National Women's Law Center

TESTIMONY OF JUDITH C. APPELBAUM

VICE PRESIDENT AND DIRECTOR OF EMPLOYMENT OPPORTUNITIES

NATIONAL WOMEN'S LAW CENTER

Before the

COMMITTEE ON HEALTH, EDUCATION, LABOR AND PENSIONS

UNITED STATES SENATE

On Gender-Based Wage Discrimination

June 8, 2000

Chairman Jeffords and members of the Committee, I am Judith Appelbaum, Vice President and Director of Employment Opportunities at the National Women's Law Center. Thank you for the invitation to appear before you today.

The Center is a non-profit organization that has been working since 1972 to advance and protect the legal rights of women across the country. Ending gender-based wage discrimination has long been a central concern of the Center, and we are pleased to have the opportunity to address this important issue today.

Mr. Chairman, this week - June 10 - marks the 37^th anniversary of the day President John F. Kennedy signed the Equal Pay Act into law. For nearly four decades, it has been the law of the land that women are entitled to equal pay for equal work. And yet, even today - despite the obvious fairness of that simple principle - too many hardworking women are still finding their paychecks shortchanged merely because of their sex.

The pay gap - the notorious fact that women still earn, on average, only 73 cents for every dollar earned by men (63 cents for African-American women, 53 cents for Hispanic women)⁽¹⁾ - is certainly one reflection of the persistence of such discrimination, as other witnesses have shown in their testimony and as numerous studies document. A1998 report by the Council of Economic Advisers, for example, cites studies showing that a pay gap remains even when variables such as occupation, age, experience, and education are held constant, and concludes that some of the pay gap is due to discrimination.⁽²⁾

But with all due respect to the economists appearing before you today, it is not really necessary to deconstruct the pay gap to determine that pay discrimination remains a fact of life in the American workplace. That is because the persistence of gender-based wage discrimination is documented by case, after case, after case, in which women have gone to court - or to the Equal Employment Opportunity Commission or the U.S. Labor Department - to vindicate their rights.

The EEOC reports that in Fiscal Year 1999, the Commission received approximately 3,800 wage-related charges filed by women, and since 1992, the Commission has obtained a cumulative total of nearly $100 million through its enforcement and litigation efforts for all charging parties alleging wage bias.⁽³⁾ Just this past April the EEOC settled two equal pay cases. One was a $100,000 settlement of a case involving a female professor at Eastern Michigan University who was paid substantially less than her male colleagues for the better part of a decade.⁽⁴⁾ The other resolved a case in which a Baltimore cable company was charged with paying its executive director less than her male counterparts in the industry, terminating her when she complained, and then compensating her male successor at a far higher salary for performing the same job.⁽⁵⁾

The Labor Department's Office of Federal Contract Compliance Programs (OFCCP), which enforces Executive Order 11246 and its prohibition against sex discrimination by federal contractors, also has exposed numerous instances of discriminatory pay practices. OFCCP reports that in 1999 it recovered more than $15 million in back pay for 11,000 women and minorities in 30 pay actions.⁽⁶⁾ To cite just a few recent OFFCP cases:

Boeing Co., the second largest federal contractor, agreed in November 1999 to a $4.5 million pay discrimination settlement with OFCCP, creating a fund to cover back pay and salary adjustments to as many as 6,000 female and minority employees at several Boeing facilities across the country and at its Seattle headquarters.⁽⁷⁾

After an OFCCP review, Texaco agreed in January 1999 to pay $3.1 million to 186 women who worked in mid-level positions at corporate offices across the country and who were consistently paid less than their male counterparts.⁽⁸⁾

In March of this year, Fifth Third Bank agreed to pay $440,000 to resolve allegations of gender and race discrimination, including claims by women professionals and managers who were paid less than their male counterparts.⁽⁹⁾

In February of this year, Sunoco agreed to pay 15 women executives $250,000 in back wages and salary adjustments to rectify pay discrepancies uncovered in an OFCCP compliance review.⁽¹⁰⁾

Numerous pay discrimination cases are being litigated in the courts as well. Here are just a few recent examples of reported decisions, all from within the past five years:

Harris v. City of Harvey was brought by Dolores Harris, who was hired for a position of "driver" in an Illinois city's Streets Department, a position no woman had ever held before. Harris worked full time on the street sweeper, and the city admitted that she performed the same work as other drivers. But she earned only $5.00 an hour ($10,400 annually), a part-time wage rate, despite her full-time work. The other drivers, who were all men, earned between $20,000 and $30,000 annually. After four months on the job, her pay was increased, but not to the level of the other (male) drivers.⁽¹¹⁾

EEOC v. Grinnell Corp. was brought against an Indiana manufacturing company that paid a newly-hired male sales representative more than several female sales representatives who had significantly longer relevant experience than he had - one had 30 years compared to his six.⁽¹²⁾

Knight v. G.W. Plastics, Inc., was brought by Marilyn Knight, who began working at G.W. Plastics (a Vermont company) as a secretary. Throughout her 23-year career with the company, she received a series of promotions of increasing responsibility, regularly-scheduled merit pay increases, and good performance evaluations. During her last eight years there, she was a Production Control Supervisor, and earned a salary of $29,786 a year at the time of her retirement. Upon her retirement, G.W. Plastics offered the male candidates for her position approximately $10,000 more per year to do the same job. When her male replacement did not meet the company's expectations, it asked Knight to return, but still failed to offer her the salary it had offered her replacement.⁽¹³⁾

Nyman v. FDIC was brought by Massoumeh G. Nyman, a woman of Iranian descent, who worked in a supervisory position in a unit responsible for processing financial statements that federally insured banks file annually with the FDIC. She earned a salary of $91,000 a year, while Lawrence Pierce, another supervisor in her division with substantially equal duties and responsibilities, earned more than $100,000. Nyman brought an Equal Pay Act claim based on this discrepancy and won.⁽¹⁴⁾

A medical researcher at the University of Texas was awarded $111,000 in damages by a federal jury on her claim that she was paid about $20,000 a year less than a male researcher with similar qualifications. The record also showed that other newly-hired male researchers had higher salaries than she although they had less experience, fewer publications to their credit, and no clinical duties. The department chair had criticized the plaintiff's status as "a female with children who wanted a career."⁽¹⁵⁾

Scarfo v. Cabletron Systems was brought by Genevieve Scarfo, who was hired as a buyer at a salary of $27,000. When she was promoted to purchasing supervisor, Cabletron continued to pay her a buyer's salary even though she performed all the functions of a supervisor, informing her that she was not immediately eligible for a raise. Later, apparently because the chief operating officer wanted a "guy in that position," Scarfo was demoted to buyer, but asked to continue to perform all the management functions she had performed as supervisor. Meanwhile, a man hired at the same time as Scarfo performed similar duties, but was given the title of supervisor and paid a starting salary of $35,000. Two years later, another man was hired as purchasing manager, a job with similar duties and responsibilities, and paid a salary of $65,000. An analysis of Cabletron data on pay increments, education, and employment history showed a $14,000 difference between male and female pay for Cabletron managers and supervisors, even when education and seniority were taken into account. Scarfo brought Title VII and Equal Pay Act claims against Cabletron and won. The First Circuit declined to set aside the verdict despite errors in jury instructions at the trial level, calling the evidence of discrimination "overwhelming."⁽¹⁶⁾

These cases demonstrate the fallacy of attempts to explain away the pay gap by asserting that it reflects nothing more than choices women make. The women represented in this sampling of cases, and the many others all across the country whose employers are denying them equal pay for equal work, have not chosen to make less money than their male counterparts. They are working to support themselves and their families - often as the sole support - and they do not willingly choose to forfeit a portion of the pay to which they are entitled.

It is thus hardly surprising that public opinion surveys consistently show that ensuring equal pay is a high priority for women (and for men). To cite just one recent example, women responding to the "Ask A Working Woman 2000 Survey" of the AFL-CIO rated stronger equal pay laws as their Number 1 legislative priority; 87% of the respondents said stronger equal pay laws are important, and this sentiment was shared across all racial, age, education, and income divides.⁽¹⁷⁾

What, then, can be done to address the continuing problem of gender-based wage discrimination?

First, the federal agencies that enforce the laws against pay discrimination must be given the resources they need to do their jobs. The Clinton Administration has proposed a $27 million Equal Pay Initiative in its budget for FY 2001, which includes $10 million for the EEOC and $17 million for the Department of Labor, to cover law enforcement as well as training for EEOC staff, technical assistance for employers, and training for women seeking non-traditional jobs. Last year, a similar initiative was not approved by Congress. (Indeed, in FY 2000 the EEOC received only a $2 million increase over its FY 1999 appropriation - $8 million less than necessary just to cover inflationary increases.) This year, Congress should approve the entire $27 million Equal Pay Initiative.

Second, the Paycheck Fairness Act must be enacted. The Paycheck Fairness Act, S. 74, would strengthen the Equal Pay Act in several important ways. It would authorize EPA class action lawsuits, to help ensure that relief will be provided to all those who are injured by a practice that violates the Act. It would make it unlawful for an employer to punish an employee for disclosing her wages to a co-worker, and thereby make it easier for workers to evaluate whether their rights under the EPA are being violated. It would eliminate the EPA's requirement that male-female wage comparisons must be limited to employees working in the same "establishment." This limitation in current law means, for example, that wages paid in different facilities or offices of the same employer cannot be compared even if the employer is paying male and female workers different salaries for the same work.⁽¹⁸⁾

A particularly important feature of the Paycheck Fairness Act is a provision in it that would toughen the EPA remedies by allowing prevailing plaintiffs to recover compensatory and punitive damages. The EPA currently provides only for back pay awards and liquidated damages (an additional recovery equal to the back pay award), which tend to be very insubstantial. Adding compensatory and punitive damages to a plaintiff's potential recovery under the EPA is key for several reasons: adding compensatory damages will ensure that plaintiffs can be made whole to the full extent of their injuries, adding compensatory and punitive damages will increase the incentives for employers to obey the law, and, finally, this provision will put gender-based wage discrimination on an equal footing with wage discrimination based on race or ethnicity, for which full compensatory and punitive damages are already available.⁽¹⁹⁾

Another important provision of the Paycheck Fairness Act is one that would tighten - but not eliminate altogether - an affirmative defense in the Equal Pay Act that too often serves as a huge loophole enabling employers to escape responsibility for compensating male and female employees unequally for equal work. Under the EPA, when an employer is found to be paying female employees less than male employees for equal work, the employer may assert an affirmative defense that the pay differential is based on a "factor other than sex."⁽²⁰⁾ Some courts have interpreted this defense, sometimes called the "fourth affirmative defense,"⁽²¹⁾ so broadly as to seriously undermine the EPA.

For instance, some courts have allowed employers to justify paying men and women different wages for the same job by showing that they are paying all employees according to a job classification or salary system, without demonstrating that the system serves any business purpose or is at all related to the requirements of the jobs - in other words, the mere assertion of reliance on such a system often serves to insulate employers from liability.⁽²²⁾ Other courts have allowed an employer to pay a man higher wages because he earned more money in his previous position, thus locking in wage disparities that may have been caused by other employers' discrimination or by men's and women's unequal bargaining positions in the labor market.⁽²³⁾ Courts have also allowed employers to pay unequal wages on the basis of factors closely correlated with sex, such as head-of-household status.⁽²⁴⁾ Under current law, an employer might also be able to escape liability by relying on a factor other than sex in setting wages, but manipulating that factor in a discriminatory way - for example, if a university pays a male coach of a men's basketball team more than a female coach of a women's basketball team based on higher gross revenues generated by the men's team, but at the same time gives greater assistance to the men's program in generating those revenues through the marketing and promotion budget and support provided to it.⁽²⁵⁾

The Paycheck Fairness Act would tighten this "factor other than sex" affirmative defense in the Equal Pay Act in several ways, and thereby further the fundamental purpose of the Equal Pay Act: to ensure that equal work is rewarded by equal pay. Under the Paycheck Fairness Act, to establish this defense, the employer would have to demonstrate that the factor is job-related or furthers a legitimate business purpose (while enabling the employee to overcome such a showing if the employee can demonstrate that an alternative employment practices exists that would serve the same purpose without producing the salary disparity). It would also require the employer to show that this factor was actually relied on in setting the employee's pay, and is not merely being offered up as an after-the-fact justification. Finally, it would allow the employee to defeat the affirmative defense if she could show that the factor relied upon by the employer was itself the result of discrimination - as in the example of an institution that fails to provide to a female coach the support she needs to produce a revenue-generating sports program (while providing such support to her male counterpart), and then relies on the lack of revenue production to justify her lower salary.⁽²⁶⁾

In addition to these modifications to the Equal Pay Act, the Paycheck Fairness Act also directs the EEOC and OFCCP to provide training for EEOC employees to identify and respond to wage discrimination claims; directs the Labor Department to conduct research on ways to eliminate gender-based pay disparities and to provide outreach and assistance to employers to aid them in eradicating disparities; directs the EEOC to issue regulations to provide for the collection of pay information from employers, to enhance the targeting of the agency's enforcement efforts; directs the Labor Department to develop guidelines to enable employers to compare wages paid for different jobs to determine whether their pay scales accurately reflect the requirements of the jobs, to help them eliminate unfair disparities between occupations traditionally dominated by men and by women; and, finally, establishes programs to provide public recognition for employers who have made progress in eliminating pay disparities between men and women. In short, the Paycheck Fairness Act is a package of reasonable, measured provisions that, taken together, will help enhance enforcement of the Equal Pay Act by private plaintiffs as well as the EEOC, and at the same time encourage employers to address wage disparities voluntarily and give them assistance in doing so. Congress should pass this eminently sensible legislation without delay. Chairman Jeffords, we are grateful to you for taking a first step by holding this hearing, and we ask that you now schedule the Paycheck Fairness Act for markup and that you support full Senate action on the bill as soon as possible.

Beefing up enforcement of the Equal Pay Act as outlined above will not, however, end all forms of pay inequity, and in particular, will do nothing to eliminate the practice of paying jobs dominated by women (or members of racial or ethnic minorities) at lower rates than equivalent jobs in the same workplace that are dominated by men (or non-minorities).⁽²⁷⁾ That is the purpose of the Fair Pay Act, S. 702, authored by Senator Harkin. The Fair Pay Act would prohibit employers from discriminating, within a firm, between employees on the basis of sex, race, or national origin, by paying lower wages to employees in a job dominated by women or racial or ethnic minorities than the wages paid for work on equivalent jobs not dominated by women or minority employees. "Equivalent" jobs are defined as jobs that may be dissimilar, but whose requirements are equivalent when viewed as a composite of skills, effort, responsibility, and working conditions. The bill directs the EEOC to develop and publish guidelines for determining jobs that are dominated by employees of a specific sex, race, or national origin.

This approach is neither novel nor unworkable, as some have argued. Many state and local governments have addressed pay inequity in female-dominated jobs in their workforces. In Minnesota, for example, a pay equity plan was implemented to ensure that women in state jobs were fairly compensated for the skills, effort, responsibility, and working conditions of their jobs. Before the plan, women's jobs paid, on average, 20 percent less than jobs predominantly held by men. Pay equity adjustments raised women's wages by 9 percent, for health care workers, clerical workers, and others (while raising some men's wages as well).⁽²⁸⁾ In Los Angeles County, a study found that children's social service workers (a female-dominated occupation) were paid substantially less than probation officers (predominantly male), jobs that were found to be equivalent in skill, effort, responsibility and working conditions. The county applied a 20 percent pay raise to the female-dominated jobs.⁽²⁹⁾

Another example of an effort to achieve pay equity comes from the U.S. Department of Defense and its compensation of child care workers. In the 1980s, Congressional hearings and GAO reports disclosed serious deficiencies in the military child care system, including the fact that workers at military child care centers (mostly women) received such poor compensation that turnover at some installations was as high as 300 percent, and the quality of care suffered accordingly. (Child care workers were earning less than commissary shelf-stockers, for example.) In response, Congress - under the leadership of Senator Kennedy - passed the Military Child Care Act of 1989,⁽³⁰⁾ and DoD implemented a series of reforms that completely overhauled the system and made it a model for child care nationwide, as a recent National Women's Law Center report describes.⁽³¹⁾ One feature of the MCCA was a requirement that child care employees be paid at rates of pay "substantially equivalent" to rates of pay paid to other employees at the same installation with similar training, seniority, and experience.⁽³²⁾ A DoD task force was established to carry out this mandate, and a new, more generous pay scale for child care workers was developed as a result.⁽³³⁾

Under the Fair Pay Act, employers across the country would be called upon to address pay inequities in their workplaces. Hardworking women who are underpaid for the valuable work they perform - and the families who depend on their income - deserve no less.

In conclusion, Mr. Chairman and members of the Committee, gender-based pay discrimination is real, and there are concrete steps that Congress can take to end it. It is long past time to make ending the pay gap for women a serious national priority.

Thank you.

REFERENCES

1. 1.. See U.S. Census Bureau, Current Population Reports: Money Income in the United States: 1998, P 60-206, Table 10 (Sept. 1999).

2. 2.. Council of Economic Advisers, Explaining Trends in the Gender Wage Gap 1 (1998). See also Linda Levine, Congressional Research Service, The Gender Wage Gap and Pay Equity: Is Comparable Worth the Next Step? 12 (1998) ("Although the unexplained portion of the gender pay gap has diminished, it does not mean that labor market discrimination has been vanquished. All other things being equal, women's wages remain lower than those of men.").

3. 3.. See Equal Employment Opportunity Commission Press Release, EEOC Settles Suit Against Public Access TV Corp. for Pay Discrimination and Retaliation (April 28, 2000).

4. 4.. See Equal Employment Opportunity Commission Press Release, EEOC Settles Equal Pay Lawsuit Against Eastern Michigan University (April 27, 2000).

5. 5.. See Equal Employment Opportunity Commission Press Release, supra note 3.

6. 6.. See Office of Federal Contract Compliance Programs, Highlights of Accomplishments Under Secretary's 1999 Equal Pay Initiative (undated).

7. 7.. See U.S. Department of Labor Press Release, Boeing Agrees to End Pay Disparity: Second Largest Federal Contractor Will Adjust Pay Practices Corporate Wide (Nov. 19, 1999); Boeing Agrees to Pay $4.5 Million as Bias Settlement, L.A. Times, Nov. 20, 1999; Mike Maharry, Boeing Denies Discrimination Charges, Pays Back Pay to Women, Minorities, Knight-Ridder Tribune Bus. News, Nov. 20. 1999.

8. 8.. See U.S. Department of Labor Press Release, Texaco to Pay $3.1 Million to Women Professionals and Executives in Largest Pay Discrimination Settlement (Jan. 6, 1999); Richard W. Stevenson, Texaco Is Said to Set Payment Over Sex Bias, N.Y. Times, Jan.6, 1999; Kirstin Downey Grimsley, Texaco Agrees to Pay $3.1 Million to Settle Sex-Bias Suit, Wash. Post, Jan. 7, 1999, at E3; Stephanie Armour, Texaco to Pay Workers $3.1M, USA Today, Jan. 7, 1999, at B3.

9. 9.. See U.S. Department of Labor Press Release, Fifth Third Bank to Pay $440,000 to Resolve Charges of Race and Gender Discrimination (March 8, 2000).

10. 10.. See U.S. Department of Labor Press Release, Sunoco Agrees to Resolve Pay Equity Issues for Women Executives with $250,000 Settlement (Feb. 29, 2000).

11. 11.. The court denied the city's motion for summary judgment on Harris' EPA claim. Harris v. City of Harvey, 993 F. Supp. 1181 (N.D. Ill. 1998). While the City produced a collective bargaining agreement that provided for the payment of percentage wage increases on the basis of an employee's seniority, it made no attempt to show how Harris's situation compared to or differed from the situation of the male drivers and warranted a wage differential. In addition, the City offered no explanation for why Harris, a full-time worker, was paid at a part-time hourly rate during the first four months of her employment.

12. 12.. The court denied the defendant's motion for summary judgment. EEOC v. Grinnell Corp., 881 F. Supp. 406 (S.D. Ind. 1995).

13. 13.. Here too, the court denied the defendant's motion for summary judgment. Knight v. G.W. Plastics, Inc., 903 F. Supp. 674 (D. Vt. 1995).

14. 14.. Nyman v. FDIC, 967 F. Supp. 1562 (D.D.C. 1997). While the FDIC attempted to justify her lower salary on the basis of an Office of Personnel Management audit that had established Nyman's job classification, which was one step lower than that of Pierce, the audit did not include Pierce's job or those of other male supervisors. Thus, the audit could not establish that Nyman's job was not substantially the same as these jobs, since it provided no basis for comparison. FDIC also failed to prove that it used any sort of organized, structured salary system to reward merit that created the pay discrepancy. The court held, consistent with an advisory opinion submitted by a jury, that the pay discrepancy between Nyman and Pierce was the product of bad faith by the FDIC.

15. 15.. Siler-Khodr v. University of Tex. Health Science Ctr., 13 Empl. Discrimination Rep. (BNA) 611 (W.D. Tex. Sept. 24, 1999).

16. 16.. Scarfo v. Cabletron Systems, 54 F.3d 931, 942 (1^st Cir. 1995).

17. 17.. See AFL-CIO, Working Women Say . . . : Findings from the Ask a Working Woman 2000 Survey 10 (2000).

18. 18.. See, e.g., Meeks v. Computer Assocs., 15 F.3d 1013, 1017 (11^th Cir. 1994); Winther v. City of Portland, No. 92-35590, 1994 WL 118167 (9^th Cir. Apr. 6, 1994); Jacobson v. Pittman-Moore, Inc., 573 F. Supp. 565, 568 (D. Minn. 1983); Alexander v. University of Michigan-Flint, 509 F. Supp. 627 (E.D. Mich. 1980).

19. 19.. Racial and ethnic minorities can recover full compensatory and punitive damages in employment discrimination cases brought under 42 U.S.C. § 1981.

20. 20.. 29 U.S.C. § 206(d)(1) (2000).

21. 21.. The EPA's other three affirmative defenses permit employers to pay different wages for equal work based on (1) seniority systems, (2) merit systems, or (3) systems measuring earnings based on the quality or quantity of production. 29 U.S.C. § 206(d)(1) (2000).

22. 22.. See Fallon v. Illinois, 882 F.2d 1206 (7^th Cir. 1989); Strecker v. Grand Forks County Soc. Servs. Bd., 640 F.2d 96 (8^th Cir. 1980); EEOC v. Aetna Ins. Co., 616 F.2d 719 (4^th Cir. 1980).

23. 23.

. See Brinkley v. Harbor Recreation Club, 180 F.3d 598, 624-15 (4^th Cir. 1999); Covington v. Southern Ill. Univ., 816 F.2d 317, 322 (7^th Cir. 1987).

24. 24.. See EEOC v. J.C. Penney Co., 843 F.2d 249 (6^th Cir. 1988).

25. 25.. Cf. Stanley v. University of So. Cal., 13 F.3d 1313, 1323 (9^th Cir. 1994) (concluding that disparate salaries paid to male coach of men's basketball team and female coach of women's basketball team could be justified by disparities in the team's revenue production, even if the university may have exacerbated this revenue disparity by making a "business decision to allocate [promotional] resources to the team that generates the most revenue"); Hodgson v. Robert Hall Clothes, 473 F.2d 589 (3d Cir. 1973) (holding that the fourth affirmative defense permitted higher salaries to male than female salespersons, based on the higher profitability of the men's clothing department, when male employees had the opportunity to sell higher quality, more expensive merchandise than their female counterparts were permitted to sell).

26. 26.. This is analogous to when employers establish requirements for promotion, but discriminate against women or minorities by preventing them from satisfying those requirements, for example in the granting of assignments and awards.

27. 27.. As noted, the Paycheck Fairness Act does contain a provision directing the Labor Department to issue guidelines that would help employers voluntarily address this issue, but it does not contain any mandate for employers.

28. 28.. See National Committee on Pay Equity, Two Progressive Models on Pay Equity: Minnesota and Ontario; see also Institute for Women's Policy Research, Research-in-Brief, Pay Equity and the Wage Gap: Success in the States.

29. 29.. See National Committee on Pay Equity, Real Life Examples of Equivalent Jobs 2.

30. 30.. Department of Defense Authorization Act of 1989, Pub. L. No. 101-189, Title XV, 103 Stat. 1352, 1589-94 (codified as amended at 10 U.S.C. §§ 1791 to 1798 (2000)).

31. 31.. See Nancy Duff Campbell et al., National Women's Law Center, Be All That We Can Be: Lessons From the Military for Improving Our Nation's Child Care System (2000).

32. 32.. 10 U.S.C. § 1792(c) (2000).

33. 33.. See Campbell et al., supra note 31, at 16.