation issues.  

The Lilly Ledbetter Fair Pay Act, HR 11, pretty much split among party lines 247-171. The Paycheck Fairness Act, HR 12, passed 256-163.  

The bills now move on to the Senate, where the vote is expected to be closer.