Senate Majority Leader Harry Reid recently indicated his intent to bring the proposed Paycheck Fairness Act for a vote by the full Senate before the end of the current Senate term. The PFA would substantially change the burden of proof in gender-based Equal Pay Act Claims, requiring employers to prove that differences in pay among employees inevitably result from factors other than gender.

Under current equal pay laws, the employer can defend a claim of sex discrimination by demonstrating a bona fide business reason for the disparity other than gender. The PFA would change this burden by requiring the employer to prove that the pay disparity is required by business necessity. The employee would then have the ability to demonstrate that the claimed business necessity can be satisfied by policies that do not result in the pay disparity.

In other words, businesses could be forced into adopting alternative business practices that do not result in pay disparities as an alternative to compensation differences that may result in gender differences. For example, if the employer pays more to an experienced male employee, a less experienced female employee could contend that the employer is required to send her for additional training, and then pay her the same as her more experienced male co-worker.  Experience would not be a bona fide factor justifying the pay difference, because the female employee could contend that the training is an alternative work practice.

The PFA would also change existing wage laws by (1) banning employers from prohibiting employees from comparing compensation; (2) allowing unlimited punitive damage awards for Equal Pay Act claims; and (3) making it easier for plaintiffs to bring class action pay discrimination claims.

Employers are concerned that if enacted, the PFA would allow federal courts to second-guess business decisions, and impose alternative business practices on employers. The increase in litigation and penalties against employers for equal pay violations would also encourage employers to adopt regimented pay levels across broad groups of employees in order to avoid questions regarding their pay practices.

The PFA has already been passed by the House. President Obama has indicated his support of the legislation if it is approved by the Senate.