Paycheck Fairness Act and Its Attack on Private Business

Many conservatives have made the accusation that the current administration and Democratic leadership are attempting to turn the US into a European Socialist state.  One of that easiest ways of accomplishing this is through the control of private business under the disguise of helping the people.  Recently, the Paycheck Fairness Act (PFA) was brought before the US Senate for the third time in four years.  According to website of one of its authors, Senator Mikulski, this bill ‘will close the loopholes that allow pay discrimination to continue in the first place and, with Ledbetter, provide employees the rights they need to challenge and eliminate pay discriminate in the workplace.’  However upon examination of this bill and it alteration to the Fair Labor Standards Act (FLSA) its claims will far exceed to benefits to women.  In fact, based on its wording, it was not crafted to build up the wages of women, but rather depress all wages at an equal level while giving a nice kick back to the trial lawyers. 

In the PFA, there are two main directions Senator Mikulski and her co-author Congresswoman Delauro have taken when crafting this legislation: 

1) Limit the ability of private business owners to operate there business. 

            (a) According to the rewording of the FLSA done by the PFA rather then granting concrete defense on the scope of pay discrimination ‘any factor other then sex’, the new Act includes wording that restricts an employers defense to ‘bona fide factor other than sex’.  By exposing the employer to what equates to a good faith estimate of discrimination it begins to tie the hands of employers even if certain factors other then sex are actually present with in a companies pay structure. 

            (b) To further limit the actions of the employer, the PFA goes on to include that an employer is liable if ‘the employee demonstrates that an alternative employment practice exists that would serve the same business purpose without producing such differential and that the employer has refused to adopt such alternative practice.’  Again as we saw with the ‘bona fide’ inclusion, this statement creates opportunity for varied interpretation.  For instance, what is included in ‘same business purpose’, is that based on profits or simply production with no regards to additional costs?  Does the refusal ‘to adopt such alternative practices’ include those that might go against the employers desires for his company?  In either instance, the law is vague opening an employer unknowingly to litigation.

             (c) Lastly, it no longer allows employers to punish employees for discussing wages.  The idea of ones wage is a personal contract between employee and employer based on many factors unique to your own employment status.  This addition to the PFA becomes important only when your employment status has been made subjective based on interpretation.  It becomes easier to file complaints if employees are able to consider factors other then sex as discrimination or if they feel things could be done differently.  Based on my own experience every employee believes things should be done differently or they deserve more pay; however, for the vast majority of us making either one of those determinations is above our pay grade. 

2) Increasing the ability of litigation. 

            (a) The first nod to the trial lawyers in this bill (besides making the law vague and open to random interpretations) is making it the employees responsibility to opt out of any class action law suit.  In the original FLSA it stated specifically that in order to be plaintiff an employee had to submit consent in writing with the court.  The PFA includes that following phrase, ‘Except with respect to class actions’ allowing large sections of employees to be named in a suit without actually wanting to bringing a charge against the company.  Consider the legal fees a lawyer to build if by taking the claim of one employee and expanding it to an entire company without the other employees being aware. 

            (b) The most damaging actions that could be included in this bill, when you take into effect the subjective nature provided lawyers and employees, is the addition of punitive damages.  In the FLSA an employer found liable for discrimination was responsible for the unpaid wages or unpaid overtime.  The PFA includes, ‘where the employee demonstrates that the employer acted with malice or reckless indifference, punitive damages as may be appropriate,’ in an attempt to further punish that actions of discrimination.  Yet, punitive damages without limit can quickly turn from a punishment to the destruction of a company. 

In the introduction to the PFA, the authors included a list of reasons that were being addressed by the enactment of this bill.  They claimed the loopholes in the FSLA ‘depresses the wages of working families who rely on the wages of all members of the family to make ends meet’, ‘prevents the optimum utilization of available labor resources’ and ‘interferes with the orderly and fair marketing of goods in commerce’.   The hope was that by implementing PFA it would be ‘providing a solution to problems in the economy created by unfair pay disparities’ and ‘promoting stable families by enabling all family members to earn a fair rate of pay’.  Unfortunately all this bill will do is create a less stable platform from which business can operate within the economy.  

This administration and the liberals in the US have gone a rant in the last couple of years chastising business owners for not hiring or expanding business.  The employers seem to be withholding profits and not reinvesting them into the business or community.  Then in response we see legislation such as this being pushed in Congress.  Legislation that opens business up to increased reckless scrutiny, over zealous lawyers and employees who are being told by their government they are entitled equal pay with almost no objectivity to merit.  As this uncertainty grows, business owners are unwilling to take the associated risk.  

As for any effect on wages, it will only serve to depress all wages.  If the subjective determination of inequality by employees and courts is the new societal norm; merit style increases become increasing dangerous to the employer.  The easiest solution is to bring all wages to the median level.  This will obviously artificially raise the wages of those at the bottom; but, it will also reduce the wages of those above the median level making the overall wage earning ability less for all.  So in their attempt to help women close a $0.77 gap in pay, they are willing to sacrifice the earning potential of all.  While it is hard to prove that is their ultimate, the end result will be further government control of both private industry and wages. 

At this point, I don’t think this bill will pass.  Be that as it may, this thought process and slow creep of socialism into the US society is the goal of this administration.  If we want European style government on this side of the pond, allowing these elected officials to continue to push this progressive agenda is the quickest way.