Where We Stand: Paycheck Fairness Act

AAUW believes that pay equity and equal opportunity are matters of simple fairness.

Despite civil rights laws and advancements in women’s economic status, workplace discrimination still persists. As AAUW’s report The Simple Truth about the Gender Pay Gap explains, the latest numbers from the U.S. Census Bureau once again revealed that women working full-time, year-round are typically paid only 83 cents for every dollar paid to men. And the pay gaps are even wider for women of color. African American women and Latinas make, respectively, 63 and 55 cents on the dollar as compared to non-Hispanic, white men.

We know that women take home less money than they have rightfully earned in every industry, no matter what they do, how much education they have and where they are from. AAUW research found that even when controlling for factors known to affect earnings, such as education and training, marital status, and hours worked, college-educated women still earn 7% less than men just one year out of college. Over time, the pay gap compounds and widens, impacting women’s social security and retirement.

While the gap has narrowed since passage of the Equal Pay Act of 1963, progress has largely stalled. Because of limited enforcement tools and weak remedies, the law has not been able to fulfill its promise. The Paycheck Fairness Act (PFA) provides a much-needed update to the Equal Pay Act.

The PFA would give women the tools they need to successfully challenge pay discrimination and to provide incentives to employers to comply with the law. The bill takes several important steps, including:

Ensuring Non-Retaliation for Wage Disclosure

The PFA prohibits retaliation against workers for discussing or disclosing wages, while also protecting certain confidential wage information. It’s often difficult for workers to learn how their pay compares with that of fellow employees. Many employers explicitly prohibit employees from discussing their salaries. The PFA would ensure that women are no longer silenced in the workplace, and instead able to talk about wages with coworkers without the fear of being fired. Allowing workers to discuss their salaries without fear of losing their jobs will help women to know whether or not they’re being treated equally.

Prohibiting Use of Salary History

The bill bars employers from relying on an employee’s salary history to determine their future pay, so that prior pay discrimination doesn’t follow workers from job to job. If a worker faced a pay gap at one job – perhaps because of discrimination – basing their next job’s salary on this earlier one only continues that pay gap. Even a well-meaning employer could be carrying forward a salary that was tainted with discrimination. It makes sense that employers should establish salaries based on market research and the duties of the job in question rather than on factors that could introduce bias.

Ensuring Job-Relatedness

The bill clarifies the reasons an employer can legally use to justify differences in pay between men and women. One way current law allows an employer to defend a difference in pay between men and women is by asserting that the difference is based on “any factor other than sex.” Courts have interpreted this phrase so broadly that it can embrace some factors that themselves can be based on sex, like prior salary or perceived negotiation skills. The PFA closes this loophole by requiring that employers show that pay gaps between men and women are justified by a business necessity and are related to the job.

Equalizing Remedies

The bill ensures women can receive the same robust remedies for sex-based pay discrimination that are currently available to those subjected to discrimination based on race and ethnicity. The current limited remedies are often inadequate to compensate plaintiffs who have experienced sex discrimination, and can be viewed by employers simply as the cost of doing business. Allowing individuals to recover the full amount of their injuries, as they can in race discrimination cases, strengthens the penalties that courts may impose for sex-based equal pay violations and provides a much stronger deterrent effect.

Helping Challenge Systemic Discrimination

The Equal Pay Act was adopted before the current federal class action rules and thus has a different process for joining together for a suit: workers must opt-in, rather than opt-out. This is a more difficult process and could exclude women who are not aware of their claim or afraid to affirmatively join a suit. The PFA would allow Equal Pay Act lawsuits to proceed as opt-out class actions, like other civil rights cases, making it easier for women to band together to challenge systemic discrimination.

Clarifying Comparable Establishments

The PFA would eliminate artificial geographic limits, allowing a woman to reasonably compare her salary to male colleagues with the same employer, so long as the facilities are in similar geographic regions. Current law forbids unequal pay within the same “establishment,” which some courts have interpreted narrowly to mean the employees being compared must be in the same physical location. This interpretation unfairly limits employees’ ability to bring cases under the Equal Pay Act. In many workplaces, particularly in the case of managers or supervisors, there are no similarly situated employees of the opposite sex at the same physical place of business, but there are within the same county or region.

Providing for Pay Data Collection and Additional Assistance and Resources for Businesses

The PFA requires pay data collection and supports salary negotiation skills training programs to give workers the tools to advocate for higher wages. The bill also provides technical assistance for businesses, including an exemption for small businesses.

The pay gap is persistent and new tools, like those in the Paycheck Fairness Act, are necessary to help make progress towards closing it.