Federal Legislative Action Alert

YOUR ASSISTANCE IS NEEDED! The "lame duck" session of Congress is about to begin, and the Senate is poised to vote on the "Paycheck Fairness Act (S. 3772)."  If enacted, the bill would:

•  significantly restrict the factors HR professionals use to compensate their employees,

•  authorize the Equal Employment Opportunity Commission and the Department of Labor to collect wage information from employers of all sizes, and

•  encourage employees to publicly disclose their colleagues' wages.

The Senate is scheduled to vote on the Paycheck Fairness Act (PFA) during the week of November 15-19. The House has already passed the PFA, so now is your opportunity to contact your senators urging them to OPPOSE this bill.

SHRM and its membership are committed to preventing and resolving any form of workplace discrimination, including pay disparities between women and men. SHRM strongly supports the two federal laws that already protect employees from gender-based pay inequity: (1) Title VII of Civil Rights Act of 1964 and (2) the Equal Pay Act of 1963 (EPA).

The proposed Paycheck Fairness Act would amend the Equal Pay Act. SHRM is very concerned that, however well-intentioned, the Paycheck Fairness Act will significantly restrict the factors HR professionals can use in compensation decisions.

HR professionals who manage compensation use their professional judgment to make pay decisions for their employees. The PFA would undercut their efforts in two primary ways:

1. Restrict employer flexibility in pay decisions - The PFA would effectively prohibit employers from using many legitimate factors to compensate their employees, including professional experience, education, training, employer need, local labor market rates, hazard pay, shift differentials and the profitability of the organization. The PFA would permit employers to base pay decisions only on production, merit and seniority - the latter of which HR professionals rarely incorporate in compensation decisions.

2. Require collection of employer wage data - The PFA would enable the Equal Employment Opportunity Commission and the Department of Labor to collect compensation data from employers of all sizes. Furthermore, the bill would effectively encourage employees to publicize their co-workers' wages by preventing retaliation against an individual who publicly discloses the wages of other employees.

On January 9, 2009, the U.S. House of Representatives passed the Paycheck Fairness Act (H.R. 12). Senate Majority Leader Harry Reid (D-NV) introduced a new version of the bill (S. 3772) in the U.S. Senate on September 13, 2010 and he wants the Senate to vote on the bill as early as November 17.

SHRM Position
SHRM believes that compensation programs should be designed to ensure fair treatment of employees, but should be determined by the market and employer needs, not by the government. Because of the complexity of administering and the inefficiency of the government regulating private-sector compensation practices, SHRM opposes Federal government efforts to second-guess employers in making pay decisions that comply with current federal civil rights laws. Instead, SHRM encourages organizations of all sizes to regularly perform compensation or job evaluation audits to ensure such systems do not discriminate based on gender in order to comply with current federal law.

SHRM believes the Paycheck Fairness Act would be an unnecessary expansion of the Equal Pay Act. By significantly restricting the factors used in setting compensation, the Paycheck Fairness Act would threaten the tools that HR professionals use to compensate their employees. The bill could lead to employers cutting back on incentive pay programs, because of the pay disparities between employees that would naturally result. The bill would also have a negative impact on employee privacy by encouraging employees to publicize their colleagues’ wages.

Action Needed
Please write your two senators and urge them to oppose the "Paycheck Fairness Act." To write your elected official using HRVoice, follow these steps:

1. Log onto the SHRM Advocacy Action Center by clicking here.
2. Sign in using your Member ID and last name.
3. Once you have completed the HR Advocacy e-list form and / or been directed to the SHRM Advocacy Center homepage, click the "Take action here" tab at the bottom of the featured federal alert highlighted in blue and to the left.

For questions regarding S. 3733, please contact Michael Layman, SHRM's Manager, Employment and Labor, at eat0@eau0eav0eaw0.