House and Senate Democrats recently introduced the Civil Rights Act of 2008. The bill will have a serious impact on the cost of doing business. Not only will it expand employer liability, it will also increase the cost of settling lawsuits.

Among other things, the Act seeks to change several former federal laws and U.S. Supreme Court decisions, including the Federal Arbitration Act, the Fair Labor Standards Act, the Civil Rights Act of 1964, the Equal Pay Act, and the Age Discrimination in Employment Act. For instance, if the bill passes, any employment contract that requires an employee to arbitrate a claim would be unenforceable unless the employee knowingly and voluntarily consented to arbitrate after the dispute arose. Basically, the bill seeks to prevent employers from contracting with employees to arbitrate employment disputes during the hiring process.

The bill will make employers vulnerable to liability under the Equal Pay Act for paying men and women different salaries, even if the difference is for legitimate reasons. The biggest and most expensive change by far will be that the bill will uncap damages in Title VII Civil Rights Act lawsuits. That’s right. No monetary cap on liability under Title VII.