Transcript: Q&A w/ Sen. Lamar Alexander on the Paycheck Fairness Act

Partial transcript of Q&A w/ Sen. Lamar Alexander (R-Tennessee) on the Paycheck Fairness Act. The Senate Committee on Health, Education, Labor and Pensions hearing was held on April 1, 2014:

Sen. Lamar Alexander (R-Tennessee):
…Those watching might notice the ideological differences here. I would say that the HELP committee produces more legislation than anybody else despite them because we know how to work together to get a result. When we can do that, we’re hoping that the appropriations committee beats us this year when Chairman Mikulski passes all 12 appropriations bill on the Senate floor, which I want to help her do. So that’s what we’re looking forward to.

Ms. Olson, let me ask you – you did a good job of pointing out that for 50 years equal pay for equal work has been the law. Actually it’s been two laws. One we’re not touching with this – the Title VII of the Civil Rights Act. And that there’s lots of different ways that a person who feels aggrieved may go forward with a lawsuit, damages that can be collected, back pay that can be collected. In the case of Title VII of the Civil Rights Act, you can go to EEOC. They may do your legal work for you. So it’s the law, and you can sue, and you can go both to federal agency and both to the courts. So that’s already in the law.

And you made a strong point of something that I was talking about which is what the proposed change here does to flexibility for employees in the workplace.

For example, let’s say you have a dry cleaner with 6 people, and there are 3 night shifts and 3 day shifts…And the 3 earlier shifts have – 3 of the employees have young children and they say we like the flexibility of more time off or more flexibility in our schedule. Could you pay some men different than some women based upon a flexible work schedule in the new regime set up by the so-called Paycheck Fairness Act?

Camille Olson, Partner at Seyfarth Shaw:
An employer who does so risks, under the Paycheck Fairness Act, unlimited compensatory and punitive damages if they were not able to show it was a business necessity…[Overlapping audio]

Sen. Lamar Alexander (R-Tennessee):
Assume he could do that under this law, then the other side – whoever was doing the suing – could come in and say, “Well, I could think of a way you could have done it.” That’s the alternative employment plan. Is that correct?

Camille Olson, Partner at Seyfarth Shaw:
Right. And the other way is you could have just raised all of our pay by $1, unless to do so you’d go bankrupt.

Sen. Lamar Alexander (R-Tennessee):
So from that would – well, let me go to a school. I assume this would apply to schools. Is that right?

Camille Olson, Partner at Seyfarth Shaw:
Yes.

Sen. Lamar Alexander (R-Tennessee):
Let’s say a principal wanted to inspire girls to go into math and science and in order to attract outstanding female teachers, he had to pay them more than the men. Could he do that?

Camille Olson, Partner at Seyfarth Shaw:
Under this act, the answer is no. Both males and females can raise a claim under the Equal Pay Act. And again, any difference that is paid that is different from the minimum amount that you paid someone else of another sex you’ve got to be able to justify it by a business necessity. You’ve got to be able to show that even if it was a business necessity that you didn’t have the ability to pay everybody the higher rate.

Sen. Lamar Alexander (R-Tennessee):
What if they were a school in a – is the employer in the school situation is a school district or is it a principal of a particular school?

Camille Olson, Partner at Seyfarth Shaw:
The employer is generally the school district.

Sen. Lamar Alexander (R-Tennessee):
So what if they were a school in a rough section of town and a school in an upscale section of town and you wanted to pay more men in a rough section of town a higher wage and women teachers less in the upscale section of town. Would that be a business necessity under the new rule? Would that be difficult to do?

Camille Olson, Partner at Seyfarth Shaw:
The way this act would roll out is every time – before an employer determined to pay extra for that particular reason – that difference in the job – the employer would be required to prove that it was a business necessity, that they couldn’t otherwise get individuals at the lower rate of pay.

Sen. Lamar Alexander (R-Tennessee):
…I think you’ve made an excellent point of pointing out how this takes existing law, which makes it clear that if an employer pays a female less than a male counterpart and a male less than a female for the same work, that’s against the federal law, and there are plenty of opportunities to redress that. But this would expand the litigation. Please make comment that you could about the effect this might have on the ability of an employer to be more flexible in recognizing different circumstances among employees.

Camille Olson, Partner at Seyfarth Shaw:
What this really does is it eliminates an employer’s consideration of the marketplace. It eliminates an employer’s consideration of different qualifications between individuals in the same job so that, for example, if a female employee meets the minimum qualifications or applicant and a male applicant actually meets the minimum qualifications but – let’s just say – has two years more experience and two years more training to pay that male employee more. And if that male employee or applicant says, “I won’t take the job unless I’m paid an extra 50 cents an hour more than my current job”, the employer would have to show that that was a business necessity to employ that individual and that in fact their valuation of the value of those enhanced qualifications that are described in that new applicant are such that they were appropriate under the law. And even if so, again, a plaintiff could erase the defense and hold the employer liable under the Paycheck Fairness Act if the plaintiff can show that you had the money to increase others’ – even though they didn’t have the same qualifications – to the same rate of pay in the job.

Sen. Lamar Alexander (R-Tennessee):
I wanted to get – it seems to me that this is – and I thank all of the witnesses for coming. I spent a lot of time in Waterloo several years ago and it’s a lovely, lovely tow in Iowa.

The law already is equal pay for equal work. That’s the law and there are already remedies. This is more – this bill seems to me more proposal about a different remedy. In the view of those who support it a more effective remedy. But it’s about in effect more litigation. More opportunities for lawyers to represent people who feel they’re aggrieved and have a chance to assert their claims.

Now, let’s take an example and let me understand exactly how – the laws that exist apply to every business, right? As long as you’ve got two employees – one’s a man, one’s a woman – you’re covered by this. Is that right?

Camille Olson, Partner at Seyfarth Shaw:
Correct.

Sen. Lamar Alexander (R-Tennessee):
And there’s strict liability which means you don’t have to prove intent; all you have to prove is the fact of the woman made more than the man for the same work or vice versa and you’ve got a violation of the law.

Camille Olson, Partner at Seyfarth Shaw:
A prima facie case. Correct.

Sen. Lamar Alexander (R-Tennessee):
And then – the way it is today, you can have events – it’s variously described here – but it gives the employers some room to present a justification for that. Under the proposed change, take me through exactly what would have to happen with the specific example of a man and a woman, and let’s take an example of where the man’s being paid less than the woman in this case because this law is not just about women; it’s about men and women.

Camille Olson, Partner at Seyfarth Shaw:
Correct. An employer would have to prove – it has the burden of proof under the law whenever there’s a difference in pay to show that the woman was being paid more because of a factor other than sex, such as a qualification, an advanced degree let’s say, or more experience, and that not just that that was the reason but that using that reason was a business necessity, which is a very high standard. Courts have described business necessity as the employer was required that particular employee to perform the job with those requirements to be able to sustain it. Once an employer was able to sustain it, if it is, it was a business necessity to pay the woman an additional dollar, let’s say, because of her higher qualifications, the man could still prevail in the case if the man were able to show that it wouldn’t be impossible for that business – that business would survive; it wouldn’t be cost-prohibitive – to raise his pay as well even though he would admit he didn’t have that same qualification.

Sen. Lamar Alexander (R-Tennessee):
Do you believe that the amendment in the proposed Paycheck Fairness Act to allow for unlimited compensatory and punitive damages for claims and to allow class actions to be brought on behalf of the employee whether the employee knows it or not, giving the employee an opportunity to opt out, do you believe those proposed changes would increase litigations significantly?

Camille Olson, Partner at Seyfarth Shaw:
There’s no question it would increase litigation and not only increase it but prolong it because there’s an open-ended high top in terms of what the value of that claim is. You can’t value it any more based on what the economic damages are or what a limit on compensatory or punitive are like under Title VII. It’s limitless.

I think that there’s no question that the issue of moving from the collective action to the rule 23 context, which would be different from every other class case that’s brought under the Fair Labor Standards Act which the Equal Pay Act is part of, would do one thing – it would make it harder to necessarily certify a claim but it would allow plaintiffs’ class action lawyers to have much bigger claims. Because it’s not the people who are sending in their written consents saying “Yes, I want to join that claim”; it’s everybody’s in unless you tell me otherwise. And that’s a very, very big difference in terms of the size of the class actions and the costs of the litigations.

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One Comment on “Transcript: Q&A w/ Sen. Lamar Alexander on the Paycheck Fairness Act

  1. Pingback: Election 2014: Tennessee Sen. Lamar Alexander's voting records & positions on issues | What The Folly?!

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