Questions
and Answers on the Fair Pay Act |
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Q:
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What
are the major provisions of the Fair Pay Act? |
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A:
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The major provision of the Fair Pay
Act prohibits wage discrimination based on sex, race,
or national origin among employees for work in "equivalent
jobs." Equivalent jobs are those whose composite
of skill, effort, responsibility, and working conditions
are equivalent in value, even if the jobs are dissimilar.
The Act is a natural extension of the 1963 Equal Pay
Act, which is limited to sex-based discrimination in
the same jobs. For enforcement purposes, the Fair Pay
Act allows class action lawsuits to be filed and provides
for compensatory and punitive damages. It also fills
the information gap for workers by requiring some employers
to disclose to the Equal Employment Opportunity Commission
(EEOC) general job classifications and their pay statistics
(although it maintains individual confidentiality).
The bill prohibits a company from lowering any employee's
wage rate in order to implement fair pay.
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Q:
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Is
the Fair Pay Act a new law? |
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A:
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No; technically, it is an amendment
to the Fair Labor Standards Act of 1938 (FLSA), which
is the principal federal law covering minimum wage,
equal pay, overtime requirements, and other labor-related
issues. The Equal Pay Act of 1963 was also an amendment
to the FLSA.
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Q:
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How
does this act expand upon the 1963 Equal Pay Act? |
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A:
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The Equal Pay Act essentially covers
"equal pay for equal work" and applies only
to sex-based discrimination. The Fair Pay Act expands
these protections in two ways: First, it prohibits pay
discrimination on the basis of race and national origin,
as well as sex; Second, it prohibits such discrimination
among workers performing dissimilar work in equivalent
jobs. The Equal Pay Act prohibits only sex discrimination
between workers performing substantially the same
jobs.
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Q:
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What
is the current wage gap? |
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A:
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According to the U.S. Census Bureau, in 2007 women earned only 78 cents for every dollar that men earned. This is approximately an 19-cent improvement from the 1963 wage gap figure of 59 cents on the dollar. Most women of color experience even more severe inequities: African-American women earned only 68.7 cents for every dollar earned by men in 2005, Hispanic women earned only 59 cents, and Asian American women earned 89.5 cents.
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Q:
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Why
is the Fair Pay Act needed? |
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A:
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Wage discrimination
is deeply rooted in our legal system and our cultural
history. Today's compensation systems still reflect this
bias. In our not-so-distant past, employers considered
men to be the primary breadwinners and married women as
being in the workforce to earn "pin money."
The "family wage" was built around the concept
of a wage-earning male and a "dependent" female
spouse. Some jobs were off-limits to women and minorities,
and in many cases, women were discriminated against for
reasons such as needing time off to have children.
Women are still often steered into the more traditional
female occupations - such as nurse, teacher, clerical
worker, or retail sales clerk. This has perpetuated
sex-based occupational segregation, which is beyond
the reach of the Equal Pay Act alone. Requiring equal
pay for workers in equivalent jobs, even when the work
performed is different, is the surest way of eliminating
the enduring biases against jobs held predominantly
by women and people of color.
Research published by the Council of Economic Advisors
has estimated that between one quarter and one third
of the wage gap cannot be explained by legitimate factors
such as education or experience. Although some progress
in closing the wage gap has been made in recent years,
much of this has been due to the decline in men's wages
rather than an increase in women's wages.
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Q:
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What
types of jobs have been compared when "fair pay"
adjustments have been made? |
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A:
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There has been a variety of experiences with pay equity
implementation. In a school district, elementary school
head secretaries were compared to audiovisual technicians.
In a hospital, registered nursing assistants were compared
to plumbers. In a shoe factory, console operators/sample
stitchers were compared to cutters. In a retail food
chain, cashiers and meat wrappers were compared to stock
clerks. In state and municipal governments, job evaluation
systems have allowed comparisons to be made between
many female- and male-dominated jobs. These have included
comparing Clerk Typists and Custodians; Secretaries
and Lab Technicians; Finance Clerks and Maintenance
Workers; Emergency Services Operators and Fire Dispatchers;
and Dining Hall Coordinators and Automotive Parts Technicians.
Through collective bargaining negotiations, Social Workers
in a large county received a pay adjustment after being
compared to Parole Officers.
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Q:
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Is
there national support for legislation addressing unfair
pay practices? |
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A:
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Absolutely. Surveys throughout the past decade have
documented strong support for legislation to curb wage
discrimination. In a recent poll conducted by Lifetime
Television and the Center for Policy Alternatives, working
women ranked equal pay as a top priority for Congress
in 2001. Overall, 93% of African-American women, 91%
of Latinas, 90% of Asian-American women, and 87% of
white women said equal pay and benefits for women should
be one of the top policy priorities in the United States.
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Q:
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How
will the Fair Pay Act affect business? |
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A:
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Each employer individually will decide how its employees
are paid. The government will absolutely not set wages.
Under the Fair Pay Act, businesses would decide how
jobs are valued, as they should. It requires only that
a legitimate and non-discriminatory system be used to
set wages.
Based on experiences in state government, effective
pay equity programs can be implemented with minimal
costs. In Minnesota, the state spent only 3.7 percent
of its payroll budget over a four-year period, decreasing
the wage gap among its 30,000 employees by six to eight
percent. The state of Washington implemented its pay
equity plan over a ten-year period, resulting in increased
pay for women in the lowest job classes by about ten
percent. The total cost to the state was only 2.6 percent
of payroll. In the private sector, pay equity consultants
help companies implement fair pay policies quietly over
time.
Fair pay for employees can lead to greater productivity
by raising morale among workers who expect to receive
fair pay for their work. By compensating workers for
the fair value of their work, the Fair Pay Act can help
businesses recruit and retain the best-qualified workers.
There has been no evidence of job loss associated with
any pay equity plans. The many businesses that already
evaluate their compensation plans to correct for the
effects of bias will not be impacted by this legislation.
For other employers, the Act will provide them with
an incentive to examine their wage-setting policies
in order to eliminate any bias.
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Q:
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Who
is covered by the Fair Pay Act? |
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A:
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Both private
business and government agencies are covered. Part-time
and temporary workers are protected to the same extent
that they are currently under the FLSA.
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Q:
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Can
an employer ever pay different wages for work in jobs
that have been deemed equivalent? |
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Yes. Under the Fair Pay Act, employers are allowed
to pay equivalent jobs differently if the disparity
is proven to be a result of a seniority or merit system,
or a system that measures pay by the quantity or quality
of work. In addition, differences in pay are justifiable
for other reasons having to do with a legitimate business
interest.
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Q:
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How
will the Fair Pay Act benefit women and people of color? |
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A:
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Women and people of color have been historically undervalued
in the workplace due to discrimination. Above all, fair
pay is a matter of justice and human dignity. But it
also has severe economic ramifications. One study estimated
that women earn $700,000 to $2 million less than men in wages over
a lifetime. This significantly undermines their ability
to provide for their families today and hurts their
retirement security tomorrow. By ensuring fairness in
compensation, the Act will provide workers with the
respect that comes with a fair paycheck.
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Q:
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Does
the Fair Pay Act require employers to conduct pay equity
studies as does the Ontario, Canada Pay Equity Act? |
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A:
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No, the Fair Pay Act does not require the employer
to perform a pay equity study. It simply requires that
employers refrain from discriminating in compensation
on the basis of sex, race, or national origin.
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Q:
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How
will this legislation be enforced? |
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A:
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Enforcement
of The Fair Pay Act is complaint-driven. That means that
an individual (or a class of individuals) who believed
she or he had been discriminated against would first file
a complaint. Only after an investigation and a finding
of discrimination could an agency or court order a remedy
- and then only to correct discrimination, not to engage
in generalized wage setting for companies.
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Q:
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Why
does the Act have a disclosure and reporting system for
job classification and pay statistics? |
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A:
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For a free enterprise system to work effectively, all
economic decision-makers require information for fully
informed choices. This includes employees. Currently,
employers are entitled to know a great deal about employees,
but employees often lack even the most basic information
about overall compensation practices. Without this information,
workers cannot fairly compare and evaluate present and
prospective employers, thus artificially constraining
their employment choices. Disclosure will aid employers
as well. Analyzing compensation statistics by job type,
gender, race, and national origin will enable employers
to identify and remedy inequities that might not otherwise
come to their attention. Fair employers have nothing
to hide. The Fair Pay Act directs the EEOC to develop
regulations relating to the form and content of the
reports.
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Q:
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What
is the effective date of the Fair Pay Act? |
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A:
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The Fair
Pay Act becomes effective one year after enactment. |
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