Fact Sheets

Forty-seven years ago, President Kennedy signed the Equal Pay Act (EPA) [1] into law, making it illegal for employers to pay unequal wages to men and women who perform substantially equal work. At the time of the EPA’s passage in 1963, women earned only 59 cents for every dollar earned by men.[2]  Although enforcement of the EPA as well as other civil rights laws has helped to narrow the wage gap, women today still make, on average, only 77 cents for every dollar earned by men.[3]

The Paycheck Fairness Act would strengthen current laws against wage discrimination. Among other things, it would close a significant loophole in the EPA by allowing full compensation for sex-based wage discrimination. Unlike most anti-discrimination statutes, the EPA does not currently allow the award of compensatory or punitive damages. Instead, women who have been paid less than their male counterparts are entitled to recover only their “unpaid minimum wages, or their unpaid overtime compensation” and “an additional equal amount as liquidated damages.”[4]

To ensure the fair enforcement of the EPA, it is critical that the Senate move swiftly to pass the Paycheck Fairness Act without arbitrary caps or limits on recovery.  Among other things, a cap on damages would have the following adverse consequences:

  • A cap on damages would treat victims of sex-based wage discrimination differently from victims of discrimination based on race or ethnicity. Under current law, claims by victims of race or ethnic discrimination are not subject to damage caps. The remedies available to those subject to unlawful conduct should not depend on the basis for discrimination; women and men who endure sex-based wage discrimination should be entitled to the same remedies as those available in race and ethnicity cases. A cap on damages would continue the inequity of current law.
  • A cap on damages would deny victims of sex-based wage discrimination full compensation. Because a cap on damages sets an artificial limit on the amount that an individual can recover, the ultimate award may be insufficient to compensate the plaintiff for the injuries s/he has suffered. In fact, a cap on damages would penalize those who are the most seriously injured:  Plaintiffs who suffer the greatest injury as a result of discrimination are the ones most likely to end up not being fully compensated for their losses.
  • A cap on damages would limit the deterrent effect of monetary remedies.  Employers would gamble that it costs less to pay damages than to create workplaces free of discrimination. This perverse incentive is contrary to the intent of the Equal Pay Act, which was to encourage employers to voluntarily comply with the law, not to bury discrimination in the cost of doing business.
  • A cap on damages would pose a unique burden for women of color.  It would force this group of women to classify their claims only as race or ethnic discrimination, ignoring the complex nature of the discrimination they have suffered. Moreover, a cap on damages would create an incentive for employers to characterize any discrimination as sex-based and therefore subject to the caps.
  • Uncapped damages do not unduly burden employers. In employment discrimination cases based on race or ethnicity—where there are no damage caps under 42 U.S.C. § 1981—there have not been egregious damage verdicts. This is, in part, due to the numerous existing limitations in current law that guard against improperly high verdicts.  Punitive damages are only awarded these claims if the employer intentionally discriminated and acted with “malice” or “reckless indifference to a [plaintiff’s] federally protected rights” [5] —a standard the Supreme Court has construed explicitly and very narrowly in Kolstad v. American Dental Association. [6]   Additionally, if a judge feels a jury award is excessive, the judge can reduce or vacate the amount.  Finally, there are constitutional limitations on the amount of punitive damages that a plaintiff can receive.[7]

For all of these reasons, Congress must approve the Paycheck Fairness Act without setting artificial limits on the remedies that individuals subject to discrimination can receive.

 

[1] Pub. L. No. 88-38, 77 Stat. 56, codified as amended at 29 U.S.C. § 206(d).

[2] U.S. Census Bureau, Historical Income Tables – People, Table P-40: Women’s Earnings as a Percentage of Men’s Earnings by Race and Hispanic Origin: 1960 to 2009, available at http://www.census.gov/hhes/www/income/data/historical/people/index.html (last visited Sept. 21, 2010).
29 U.S.C. § 216(b).

[3] Lowery v. Circuit City Stores, Inc., 206 F.3d 431, 441 (4th Cir. 2000) (internal quotation marks omitted) (citing Smith v. Wade, 461 U.S. 30, 56 (1983)).

[4] 527 U.S. 526 (1999) (interpreting this standard as used in 42 U.S.C. § 1981a(b)(1) as it applies to Title VII).

[5 ]See, e.g., State Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S. 408, 425 (2003).

Published On: October 1, 2010Associated Issues: Equal Pay & the Wage GapEqual Pay LawsWorkplace Justice
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