(Originally posted on November 15, 2010)

TO THE MEMBERS OF THE UNITED STATES SENATE:

The U.S. Chamber of Commerce, the world’s largest business federation representing the interests of more than three million businesses and organizations of every size, sector, and region, urges you to oppose S. 3772, the “Paycheck Fairness Act.” The Chamber strongly supports equal employment opportunity and appropriate enforcement of the Equal Pay Act (EPA) and Title VII of the Civil Rights Act of 1964. However, this bill would, among other things, expand remedies under EPA to include unlimited punitive and compensatory damages, significantly erode employer defenses for legitimate pay disparities, and impose invalid tools for enforcement by the Labor Department.

The EPA, while allowing recovery for lost back pay, does not provide for compensatory and punitive damages, nor should it. The EPA is a strict liability statute in that there is no requirement that the employer intend to act unlawfully. It strains logic to mandate that damages conceived and designed to punish and deter wrongful conduct should apply to claims of inadvertent, unintentional conduct that has the effect of violating the EPA. If a plaintiff can demonstrate that a wage disparity is due to intentional discrimination, then he or she should bring a claim under Title VII of the Civil Rights Act of 1964, where punitive and compensatory damages (capped at certain levels) are available.

S. 3772 would also significantly erode the defenses available to employers under the EPA. For example, the bill would permit plaintiffs to challenge otherwise legitimate employer pay decisions by showing that some other employment practice might achieve the same business purpose without creating the disparity. Further, the employment decision in question must also be proven to be required by “business necessity.” These provisions would open up compensation and employment decisions to limitless review by courts and juries and would ultimately lead to an inefficient, cumbersome, and costly salary-setting process. In addition, the bill would modify existing rules concerning collective actions, making it easier for plaintiffs’ attorneys to mount class action suits.

In addition, the bill would make a number of regulatory changes at the Labor Department related to equal employment opportunity requirements for federal contractors. Re-imposing the flawed Equal Opportunity Survey and requiring use of dubious statistical models for determining whether employers engage in systemic compensation discrimination, would do nothing to combat discrimination and instead would waste both enforcement and employer resources.

Litigation in employment discrimination has exploded since inclusion of compensatory and punitive damages under Title VII resulting in increased costs associated with attorneys’ fees and employment investigations as employers must respond to each charge filed, whether frivolous or not. Further increasing the opportunity for frivolous litigation will only further serve to undermine America’s civil rights laws.

The Chamber urges you to oppose S. 3772 and may consider votes on, or in relation to, these issues – including votes on the motion to proceed – in our annual How They Voted scorecard.

Sincerely,

R. Bruce Josten