Tuesday, February 2, 2016

We’ve Come A Long Way, But There’s Still A Long Road Ahead: New Rules To Address The Gender Pay Gap

On January 29, 2009, President Obama signed into law the Lilly Ledbetter Fair Pay Act (Fair Pay Act), making it easier for employees to effectively challenge discriminatory pay. After the Supreme Court’s 2007 holding in Ledbetter v. Goodyear Tire & Rubber Co. that unequal pay claims must be filed within 180 days of an employer’s decision to pay a worker less—even if the employee did not learn of the unfair pay until years after the discrimination began, the Fair Pay Act amended the Civil Rights Act of 1964 to provide that unfair pay complaints may be filed within 180 days of each discriminatory paycheck.

On the seventh anniversary of the Fair Pay Act, the Obama administration announced executive action that would require employers, including federal contractors, with more than 100 employees to report summary pay data broken down by race, gender, and ethnicity. In conjunction with the announcement, on January 29, 2016, the Equal Employment Opportunity Commission (EEOC) issued a proposed regulation revising its longstanding Employer Information Report (EEO-1). For the past 50 years, EEO-1 data has provided the federal government with private sector workforce profiles by race, ethnicity, sex, and job category. The new regulation would add aggregate data on pay ranges and hours worked, beginning with employers’ September 2017 EEO-1. The EEOC’s hope is that this new data “will assist the agency in identifying possible pay discrimination and assist employers in promoting equal pay in their workplaces.”

This proposed regulation serves to encourage and facilitate greater voluntary compliance by employers with existing federal pay laws, e.g., evaluating how they are actually paying their employees. Surprisingly or not, the gender wage gap in the U.S. is 2.5 percentage points larger than the average among industrialized countries, with women in full-time jobs earning 79 cents for every dollar a man earns. According to the EEOC's Small Business Fact Sheet, “Although some of these pay disparities may be explained by differences in education, career, or experiences, even when these factors are taken into account, significant unexplained racial, ethnic, and gender-based disparities remain.” Providing greater insight into these pay disparities across industries and occupations will improve federal efforts to combat discrimination; greater transparency, per the EEOC, “will help to root out discrimination and reduce the gender pay gap.”

President Obama also renewed his call to Congress to take up and pass the Paycheck Fairness Act: proposed legislation to update the Equal Pay Act of 1963, which made sex-based wage discrimination illegal. You can read the Senate and House Reports here and here. Specifically, the Paycheck Fairness Act would ban employers from retaliating against employees who share salary information with each other, impose harsher penalties for pay discrimination, and require employers to show that wage gaps between men and women are based on factors other than gender.

Written by Aaron Herreras

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