Equal pay "certification": A terrible idea

Our blog is non-partisan, but I must speak out!

Mind you, I'm not recommending that you vote for or against any particular presidential candidate.

BUT . . .

Sen. Kamala Harris's (D-Calif.) idea to require employers with 100 or more employees to be federally "certified" that they have pay equity is a terrible, horrible, no-good, very bad idea.

Senator Harris, please reconsider!

Sen. Harris would require employers with 100 or more employees to provide their compensation data every year to the Equal Employment Opportunity Commission.

(Well, okay, you may say. Don't they already have to do that, by September 30? And the answer is yes, for now, unless the U.S. Court of Appeals for the District of Columbia steps in and stops it. We'll keep you posted.)

Under Sen. Harris's proposal, if there is a pay disparity between men and women, the burden would be on the employer to prove that the disparity was based on "merit, performance, or seniority." Employers would also have to commit that they will not ask for salary history when making hiring decisions, and will not mandate arbitration of employment disputes.

If an employer had a wage gap that could not be explained, the government would fine the company 1 percent of its profits for each 1 percent "adjusted" wage gap.

Sen. Harris expects her plan to initially generate $180 billion in revenue for the federal government, which she would apply to financing paid family and medical leave. She does expect the revenues to decline over time, as employers take actions to "correct" their "unequal" pay.

In support of her proposal, Sen. Harris cites the very misleading statistic that women earn 80 cents for every dollar that men earn. (As I've reported ad nauseam, that figure is correct, but it's meaningless because it doesn't control for anything other than sex and compensation. It fails to take into account position held, years in the workforce, relevant experience, geography, education, employer, industry, career interruptions, dangerous or physically strenuous work, or any of the other factors that affect a person's compensation.)

My primary objection to the Senator's proposal is that it's premised on this equal pay junk science.

My second objection is that it's a very radical "cure" for something that is barely even a "disease." After you control for the legitimate factors that can affect pay, the pay gap is reportedly only a few cents. Imposing this extremely burdensome and expensive requirement on employers over an adjusted pay gap of mere pennies is like sending your kid to the hospital for a tonsillectomy because she has a dribbly nose. During pollen season.

My third objection is that -- like the tonsillectomy for the kid with pollen sniffles -- it won't do any good. The EEOC has already said under oath that it is barely capable of collecting compensation data, much less investigating whether unjustified pay disparities exist for every employer in the United States who has 100 employees or more. Given the EEOC's lack of capacity, I see two possible outcomes:

Under a Democratic administration, the EEOC will find every employer with a disparity guilty of pay discrimination and will assess the fine. If the employer doesn't like it, the employer can sue and let the courts sort it out. The administration will gamble that most employers would rather pay the fine than incur the costs of defending themselves in court.

Under a Republican administration, the EEOC will find every employer in compliance and will issue the certification. If the employee doesn't like it, he or she can sue and let the courts sort it out. The administration will gamble that most employees will think it's too much trouble to take the issue to court.

In other words, either way it won't accomplish the goal of exposing and penalizing the relative handful of employers who really do engage in pay discrimination.

I won't be taking sides in the 2020 elections, but I'll speak out on proposals that have to do with employment or labor law. 

Image Credit: From flickr, Creative Commons license, by Gage Skidmore.

Robin Shea has 30 years' experience in employment litigation, including Title VII and the Age Discrimination in Employment Act, the Americans with Disabilities Act (including the Amendments Act). 
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