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The 111th Congress wasted no time signaling its intention to enact employment law legislation that dramatically favors employees.

Just days after taking their oaths of office, members of the House of Representatives passed the Lilly Ledbetter Fair Pay Act and the Paycheck Fairness Act—two bills proponents say deliver on the promise of equal pay for equal work.

Business groups that oppose the bills say they promise something far less benign: Higher employer costs, compliance headaches—and fat paychecks for the attorneys representing employees.

The Ledbetter Fair Pay Act passed the House 247-171, while the Paycheck Fairness Act passed 256-163. Both move on to the Senate, which may vote on the measures this week. A strong Democratic majority in the Senate makes passage likely.

President-elect Barack Obama has previously said he would sign the bills.

Lilly Ledbetter Fair Pay Act

This legislation is a congressional response to the U.S. Supreme Court’s landmark 2007 Ledbetter v. Goodyear Tire & Rubber decision. It would liberalize statutes of limitations on when employees could file pay discrimination lawsuits.

In Ledbetter, the Supreme Court affirmed a Title VII provision requiring employees to file pay discrimination complaints within 180 days of the alleged discriminatory act (300 days in cases covered by a state or local anti-discrimination law).

Lilly Ledbetter argued that each low paycheck she received over the years constituted a new discriminatory act. But the court said the discriminatory act happened decades earlier, when Goodyear first hired her at a pay rate below that of male employees. Since more than 180 days had passed since then, the court said Ledbetter could not sue her employer.

The Ledbetter Fair Pay Act would amend Title VII to make clear that each allegedly unfair paycheck could be considered a fresh incident of discrimination.

What the critics say: According to the Society for Human Resource Management (SHRM), “By making the time clock start over upon the issuance of each successive paycheck or retirement benefit, the Ledbetter bill would allow individuals to bring discrimination claims years or even decades after an alleged act of discrimination occurred.”

SHRM also says the bill “expands the field” of those allowed to sue for past wage discrimination, including family members of workers who die before resolving pay disputes.

Paycheck Fairness Act

The Paycheck Fairness Act would amend the Equal Pay Act of 1963, which mandates equal compensation for jobs requiring comparable functions, skills, effort and responsibility in similar working conditions.

The bill would limit an employer’s ability to justify paying different salaries to workers based in different locations with different costs of living.  It 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.

What the critics say: SHRM says the Paycheck Fairness Act restricts legitimate pay practices. It “would make it significantly more difficult for an HR professional to use legitimate factors, such as education, training or experience, as a component of an organization’s pay system. Moreover, the legislation may altogether prohibit an employer’s use of local market rates and prior salary history in setting compensation,” according to a SHRM statement.

The group also says the bill would foster class-action suits and, because of the risk of higher compensatory and punitive damages, lead employers to settle suits even when they have done nothing wrong.

SHRM is urging its members to write their senators to urge them to vote against the bills.
 

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