While the Federal Equal Pay Act, which mandates employers to pay men and women the same pay for the same work, has been the law for 55 years, salary surveys continue to show that women are paid less than men. In an effort to address this pay gap, states around the country are passing their own legislation. Some of the states have enacted similar provisions, while a few have enacted unique provisions.
Ban On Salary History Inquiries
Studies have shown that one factor contributing to ongoing pay discrepancies is that an employee’s starting salary with an employer is often based upon the individual’s salary with their previous employer. Consequently, discriminatory pay discrepancies may follow an individual through his or her career. In an effort to address this issue, a growing number of states have banned employers from inquiring into an applicant’s salary or compensation history during the hiring process. These states include:
New Jersey (2/1/18);
Oregon (10/6/17); and
Some states presently only have bans on public-sector employers, including New York (1/9/17) and Wisconsin (4/18/18). In addition, some counties and cities have also enacted bans. Among them are: New York City; Albany County, NY; Westchester County, NY; San Francisco; Chicago; New Orleans; Philadelphia; and Pittsburgh.
While employers in these jurisdictions may not inquire into an applicant’s compensation history, employers may ask an applicant about his /her expectations regarding compensation for the position they are seeking. Moreover, in some jurisdictions, such as Connecticut, whose ban goes into effect on January 1, 2019, an applicant may raise the topic of their compensation history, and the employer then may take steps to verify the employee’s representations.
More Expansive Legislation Passed in Massachusetts and New Jersey
Some states are also passing more expansive legislation to address pay disparities. On July 1, 2018, both Massachusetts’ Equity Pay Act (MEPA), and New Jersey’s Law Against Discrimination (LAD) go into effect. Massachusetts’ recent legislation provides additional clarity as to what constitutes unlawful pay discrimination. The new legislation defines “comparable work” as work that requires substantially similar skill, effort, and responsibility, and is performed under similar working conditions. Certain differences in pay are permissible if they are based upon:
- Seniority System (Note: time spent on pregnancy-related leave, paternal leave or FMLA leave may not reduce seniority);
- Merit System;
- System measuring quantity or quality of production, sales, or revenue;
- Geographic location of the job;
- Education, training or experience required for the job; or
- Travel requirements.
One unique aspect of the Massachusetts Pay Equity Act is that employers may be immune from suit if, within the 3 years prior to suit, the employer conducted an audit of its pay practices and took reasonable steps to eliminate any impermissible gender-based wage differentials revealed in the audit. Please note, however, that employers may not correct disparities by lowering an employee’s compensation.
New Jersey’s Law Against Discrimination not only prohibits pay differences based on gender for “substantially similar work” absent a legitimate business reason, but also prohibits differences based upon any protected classes, including sex, race, creed, color, national origin, ancestry, nationality, disability, age, pregnancy, breastfeeding, marital status, sexual orientation, gender identity/expression, military status, or genetic information.
Like Massachusetts, New Jersey prohibits employers from correcting pay discrepancies by reducing an employee’s compensation. With its new legislation, New Jersey will have one of the longest statutes of limitation to bring a compensation-related claim – 6 years – and employers who are not in compliance will face triple damages.
So what should employers do before a claim is brought? Now is a good time for employers to:
- Review their applications to make sure they are compliant with each of the jurisdictions in which the application is used.
- Train employees who participate in interviews on how to conduct an effective and lawful interview.
- Review their compensation structure to ascertain whether employees who perform comparable work are being equally compensated as required by state and federal law.