Fairness Doctrine

Who could possibly be opposed to paycheck fairness? That’s the question some may ask as the Senate likely will consider the “Paycheck Fairness Act” in early June to further highlight the election year pursuit of the women’s vote. The legislation is the best idea some in Congress have to address the gap between men’s and women’s earnings.

Then again, what is paycheck “fairness?” Fairness is in the eye of the beholder. When I worked on Capitol Hill and a politician used the word “fairness”, my colleagues and I were confident that it meant someone’s interests were going to get snubbed.

When it comes to fairness regarding pay, compensating employees is not always an exact science. There’s no manual to look up the right answer for setting wage or salary levels for Jane, John or any employee. HR professionals who manage compensation use their professional judgment based on the facts and circumstances to make lawful pay decisions for their employees. But the Paycheck Fairness Act would significantly restrict employers’ ability to make these decisions and give premium pay to employees.

For nearly 50 years, American employees have been protected from gender-based pay discrimination by not one, but two, federal statutes: Title VII of the Civil Rights Act of 1964 and the Equal Pay Act of 1963. As The Washington Post editorial board stated in 2009, adding the Paycheck Fairness Act to these existing laws “risks tilting the scales too far against employers and would remove, rather than restore, a sense of balance.” In 2010, the Boston Globe wrote “the measure as a whole is too broad” and the Chicago Tribune described the bill as “grossly intrusive.”

Why would these major newspapers oppose a bill that purports to solve the wage gap? They agree with the Society for Human Resource Management (SHRM) that the Paycheck Fairness Act, however well-intentioned, would be an unnecessary expansion of the Equal Pay Act.

In the name of equal pay, the Paycheck Fairness Act would restrict many lawful factors – including professional experience, education, training, employer need, local labor market rates, hazard pay, shift differentials and the profitability of the organization – that the Equal Pay Act currently allows employers to use today in setting compensation. The only factors employers could safely use to pay employees higher wages would be seniority, merit, and quantity or quality of production.

If enacted, the Paycheck Fairness Act could lead to employers cutting back on incentive pay programs, because of the pay disparities between employees that would naturally result. The bill could also disallow job applicants from negotiating for a higher salary before accepting a job offer because of the disparity with other employees that it would produce.

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 compensation and the inefficiency of the government regulating private-sector compensation practices, SHRM opposes federal government efforts such as the Paycheck Fairness Act that 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 and comply with federal laws.

In the end, everyone supports fair pay for all employees; not everyone supports the Paycheck Fairness Act. Politicians regularly use consensus words like fairness to gain support for their legislation, but such words are just that. The devil of legislation is in the details. After all, if a senator proposed a “World Peace Act” that actually declared war on Saskatchewan, it shouldn’t be supported by world peace advocates. Neither should the Paycheck Fairness Act be supported by those interested in fair pay.

 

 

 

 

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COMMENTS 1

Comments

Thank you for this informative article. Perhaps it should have been balanced by two additional considerations: 1) Senators are not exactly thoughtless. If they thought of an Act, which is procedurally and legally burdensome, it's to address a real problem. 2) There really is a problem. Ideally, HR managers would make sound decisions, but in reality, this is simply not happening. The idea of diversity or gender equality is nice. However, its implementation has been ineffective. Your own website reveals the problems with glass ceiling and hiring female CEOs, not to mention the lack of balance in pay. So where is the HR's judgment in those situations?

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