© National Committee
on Pay Equity
   
 
 
Pay Equity
Information
   
 
Questions and Answers on the Fair Pay Act
 
Q:
  What are the major provisions of the Fair Pay Act?
   
A:
 

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.

   
Q:
  Is the Fair Pay Act a new law?
     
A:
 

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.

   
Q:
  How does this act expand upon the 1963 Equal Pay Act?
     
A:
 

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.

   
Q:
  What is the current wage gap?
     
A:
 

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.

   
Q:
  Why is the Fair Pay Act needed?
     
A:
  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.

   
Q:
  What types of jobs have been compared when "fair pay" adjustments have been made?
   
A:
 

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.

   
Q:
  Is there national support for legislation addressing unfair pay practices?
     
A:
 

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.

   
Q:
  How will the Fair Pay Act affect business?
     
A:
 

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.

   
Q:
  Who is covered by the Fair Pay Act?
     
A:
  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.

   
Q:
  Can an employer ever pay different wages for work in jobs that have been deemed equivalent?
     
A:
 

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.

   
Q:
  How will the Fair Pay Act benefit women and people of color?
     
A:
 

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.

   
Q:
  Does the Fair Pay Act require employers to conduct pay equity studies as does the Ontario, Canada Pay Equity Act?
     
A:
 

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.

   
Q:
  How will this legislation be enforced?
     
A:
  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.

   
Q:
  Why does the Act have a disclosure and reporting system for job classification and pay statistics?
     
A:
 

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.

   
Q:
  What is the effective date of the Fair Pay Act?
     
A:
  The Fair Pay Act becomes effective one year after enactment.