House Passage of Paycheck Fairness Act Harms Small Business

Date: April 15, 2021

WASHINGTON, D.C. (April 15, 2021) – The National Federation of Independent Business (NFIB), the nation’s leading small business advocacy organization, issued the following statement from NFIB Senior Manager of Federal Government Relations Jeff Brabant following the U.S. House of Representatives passage of H.R. 7, the Paycheck Fairness Act.

“The small business economy is fragile coming out of the COVID-19 pandemic and government-mandated business restrictions. While small business owners believe in equal pay for equal work, this legislation will enrich trial lawyers at the expense of small business owners. And when small business owners appear in court to defend themselves from these claims, this bill would make it nearly impossible to do so when an “alternative employment practice exists” at a larger company that has nothing in common with the small business. This dramatic change in employment law would be in addition to banning common hiring practices that allow business owners to identify qualified employees at a time when small businesses are reporting a record number of job openings that aren’t getting filled. We are disappointed in today’s passage and encourage the U.S. Senate to oppose this harmful legislation in its current form.”

The legislation will make legitimate business-related pay differences difficult to defend in court, invite frivolous lawsuits against small business owners by allowing unlimited compensatory and punitive damages in equal pay lawsuits, and significantly increase small business paperwork. Specifically, the legislation would make it difficult for a small employer to defend against claims where an “alternative employment practice” exists in situations where a small business may not adopt the same employment practices of a larger business.

NFIB considered the Paycheck Fairness Act a Key Vote for the 117th Congress. NFIB previously sent a letter of opposition to the U.S. Committee on Education and Labor explaining why it would be harmful to small businesses. NFIB Research shows 42% of owners reported job openings that could not be filled, a record high reading.

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