The Fight Over EEO-1 Pay Data Collection Continues

As previously reported here, in November 2017, following the Office’s of Management and Budget (“OMB’s”) “immediate stay” of the EEO-1 pay data reporting requirement, the National Women’s Law Center (“NWLC”) and the Labor Council for Latin American Advancement (“LCLAA”) filed a lawsuit to reinstate the EEO-1 pay data reporting requirement, asserting OMB lacked the legal basis to stay the pay data reporting requirement.

This week, the OMB struck back with a motion asking the court to dismiss the NWLC/LCLAA lawsuit.  OMB argued it has continuing authority to review the pay data collection requirement.  Moreover, OMB contended the NWLC and LCLAA do not have standing to sue because neither have been impacted by the OMB’s decision to stay the requirement pending further review. OMB further argued that, in any event, the lawsuit was premature because it has not yet made a final decision on EEO-1 pay data collection.

Regardless of the ultimate fate of EEO-1 pay data collection, gender and race pay gap issues continue to be an area of focus. Jackson Lewis’ Pay Equity Resource Group will keep you updated with the latest developments.

Hollywood’s Time’s Up Movement Keeps Pay Equity in Spotlight

At the start of 2018, a group of powerful women in Hollywood launched the “Time’s Up” initiative to counter systemic sexual harassment and discrimination and address broader issues affecting women, including fair pay in the workplace. In support of its goals, the initiative includes a legal defense fund to help women protect themselves from sexual misconduct and discrimination.

In a letter to The New York Times, organizers said, “Unfortunately, too many centers of power – from legislatures to boardrooms to executive suites and management to academia – lack gender parity and women do not have equal decision-making authority…. This systemic gender-inequality and imbalance of power fosters an environment that is ripe for abuse and harassment against women.”

In fact, following backlash from revelations that Mark Wahlberg was paid 1,500 times more than Michelle Williams for reshoots of the same film, Wahlberg donated his fee to the Time’s Up Legal Defense Fund.

The ongoing spotlight on gender issues, as well as the legal defense fund, will likely lead to greater litigation over sexual harassment and pay equity in the workplace, in Hollywood and beyond. Employers should consider undertaking privileged proactive pay equity analyses to ensure that they are prepared for potential claims of discrimination.

Our Pay Equity Resource Group attorneys are available to provide strategic advice as pay equity issues continue to gain momentum. We will keep you updated with any developments.

New Jersey Bars State Agencies from Seeking Applicants’ Wage Histories

In his first official act upon taking office, newly elected Governor Phil Murphy signed an executive order barring state agencies from asking job applicants about wage history. Former Governor Chris Christie previously vetoed legislation that would have prohibited employers from requesting salary history information from prospective employees.

Effective February 1, 2018, state agencies are prohibited from asking a job applicant for past wage history unless or until a conditional offer of employment, including an explanation of the overall compensation package, has been extended. State agencies also are forbidden from investigating or researching prior salaries of applicants. An agency may request or verify current or previous compensation information prior to a conditional job offer only if an applicant volunteers such information or if verification is required by federal, state or local law. An agency that obtained salary history information prior to the effective date of the Executive Order is prohibited from using that information in any employment decision unless required to do so by law or collective bargaining agreement.

Upon signing the law, Governor Murphy pledged to sign any legislation banning the practice statewide and made clear his commitment toward equal pay for women in New Jersey, “Here and now we begin the process of bulldozing the roadblocks that have kept women from being paid fairly, that have kept many women of color from fulfilling their dreams of entering the middle class, and that have allowed our wage gap to persist.”

New Jersey is the latest in a growing list of states and local governments to prohibit pre-employment inquiries into salary history. Stay tuned to the Jackson Lewis Pay Equity Advisor blog for updates on new and pending legislation

Ring in the New Year by Ensuring Compliance with New Salary Inquiry Bans

In recent months, several states and localities have passed laws and ordinances banning inquiries into an applicant’s prior compensation, including in California, Massachusetts, Delaware, New York City, Oregon, Puerto Rico, San Francisco, and Philadelphia. There are similar laws currently under consideration in a number of other states, and this topic is bound to be a key focus for lawmakers in 2018.

Companies in jurisdictions with already enacted laws should ensure they enter the New Year in compliance with any new salary inquiry requirements.

Here are a few best practices employers should consider incorporating into their processes:

  • Remove all pre-offer salary history information from sources used to collect applicant information in those jurisdictions with salary history bans. Employers also should ensure that written policies conform to the law. This includes questions posed on written employment applications, as well as online sources, such as Applicant Tracking System software used to aid in the HR process.
  • Train recruiters and talent acquisition teams. Be sure to train all HR personnel, recruiters, third-party hiring agencies, and anyone else involved in the hiring process on the new requirements, including how to document when an applicant voluntarily discloses salary history.
  • Be cognizant of when you ask for an applicant’s W-2 form. Asking for an applicant’s W-2 form before the salary history question becomes lawful may violate some salary inquiry bans. New York’s ban, for example, allows employers to ask for W-2 forms only to verify voluntary and unprompted salary disclosures. Such a request may be prohibited even after an employer makes a conditional offer and has set compensation for the job.
  • Understand what is meant by “compensation.” “Compensation” should be interpreted broadly and as including more than just an applicant’s base salary, such as vehicle allowances, retirement plan contributions, or bonuses. Inquiry into all of these measures as defined “compensation” are prohibited.

Our Pay Equity Resource Group attorneys are available to provide strategic guidance as more localities begin instituting salary history bans and similar pay equity measures in 2018.

The Fight to Keep EEO-1 Pay Data Collection

Just when it appeared settled that EEO-1 Pay Data reporting was no longer on the table, advocacy groups have filed a lawsuit to reinstate the rule.

 In November, the National Women’s Law Center (NWLC) and the Labor Council for Latin American Advancement filed suit against the Office of Management and Budget (OMB), the Equal Employment Opportunity Commission, and other government entities to reestablish the requirement that certain employers submit aggregate pay data and hours worked with their annual EEO-1 Report, in addition to the traditional demographic data already submitted.

 While intended as a way to address discriminatory pay practices, the means of achieving the result was controversial. Critics argue against the aggregate nature of the data as units of analyses, which would not take into account factors that influence pay. Additionally, the burden on employers, who often do not have crossover between payroll systems and demographic data, would be significant.

As expected, in August, the OMB issued a stay on the pay data collection aspects of the new EEO-1 Report, citing data submission specifications that were not open to public comment during the review process and a resulting change in the burden estimate for employers.

In the NWLC complaint filed challenging the stay, the plaintiffs argue, among other things, that the OMB did not have authority to issue the stay and that the OMB’s Memorandum failed to explain how the pay data collection requirement “lacked practical utility, [was] unnecessarily burdensome, and failed to adequately address privacy and confidentiality issues . . . nor why any purported problems . . . outweigh the benefits identified by the EEOC and OMB in approving the revised EEO-1.”

Regardless, of what the court decides, we anticipate that the 2017 EEO-1 Reports due date of March 31, 2018, will not change and only will collect traditional demographic information.

Jackson Lewis’ Pay Equity Resource Group will keep you updated with any developments.

Beyond Base-Pay: EEOC Settlement Targets Sales Representative Commissions

For some workers, the bulk of their income is commissions or other incentive-based pay, not their salary or base wage. For years, the Equal Employment Opportunity Commission, sales employees, and class action plaintiff attorneys have been interested in fair pay for sales workers and, in particular, pay discrimination involving female sales workers. A recent EEOC settlement demonstrates the need for employers to separately analyze all components of incentive-based workers’ pay.

EEOC is not the only agency interested in incentive-based pay. For federal contractors, an audit by the Office of Federal Contract Compliance Programs means turning over to the agency not just base wage and salary data, but also separately identifying for each employee other significant components of pay, “such as bonuses, incentives, commissions, merit increases, locality pay or overtime….” This requirement is based on the agency’s recognition that analyzing base pay alone may not get to the heart of a wage-gap or fair pay issue.

The case brought by EEOC alleged violations of the Equal Pay Act and Title VII of the Civil Rights Act based on the assertion the company paid female sales representatives a lower base pay than male sales representative, and that females did not operate on a level playing field regarding commissions. EEOC alleged female sales representatives were required to sell more than males to earn the same commission.

The company settled the matter without admitting liability. However, a proactive and thorough analysis by the employer of both base pay and commissions likely would have revealed these issues, or at least prompted questions designed to reveal the issues, and avoid the claim in the first place. As part of any analysis of pay components, such as commissions and overtime, employers should be asking not only how much is earned, but also exploring the terms and conditions on which those incentives are earned. Strategic analyses can and should include exploration of how assignments are made and whether objective and defensible criteria are used uniformly and consistently to distinguish the earnings of one employee from another. Likewise, any analysis should ask whether such decisions adversely affect any race or gender group, and why. For example, how are sales territories or overtime hours assigned?

For the same reason, OFCCP requires contractors to separately identify each pay component for every employee and employers should analyze each component separately. Analyzing “total compensation” may mask significant and, perhaps, indefensible differences in one or more components of pay. In addition, an assertion that total pay is fair cannot legitimately defend a claim that any one component is discriminatory.

A proactive pay analysis with experienced attorneys (subject to the attorney-client privilege) should look at all significant components of pay separately. Likewise, it also should look beyond how much employees earn to the terms and conditions dictating how incentive pay is earned. Such analyses may turn up interesting issues that, if timely addressed, may help avoid employee and government agency claims.

Localities and the Compensation History Ban: Next Stop Albany County

New York Governor Andrew Cuomo has long supported measures related to pay equity. In 2015, he signed a pay equity law that prohibited an employee from being paid a lower wage on the basis on gender. Similarly, in early 2017, Cuomo signed an executive order prohibiting state agencies from making pre-employment offer inquiries about a candidate’s prior or current salary. [https://www.jacksonlewis.com/publication/new-york-toughens-equal-pay-laws-state-contractors-must-disclose-salary-data-state-agencies-cannot-ask-applicants]

Unlike California, Delaware, Massachusetts, and Oregon, which have passed statewide “salary history ban” legislation, New York has yet to pass its own uniform “salary history ban.” Instead, areas of New York have begun individually to prohibit asking an applicant for his or her salary history. New York City put into effect a salary history ban on October 31, 2017. Albany County is next.

Albany County’s compensation history ban goes into effect Sunday, December 17, 2017. At the pre-offer stage, employers who employ at least four employees or employment agencies will not be permitted to seek the salary history of any job applicant from applicant’s current or former employers. In addition, applicants cannot be “screened” based on their current “wage” (including benefits or other compensation, or salary history), such as requiring an applicant’s prior “wage” satisfies minimum or maximum criteria as a threshold for further consideration. A job applicant also may not be requested or required to disclose prior wages or salary history as a condition of being interviewed or for further consideration of employment. Only after an offer of employment with compensation is extended to the job applicant can an Albany County employer or employment agency obtain salary history information. Even then, the employer or employment agency can collect the information only for the sole purpose of confirming the applicant’s prior wages, including benefits or other compensation, or salary history. (Inquiries relating to compensation, therefore, can be much broader than just “salary.”)

Potential penalties include compensatory damages, reinstatement (with or without back pay), and/or oversight imposed by the Albany Commission on Human Rights. The Albany County Human Rights Law also allows a potential private right of action filed by the aggrieved individual.

Albany County employers and employee agencies should take steps now to update their pre-employment practices to comply with this local law and New York pay equity initiatives. Employers and employment agencies should ensure that any discussions about compensation history are not affirmatively engaged in during pre-offer stage, including by asking such information on an application form.

Local jurisdictions likely will continue to consider salary history ban legislation, both in New York State and across the nation, so employers should stay alert for additional legislation.

It’s the Most Wonderful Time . . . For a Pay Equity Update

‘Tis the season . . . for state legislatures to close for the year. While we’re seeing legislative activity at the state level slow down, the past few months brought a flurry of activity in the area of pay equity and bans on salary history inquiries.  Here is a recap of recent activity and noteworthy developments.

Albany County, New York

In October, the Albany County Legislature unanimously passed a salary history ban ordinance, Local Law P, which will prohibit Albany County employers with four or more employees and employment agencies in the county from

  • Screening job applicants based on their current or prior salary;
  • Requiring that an applicant’s salary history satisfy minimum or maximum criteria;
  • Requesting or requiring that a job applicant disclose his or her salary history as a condition of being interviewed or considered for an offer of employment; and
  • Seeking an applicant’s salary history from any current or former employer.

Under the ordinance, “salary history” includes “benefits or other compensation.” Additionally, the ordinance contains an exception.  Employers may confirm an applicant’s salary history only after an offer of employment with compensation has been made, and if the applicant provides written authorization to contact previous employers.

Albany County Executive Daniel McCoy signed the bill into law on November 6, 2017. It will go into effect on December 17, 2017.

California

The California General Assembly ended its legislative session in October. Before it did, the state enacted a statewide prohibition on asking for applicants’ salary history (A.B. 168).  Beginning January 1, 2018, all private and public-sector California employers will be prohibited from

  • Relying on an applicant’s salary history as a “factor” in determining whether to offer employment to an applicant or what salary to offer; and
  • Seeking an applicant’s “salary history information” orally or in writing, directly or indirectly. Salary history includes both “compensation and benefits.”

However, employers may consider or rely on salary history information if an applicant “voluntarily and without prompting” discloses his or her salary history to a potential employer. Keep in mind, even with this exception, the new law does not change a previous amendment to California’s Fair Pay Act, which prohibits an employer from relying solely on salary history to justify a disparity in compensation.

In addition, California employers must, upon reasonable request, provide an applicant with the pay scale for the position to which the applicant applied. The new law does not define “reasonable request” or “pay scale.”

A violation will not constitute a misdemeanor under the relevant section of the California Labor Code, but the law does not specify any penalty or other remedy for non-compliance. As the January 1, 2018 effective date draws closer, we may receive further guidance from the California legislature and state administrative agencies regarding the means of enforcement.

While California passed one equal pay law, Governor Brown vetoed the Gender Pay Gap Transparency Act, A.B. 1209, which would have required employers with 500 or more employees in the state to biennially provide information on their “gender pay differentials” to the Secretary of State.  Under this law, a large employer would have been required to report on the difference between the mean and median wages of male and female exempt employees by job classification or title.  Similar information would have been required for male and female board members.  The bill had support in the Legislature, but Governor Brown vetoed it with concerns that it was ambiguous and would encourage more litigation than pay equity.  Governor Brown also noted in his veto message that the State’s Pay Equity Task Force was in the process of developing guidance and recommendations to assist employers in assessing their current wage practices.

The Governor’s veto could be overridden by a two-thirds vote of both California legislative houses. While Democrats currently have a supermajority in both chambers, meaning they have the numbers to override a veto, the Legislature has not overridden a veto since 1979 when Brown previously was governor.

San Francisco

In addition to the new statewide ban on salary history inquiries, private and public employers registered to do business in the city of San Francisco must also comply with the city’s salary history inquiry ordinance, which takes effect July 1, 2018.  While the ordinance is similar to the statewide law, it includes some additional restrictions and affirmative requirements.

Illinois

Illinois failed to join the salary history inquiry “ban” wagon in November when the Illinois Senate failed to override Governor Rauner’s veto of a salary history ban. As discussed in an earlier post, the Illinois state legislature passed H.B. 2462 which would have prohibited employers from seeking salary history and also would have amended the state’s equal pay law, replacing the requirement that an employee prove that the jobs being performed require “equal skill, effort, and responsibility” with a “substantially similar” standard.

On October 25, 2017, the Illinois House voted 80-33 to override the Governor’s veto, but the vote in the Senate was 7 “yeas” short of the three-fifths required to override the veto and become law.

Notable Pending Bills

While many legislatures have closed or are closing for the year, there are several pay equity bills still lingering, due in part to the fact that many of these jurisdictions have two-year legislative cycles with “carryover” to even-numbered years, including: Washington, D.C., Georgia, Iowa, Michigan, New Hampshire, New York, North Carolina, Pennsylvania, Vermont, and Washington.

In addition, Florida and New Hampshire have pre-filed equal pay bills for consideration during the 2018 legislative session: H.B. 393 and S.B. 594 (in Florida) and H.B. 1222 (in New Hampshire).  The Florida bills would strengthen the current equal pay law and impose wage transparency provisions and a salary history inquiry ban.  The New Hampshire bill would prohibit employers from requiring an applicant to disclose his or her salary history prior to an offer of employment.

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With several pay equity and salary history laws coming into effect in the coming year, employers should review their application forms and hiring and pay practices, educate recruiters and managers on how to comply with salary history prohibitions, and consider conducting a privileged proactive pay analysis.

Jackson Lewis’s Pay Equity Resource Group attorneys are available to provide strategic guidance. Stay tuned for updates.

NYC Issues Additional Guidance on Upcoming Salary Inquiry Prohibitions

As discussed in an earlier post, effective October 31, 2017, New York City employers generally may not inquire about or rely upon a job applicant’s salary history in making employment decisions. The New York City Commission on Human Rights (NYCCHR) previously released an Employer Fact Sheet and a Job Applicant Fact Sheet to assist employers and employees with understanding the law.  The NYCCHR has now added a “Salary History Law: Frequently Asked Questions” section to its website.  Click here to read the full article on these developments and the implications for employers.

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