Federal Paycheck Fairness Act Reintroduction in House and Senate

First introduced in Congress in 1997, and several times since, the Paycheck Fairness Act is again under consideration by Congress (S. 270/H.R. 7).

If enacted, the bill would attempt to close the gender pay gap by:

  • Implementing a wage history ban
    • With limited exceptions, employers would be prohibited from requesting or relying on the wage history of a prospective employee.
  • Limiting employers’ defenses against a claim of unequal pay
    • To defend a claim, an employer would have to show the disparity in pay was due to any bona fide factor other than sex and that the factor:
      • (1) Is not based upon or derived from a sex-based differential in compensation;
      • (2) Is job-related;
      • (3) Is consistent with business necessity; and
      • (4) Accounts for the entire differential in compensation.
  • Allowing employees to inquire about and discuss wages without retaliation
    • Employers would be prohibited from retaliating against an employee for inquiring about, discussing, or disclosing their own wages or the wages of another employee.
  • Enhancing penalties for violations
    • The bill would increase penalties for employers, including instating potential punitive damages if employers are found to have acted with malice or reckless indifference.
    • The bill also would impose certain civil penalties for violation of the wage history ban.
  • Directing pay data collection and analyses
    • The bill directs the Equal Employment Opportunity Commission to collect compensation data and other employment-related data from employers.
    • It also suggests changes in the way the Office of Federal Contract Compliance Programs pursues pay discrimination claims.

The proposed bill follows pay equity trends at the state and local levels. From salary history bans to pay transparency mandates, as well as efforts to broaden the concept of equal pay for equal work, state and local laws have been taking the lead in pay equity, and employers have been trying to keep up with the rapidly changing and decentralized legal landscape.

Please contact a Jackson Lewis attorney with any questions about pay equity where you operate.

South Carolina Contemplates Sweeping Pay Equity Legislation

Bipartisan bills introduced in both houses of the South Carolina General Assembly propose allowing workers and job applicants to bring suit against employers for pay inequality and wage secrecy.

The Act to Establish Pay Equity, introduced as Senate Bill 372 along with its similar companion in the House, would expand employees’ and applicants’ rights regarding pay disparity, wage transparency, and prohibit reliance on prior pay in determining an applicant’s job offer.

The federal Equal Pay Act of 1964 requires equal pay for equal work for men and women. The South Carolina Act goes further. As with other state pay equity laws, the South Carolina Act would require employees be paid the same wages for “comparable work” regardless of their “race; religion; color; sex, including gender identity and sexual orientation; age; national origin; or disability status.” Additionally, the Act would require employers to allow employees to discuss their wages and to disclose the pay range for positions to job applicants and employees upon request, when making a job offer, and annually thereafter. The Act would make it unlawful for an employer to consider a job applicant’s pay from previous employment when making an offer of employment.

The potential damages and penalties under the Act would be significant. The proposed Act allows job applicants and employees to bring lawsuits against employers who violate the Act both individually and in collective actions. Damages under the Act includes punitive damages. Employers may be liable for a civil penalty between $1,000 and $5,000 for every violation for each employee or job applicant.

We will continue to monitor and report on the South Carolina bill and other pay equity developments. Please contact any member of the Jackson Lewis Pay Equity Resource Group with any questions.

Colorado Equal Pay Law Introduced

On January 17, 2019, Colorado Senate Democrats introduced the “Equal Pay for Equal Work Act” (SB 19-085) to prohibit a wage differential based on an employee’s sex. The bill also contains a salary history ban and pay transparency requirements. If passed, this would be among the most aggressive equal pay laws in the nation.

Key provisions of SB 19-085 include:

  • Removing enforcement authority from the Colorado Department of Labor and Employment and allowing a private right of action;
  • Requiring equal pay for “substantially similar work” based upon a composite of skill, effort, and responsibility; and
  • Requiring that any wage differentials between employees be based upon:
    • A seniority system;
    • A merit system; or
    • A system that measures earning by quantity or quality of production.

Each of the factors reasonably relied upon must explain the entire differential.

The bill’s salary history ban prohibits an employer from seeking or relying upon a candidate’s salary history. It also prohibits employers from requiring employees to waive the right to discuss their salary with others.

Finally, the pay transparency provisions would require that employers “make reasonable efforts” to post promotional opportunities on the same calendar day that they become available and prior to making a decision. The bill would require employers to disclose an hourly wage rate or wage rate range for each job opening.

The 2019 “Equal Pay for Equal Work Act” as introduced is more aggressive than the 2018 version of the same law. The 2018 bill would allow wage differentials based upon “a bona fide factor other than sex that is job-related and consistent with business necessity such as education, training, or experience.” Additionally, the current version allows recovery of back pay for “the entire time the violations continues, not to exceed six years.”

The Senate bill in its current form already has sponsorship of all 19 Democratic Members of the Colorado Senate and 30 sponsors in the Colorado House of Representatives. Democrats control all three branches of Colorado government, making the passage of some version of an equal pay law likely in 2019.

We will continue to report on the Colorado bill and other pay equity developments. Please contact Jackson Lewis with any questions.

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.

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