Michigan Bars State Employer Inquiries into Salary History

One week after taking office, Michigan Governor Gretchen Whitmer signed a directive that prohibits state departments and agencies from asking about current or previous salaries until after extending a conditional offer of employment with proposed salary. Executive Directive No. 2019-10, intended to ensure equal pay for equal work among state employees, went into effect immediately upon receiving the governor’s signature on January 8, 2019. The directive also prohibits public employers from searching public records databases to obtain an applicant’s current or previous salary information. The directive does not prevent an applicant from volunteering salary information; however, the state cannot consider an applicant’s refusal to do so in any employment decision. The state may verify salary information only if the applicant voluntarily provides the information or verification is required by applicable law.

Less than a year ago, former Michigan Governor Rick Snyder signed a bill that prevented local governments from regulating the questions employers could ask during job interviews, essentially blocking city or county regulations prohibiting employers from inquiring about salary history information. See our previous blog: A Ban on Salary History Bans: Michigan Bars Local Governments from Prohibiting Such Inquiries. Wisconsin passed a similar bill last year. Such bills ostensibly prevent a patchwork quilt of local salary history regulations being passed where such a regulation has not yet been passed at the state level, such as in New York. See:

New York City Enacts Law Prohibiting Pre-Employment Inquiries into Salary History

Localities and the Salary History Ban: Next Stop, Westchester County, New York

New Suffolk County, NY, Bill Bans Inquiry into Salary History

Localities and the Compensation History Ban: Next Stop Albany County

Our Pay Equity Resource Group will keep you updated on further developments in this area.

Oregon Publishes Final Rule Implementing its Expansive Equal Pay Act, Effective January 1, 2019

A majority of the provisions of Oregon’s Equal Pay Act will go into effect on January 1, 2019. The Act’s ban on salary history inquiries went into effect in October 2017. Click here to read our full article regarding the Oregon Equal Pay Act final rule.

New Suffolk County, NY, Bill Bans Inquiry into Salary History

Joining New York City, Albany County, and Westchester County, Suffolk County has become the latest jurisdiction in New York to pass a bill that prevents employers from inquiring into the salary and benefits history of job applicants.

Designed to establish pay equality and to “break the cycle of wage discrimination,” the Restricting Information on Salaries and Earnings Act, or RISE Act, would prohibit any employer in Suffolk County from requesting or seeking the wage history (including the current or previous salary) of a prospective “new” employee during every stage of the hiring process. The bill also prohibits employers from conducting a search of publicly available records or reports for such information.

According to the bill’s Legislative Intent, using such information to establish salary or benefits for new employees perpetuates wage discrimination and the “wage gap” experienced by women, racial and ethnic minorities, and individuals who are returning to the workforce after an extended period. The legislation cites studies finding that women, along with ethnic and racial minorities, have historically encountered lower wages than their white male counterparts.

If County Executive Steve Bellone signs the RISE Act, it is expected to go into effect on or about June 30, 2019.

A long list of states and municipalities have already enacted pay history bans. See our articles, Massachusetts AG’s Office Issues Guidance on Equal Pay Law Set to Take Effect in July, New Jersey Governor Signs Pay Equity Bill into Law, Oregon Enacts Expansive Pay Equity Law, Puerto Rico Enacts Equal Pay Law, Prohibits Employers from Inquiring about Past Salary History, and Localities and the Salary History Ban: Next Stop, Westchester County, New York.

If you have any questions or concerns about these and other pay developments, please contact the Jackson Lewis Pay Equity Group.


Pay Equity for All: UK’s Equal Pay Advice Service Provides Free Legal Advice

A free service to help provide legal advice to female low-income earners on pay equity matters is now available in the United Kingdom. The Equal Pay Advice Service, or “EPAS,” went into operation on November 9, 2018, in time for the UK’s Equal Pay Day (the day in the year when women in the UK effectively begin to work for free) and the announcement of the UK’s pay equity legislation.

The United Kingdom, in partnership with YESS Law, a legal charity organization of employment lawyers dedicated to resolving employee/employer disputes, and the Fawcett Society, a leading UK campaigner for gender equality, created the EPAS.

The idea for the EPAS initiative came after former BCC News China editor Carey Gracie dedicated the nearly $500,000 she received in back pay compensation from her equal pay lawsuit to help create the Equal Pay Fund, which now accepts public donations as well. After salaries for all BBC international editor positions were published, Gracie challenged the pay discrepancy between her salary and that of one of her male colleagues, also employed as a BBC international editor. Gracie’s award represented the discrepancy between her and her male colleague’s salary for the three-and-a-half years both employees overlapped as BBC international editors.

The EPAS is open to those earning less than £30,000. As Gracie states, the primary mission of the service is to combat a culture of “pay secrecy” that persists in UK workplaces. Research funded by the Fawcett Society revealed that nearly 35 percent of men and women in the UK are unaware that it is illegal to pay men and women doing equal work differently. Additionally, the research revealed that 60 percent of UK employees are unaware of their legal right to inquire into potential discriminatory pay practices.

The EPAS also provides helpful information to women who may have potential pay discrimination claims, such as explaining legal terms and encouraging women to request and collect pay information on their male colleagues performing similar or equal work.

Jackson Lewis’ Pay Equity Advisor blog reports on national and international pay equity issues. Our previous posts on international pay equity issues are available here. Feel free to contact a member of the Pay Equity Group for assistance with pay equity issues or analyses in your workplace.

Federal Circuit Urged to Reconsider Prima Facie Showing Required for Equal Pay Act Claim

As previously reported here, a three-judge panel of the U.S. Court of Appeals for the Federal Circuit held in September that Equal Pay Act (EPA) plaintiffs must show not only that they are receiving less pay than similarly situated male colleagues, but that the pay differential is “historically or presently based on sex.” This holding departed from the decisions of other federal courts of appeals and prompted a request for en banc review by the full court to overturn the panel decision. The American Civil Liberties Union (ACLU) and dozens of other advocacy groups have filed friend-of-the-court briefs supporting the plaintiffs’ request.

In Gordon v. United States, No. 17-1845 (Fed. Cir. Sept. 7, 2018), the two female emergency room physicians employed by the Department of Veterans Affairs established a prima facie case that they were paid less than male emergency room physicians. Typically, under the EPA, a plaintiff must show the employer: (1) paid employees of opposite sexes different wages; (2) for substantially similar work; (3) in jobs that require substantially equal skills, effort, and responsibility; and (4) that are performed under similar working conditions. Pointing to Yant v. United States, 588 F.3d 1369 (Fed. Cir. 2009), Judge Jimmie Reyna noted that in addition to the above prongs, a plaintiff must also show that the pay differential is “historically or presently based on sex.” However, in a supplemental section of the opinion (“Additional Views”), Judge Reyna encouraged plaintiffs to seek en banc review to enable the full court to overturn its precedent.

In its friend-of-the-court brief, the ACLU argues that the “historically or presently based on sex” requirement is an “unclear and unmanageable” “plus factor” that requires EPA plaintiffs to “go beyond showing that women and men are paid differently for equal work and demonstrate something more.” The ACLU requests that the full court grant rehearing to correct its EPA precedent and remove the additional requirement to show historical or present sex discrimination.

Jackson Lewis’ Pay Equity Resource Group will continue to monitor this case and report developments.

Canada is the Latest Country to Contemplate Pay Equity Legislation

Fair pay initiatives continue to sweep the globe. Canada is the latest to consider legislation.

On October 29, 2018, the Government of Canada announced the introduction of an “Act to Establish a Proactive Pay Equity Regime within the Federal Public and Private Sectors (Pay Equity Act).” The Act would address a number of legislative findings on gender pay equity in Canada, including the following:

  • In 2017, women working full-time for hourly wages made 88.5 cents for every dollar earned by men, but just 69 cents for every dollar when looking at overall annual earnings;
  • Women are overrepresented in part-time work;
  • Labor market segmentation has left women in predominantly lower-paying jobs; and
  • Women are significantly underrepresented in senior positions.

The Act is unique in its approach to pay analyses. Under the Act, employers would be required to:

(1) Identify job classes predominated by men and women;

(2) Evaluate the “value of work” performed by male- and female-predominant job classes;

(3) Compare the compensation associated with male- and female-predominated job classes that are “of similar value”;

(4) Identify female-predominant job classes that require an increase in pay as compared to male-predominant job classes performing work of similar value; and

(5) Identify when the pay increases are due.

The Act would apply to federally regulated public and private employers with at least 10 employees. It also would require pay analyses to be included in a “pay equity plan” to be prepared within three years of the Act’s effective date.

The Pay Equity Act also requires employers to:

  • Update pay equity plans every five years;
  • Post employee notices regarding their Pay Equity Act obligations and their progress toward “key milestones in fulfilling these obligations”;
  • Provide employees an opportunity to comment on the proposed the pay equity plan and updates, and consider those comments before finalizing the plan; and
  • File “annual statements” with the Pay Equity Commissioner regarding their pay equity plans.

If the Act passes, the Pay Equity Commissioner is expected to issue regulations providing details on identifying job classes performing work of “similar value,” as well as the types of analyses that would suffice to identify pay disparities requiring pay adjustments.

Common provisions in pay equity legislation include:

(1) Employers must proactively and periodically analyze pay to determine if employees are paid fairly, regardless of race and gender;

(2) To be fair, pay among employees performing similar, substantially similar, or equal work (depending on the specific law) must be based on relevant, race- and gender-neutral pay factors; and

(3) Race and gender pay disparities that cannot be justified based on neutral pay factors must be remedied.

For our previous posts regarding international pay equity issues, please see here and here.

If you need assistance with pay equity issues or analyses in your workplace, please contact a Jackson Lewis attorney.

Grade/Step Pay-Setting System Insufficient to Defeat Pay Discrimination Claim, Fourth Circuit Holds

The courts are making it increasingly difficult for employers to prevail on equal pay discrimination claims based on the “factor other than sex” affirmative defense. One recent example is the decision in EEOC v. Maryland Ins. Admin., 879 F.3d 114 (4th Cir. 2018), from the U.S. Court of Appeals for the Fourth Circuit. There, the Equal Employment Opportunity Commission filed suit against the Maryland Insurance Administration (MIA) on behalf of three female fraud investigators alleging pay discrimination in violation of the Equal Pay Act, 29 U.S.C. 206(d).

The female fraud investigators alleged that they were paid less than men in the same role with similar experience. In defending the differences in pay, MIA relied upon its grade and step system for setting pay at the time of hire. MIA argued that the male comparators were set at a higher level in grades and/or steps because of different experience and qualifications.

The Fourth Circuit held that the alleged differences in experience and qualifications were relevant only to MIA’s affirmative defense, but not to the plaintiffs’ ability to state a prima facie claim of pay discrimination. As to the affirmative defense that the pay difference was based on a “factor other than sex” — namely, different experience and qualifications — the Court held that the discretion available in assigning the step and grade could have allowed gender to influence the pay-setting decision. According to the Court:

MIA exercises discretion each time it assigns a new hire to a specific step and salary range based on its review of the hire’s qualifications and experience. A fact finder faced with the present record could have determined that, when exercising this discretion, MIA at least in part based its assignment of the claimants’ step levels on their gender with a resulting diminution of their assigned starting salary.

Critically, the Court also noted, “the record does not contain any contemporaneous evidence showing that the decisions to award [the male comparators] their respective starting salaries were in fact made pursuant to their aforementioned qualifications.” (Emphasis added.)

This raises a key issue in defending pay discrimination claims: is the company able to establish with evidence the actual reason for the pay difference, as opposed to different possible reasons.

The Fourth Circuit joined other circuit courts in holding that “an employer [must] submit evidence from which a reasonable factfinder could conclude not simply that the employer’s proffered reasons could explain the wage disparity, but that the proffered reasons do in fact explain the wage disparity.”

Employers should continue to monitor pay practices to ensure compliance with federal and state pay discrimination laws. For assistance, please contact a Jackson Lewis attorney or our Pay Equity Group.

Knocking on Pay Equity’s Door: Commercial Real Estate Women Network Seeks Answers to Gender Wage Gap

The Commercial Real Estate Women (CREW) Network recently evaluated the pay gap by gender in the commercial real estate industry and published a white paper entitled “Achieving Pay Parity in Commercial Real Estate” (Linked here).  The white paper reports that the gender pay gap “persists and is strongest for [women] earning less than $100,000 and above $250,000.” The greatest gap was found with commercial real estate brokers, with a pay differential of 33.8% between women and men.

The CREW Network suggests that several factors are responsible for the persistent pay gap, including: (i) salary negotiations; (ii) mid-career disruptions; and (iii) unconscious bias. The white paper reports that although executive level women and men appear to negotiate their salaries equally, the wage gap widens mid-career, suggesting, in part, that “women are starting from lower offers and basing negotiations on salary history rather than skills, abilities, and experiences.” According to a series of experiments conducted by Harvard University researchers, and cited by the white paper, “evaluators penalized women more than men for initiating negotiations, and nervousness around male evaluators made females less inclined to negotiate compensation versus encountering a female evaluator.”

The white paper also reports that “[w]omen are much more likely to take time off from their careers to care for a family member, with 42% reducing their hours, 39% taking significant time off, 27% quitting jobs, and 13% being passed over for a promotion. On the other hand, only 28% of men reduced their hours, 24% took significant time off, 10% have quit jobs; and 10% have been passed over for a promotion.”

The white paper recommends specific steps to achieve “pay parity” in the industry. The CREW Network advocates for salary transparency and greater diversity in senior management.

The CREW Network’s white paper is the latest example of industry-specific efforts to tackle pay disparity.

For more information on efforts being made in other industries, see Jackson Lewis’ recent updates:

Please contact Jackson Lewis with any questions.

Leading By Example: Oregon State Government Conducts Expansive Internal Pay Equity Analysis

Oregon’s state government, ahead of the January 1, 2019, effective date of the state Equal Pay Act (EPA), is conducting an expansive, behind-the-scenes pay equity analysis of its departments to identify and remedy any potential pay disparities between male and female employees.

Under Oregon’s pay equity law, businesses are not required to conduct pay equity audits. However, the law contains a safe harbor provision providing that if an organization conducts a pay equity analysis and fixes any issues, the organization will be protected from compensatory and punitive damage liability in any related lawsuit for the next three years.

Oregon’s legislative branch had set an internal deadline of November 1 to complete its audits. However, with more than 350 employees, the entire legislative assembly, and six support agencies, the undertaking has proven to be quite a challenge. Employees received surveys and emails in late-September reminding them to verify their work experience and education information. Although a legislative work group representing both sides of the political aisle was formed to discuss exactly how the EPA will be implemented, many employees feel the audits and information gathering is premature, since the work group has yet to determine how all of the collected information will be used.

Oregon’s executive branch also sent out surveys to each of its 35,000 employees, requesting an up-to-date resume detailing experience, education, seniority, and any additional job-related training. Based on a preliminary analysis, the executive branch anticipates a $400-million budgetary impact as a “worst case scenario.” Employees slated to receive pay increases will receive back pay to June 1.

Employers must carefully scrutinize the interplay between federal and state laws in order to determine the correct course. Members of the Jackson Lewis Pay Equity Group can provide strategic advice and counseling on compliance with the law.

Déjà Vu? Illinois Governor Vetoes Salary History Ban

Illinois is not yet on the salary history ban wagon. For the second time since 2017, Illinois Governor Bruce Rauner vetoed a law that would prohibit employers from seeking salary history information from prospective employees, among other fair pay provisions.

House Bill 4163 closely resembles the bill the Governor vetoed in 2017, House Bill 2462. The bill would amend Illinois’ Equal Pay Act to:

  • Prohibit discrimination in wages among employees performing substantially similar work which requires substantially similar skill, effort, and responsibility.
  • Require that factors used to describe pay differentials not be based on sex or any protected characteristic and account for the entire differential.
  • Prohibit employers from seeking salary history, including benefits or other compensation, of any job applicant unless the information is a matter of public record or the applicant is a current employee.
  • Create a private right of action against employers, which could lead to compensatory and punitive damages.

In a message to the General Assembly, Governor Rauner offered specific recommendations for future successful salary history legislation that would gain his support. The Governor noted the law should resemble that of Massachusetts, which, he stated, has “a best-in-the-country approach” to salary history legislation.

The Governor’s recommended law would allow employers to consider salary history information in limited circumstances, including when a prospective employee has voluntarily disclosed their current or prior salary. The Governor’s suggested amendments also would permit an employer to seek to confirm salary history after making an offer of employment with salary negotiated. Also like Massachusetts’, the Governor recommended inclusion of a “self-evaluation” defense, where employers can use proactive pay analyses and progress toward eliminating pay differentials as an affirmative defense to actions alleging unequal pay.

The legislature has not yet responded to the Governor’s recommendations.

Jackson Lewis will continue to monitor and report on pay history legislation. Please contact Jackson Lewis with any questions.