Small businesses can close their billfolds and breathe a sigh of relief.  After knocking around Capitol Hill for several years, the Paycheck Fairness Act was narrowly shot down by the Senate in a 58-41 vote—just two votes shy of passing.  The House had already approved the act.  One likely problem: the Paycheck Fairness Act was widely viewed as not very fair at all.

Intended as an update to the Equal Pay Act of 1963, the Paycheck Fairness Act was regarded by the U.S. Chamber of Commerce and other business groups as potentially destructive to small businesses.  First, the act would have penalized employers for unintentional disparities in employee compensation, rendering employers responsible for unlimited punitive damages.  The act also would have eradicated limits for back pay and punitive and compensatory damages.  Second, the act could have had devastating effects on Equal Pay Act class action lawsuits by eliminating the employees’ need to opt in as a party to the suit.  Finally, the act would have removed an employer’s freedom to pay employees on its own terms, such as where different duties exist within similar job classes or where employees have variations in prior salary history.

Though wage fairness is an issue worth further examination, the Paycheck Fairness Act doesn’t seem to be the right answer for right now.  The act could potentially resurface with the new Congress as early as January, but this defeat likely marks the end of the Paycheck Fairness Act due to the more Republican face of the Senate in 2011.