House of Representatives Passes Paycheck Fairness Act to Strengthen Equal Pay Act

Democrats in the U.S. House of Representatives continue to call for stronger protections to combat wage inequality. By a vote of 242-187, the House recently passed the Paycheck Fairness Act to enhance the federal protections guaranteed under the EPA.

Currently, to defend against an EPA claim, an employer can assert any of four defenses to justify paying men and women differently for the same work. Employers can pay workers at different rates if the wage differential is based on i) seniority, ii) merit, iii) quantity or quality of the employee’s work, or iv) any factor other than sex (sometimes referred to as a “catchall defense”).

The Paycheck Fairness Act, H.R. 7, amends the applicability of the last exception by requiring wage differentials to be based on a “bona fide factor other than sex, such as education, training or experience.” This “bona fide factor defense” would require employers to prove that wage differentials fully account for the “entire differential in compensation,” actually relate to the job and are consistent with business necessity, and are not based on or derived from existing gender-based wage disparities.

H.R. 7 also would afford enhanced anti-retaliation protections for employees who not only file pay discrimination claims, but who discuss their salaries with coworkers or initiate or participate in pay equity investigations and hearings. However, employers are not liable under H.R. 7 if an employee with access to wage information, as part of their essential job functions, discloses such information to other employees, unless the employee disclosed the information as part of a complaint or employer-directed investigation.

H.R. 7 would establish the Secretary of Labor’s National Award for Pay Equity in the Workplace to recognize employers for excellence in pay practices. Employers can also receive assistance in instituting compliance checks and modifying their equal pay practices. Lastly, H.R. 7 creates a grant program that would provide funds to eligible entities to design negotiation skills training programs for women and girls.

Support for the measure was divided largely along party lines. House Republicans criticized the bill as “designed for trial lawyers” and pushed to add language limiting attorney’s fees. Under H.R. 7, violators can be subject to enhanced penalties, such as compensatory and punitive damages.

In light of the political composition of the Senate, this bill is unlikely to gain the support needed to be enacted.

This is not the first time this bill has surfaced. Previous efforts to pass the Paycheck Fairness Act failed in the Senate in 2009 after passing in the House of Representatives.

States also continue to pass new fair pay laws.

Our Jackson Lewis Pay Equity Resource Group will continue to monitor these developments and provide guidance on compliance.

 

 

Maine Lawmakers Celebrate ‘Equal Pay Day’ by Passing Pay History Ban

On April 2, Equal Pay Day, Maine’s House and Senate passed a bill prohibiting employers from asking about a potential worker’s wage history before making a job offer. L.D. 278 passed the Maine House by a vote of 86-54 after clearing the Maine Senate by a vote of 22-11 earlier in the day.

If Governor Janet Mills, a Democrat, signs the bill into law, it will go into effect immediately, and Maine will become the 14th state in the nation to prohibit employers from making pre-offer inquiries into an applicant’s compensation history.

Prohibitions

The bill would bar an employer from inquiring about compensation history unless it has negotiated and made an offer to the prospective employee that includes all terms of compensation. The employer may not make such inquiries of the prospective employee or of the employee’s current or former employer.

The bill also clarifies that the state’s existing pay transparency law prohibits employers from stopping employees from discussing or disclosing their own or another employee’s wages.

Evidence of Discrimination

Maine specifically identifies an employer’s direct or indirect inquiry into an applicant’s pay history as evidence of unlawful employment discrimination. It is the first state to do so.

Permitted Practices

The bill allows the following:

  • Employers or employment agencies may “seek compensation history of an employee or prospective employee after an offer of employment that includes all terms of compensation that has been negotiated and made to the prospective employee”
  • Employers may confirm a prospective employee’s compensation history if that compensation history was voluntarily disclosed, without prompting

Further, the law is inapplicable to an employer who makes a compensation inquiry based upon any state or federal law that requires disclosure or verification of compensation history.

Next

Governor Janet Mills is expected to sign L.D. 278. Once signed, the law will go into effect immediately. Employers should review and revise their job applications and policies and procedures and consider training personnel about the ban.

EEOC Opens Portal for 2018 EEO-1 Reporting and Must Provide Guidance on Pay Data Reporting by April 3

The U.S. District Court hearing the EEO-1 pay data reporting case has ordered EEOC to inform employers by April 3, 2019, whether they will be required to provide pay and hours worked data for the 2018 EEO-1 reporting cycle. The current deadline for 2018 EEO-1 reporting is May 31, 2019.

As we reported on March 5, 2019, the U.S. District Court for the District of Columbia vacated the Office of Management and Budget’s (OMB) stay of the EEOC’s pay data collection tool and ordered the OMB’s previous approval of the revised EEO-1 form to be in effect. National Women’s Law Ctr. V. OMB, No. 17-2458 (D.D.C. Mar. 4, 2019). In the wake of the court’s decision, employers were left to question the impact of the ruling, including whether the EEOC would require submission of the pay data by the May 31st reporting deadline or extend the deadline. The pay data reporting requirements would impact all employers, including federal contractors, with 100 or more employees.

On March 18, the EEOC opened the online portal for filing EEO-1 report workforce demographic (Component 1) data and issued the following statement regarding the pay data reporting requirement:

As it announced on February 1, the EEOC is opening its EEO-1 online portal to receive 2018 EEO-1 Component 1 data starting March 18, 2019, and ending May 31, 2019. . . . The EEOC is working diligently on next steps in the wake of the court’s order in National Women’s Law Center, et al., v. Office of Management and Budget, et al., Civil Action No. 17-cv-2458 (TSC), which vacated the OMB stay on collection of Component 2 EEO-1 pay data. The EEOC will provide further information as soon as possible.

The portal for submission of the 2018 EEO-1 Component 1 data is linked here.

EEOC’s March 18 statement provided little guidance as to what steps the agency may take in response to the court ruling, leading the plaintiffs in the underlying lawsuit to request a court conference to obtain information about how EEOC intended to proceed. Following a conference on March 19th, the court ordered EEOC to inform employers by April 3rd of the agency’s timeline for the pay data collection.

Our Jackson Lewis Pay Equity Resource Group will continue to monitor these developments and provide guidance on compliance.

Equal Pay Day is April 2, 2019. Are You Ready?

The Jackson Lewis Pay Equity Resource Group is pleased to announce a special series to help employers prepare for Equal Pay Day. “Rethinking Pay Equity” will take a look at several of the biggest questions facing employers in the ever-evolving #equalpay landscape, including: How can prior salary information perpetuate the persistent pay gap, and how should we measure and address the impact of years-long reliance on such information in the hiring process? What data should we use when reviewing pay? Who should be compared against whom? What do we do if pay analyses reveal a problem? Should the company voluntarily make public disclosures about pay?

Our four-part series will be published over the next few weeks, culminating with a unique webinar presented by Jackson Lewis Pay Equity Resource Group Co-Chairs Joy Chin and Stephanie Lewis on April 2, 2019.

April 2, 2019, is Equal Pay Day. The date, which changes each year, is meant to represent how far into 2019 a woman, on average, must work to earn what a man earned in 2018.

These days, employers face greater challenges around pay than they have for decades. The country has seen a surge in new equal pay legislation and legal theories about pay discrimination, one that is being fueled by the #MeToo movement and growing calls for gender equality. The result is a whole new set of rules, obligations, and best practices around compensation for employers.

Join us in the lead up to Equal Pay Day 2019 with “Rethinking Pay Equity,” a special series of legal alerts aimed at assisting employers by addressing the hottest topics and trends in the world of equal pay. The first alert — “Overcoming the Impact of Prior Salary Information” — is available now.

Also, be sure to register for our important webinar on April 2. Registration is complimentary, but space is limited, so please do not delay.

Illinois House Set to Pass Tough Pay History Ban, Equal Pay Amendments

Once again, the Illinois Legislature is working to pass more aggressive equal pay laws. HB 834 includes not only a pay history ban, but also additional amendments to strengthen pay equity protections and pay transparency provisions.

Pay History

In 2017, and at the end of 2018, former Illinois Governor Bruce Rauner vetoed attempts to prohibit private employers from requesting applicants’ previous pay history. Having gained control of the governorship and commanding advantages in the Illinois House and Senate in the 2018 election, Democrats appeared poised to add Illinois the growing list of states barring all employers, public and private, from inquiring about an applicant’s salary history.

HB 834 would prohibit all employers, employment agencies, and agents (such as recruiters) from seeking the salary information of any applicant from any current or former employer. Additionally, the bill prevents employers from requiring that an applicant’s prior wage or salary “satisfy minimum or maximum criteria; or to request or require such wage or salary history as a consideration of being considered for employment.” The provision banning an employer from seeking pay history does not apply if the applicant’s salary is publicly available or subject to FOIA requests.

Expanded Comparators and Narrowed Affirmative Defenses

Similar to other state pay equity laws, the amendment would also change the Illinois Equal Pay Act’s requirement that employers pay equally for work that requires “equal” skill, effort, and responsibility and instead allow comparisons to those with “substantially similar skill, effort, and responsibility.

The amendment also would increase the employer’s burden of proof by requiring that any differences in pay:

  1. Not be based on or derived from a differential in compensation based on sex or another protected characteristic,
  2. Be job-related and consistent with business necessity, and
  3. Accounts for the entire differential in pay.

Pay Transparency

Finally, Illinois would join a growing number of states by codifying protections to employees’ right to discuss “wages, salary, benefits, or other compensation.” Employers would be prohibited from requiring employees to sign any contract or waiver of these rights.

HB 834 picked up 44 co-sponsors on its way through Committee, and House leaders have sent the bill for debate before the full House, where Democrats have a 74-44 advantage. If it passes, the salary history ban will proceed to the Illinois Senate.

Our Pay Equity Resource Group will continue to report on this and other pay equity laws as they develop.

 

Federal Judge Reinstates EEOC Pay Data Collection, Effective Immediately

A U.S. District Judge for the District of Columbia vacated the Office of Management and Budget’s (OMB) stay of the Equal Employment Opportunity Commission’s (EEOC) revised EEO-1 form and the September 15, 2017, Federal Register Notice implementing the stay (Staying the Effectiveness of the EEO-1 Pay Data Collection, 82 Fed. Reg. 43362). Nat’l Women’s Law Ctr. et al. v. OMB et al., No. 17-2458 (D.D.C. Mar. 4, 2019). The court immediately restored the prior directives of the EEOC and OMB requiring use of a revised EEO-1 form where employers with at least 100 employees have to report detailed information on their employees’ wages and hours, broken down by gender, race, and ethnicity.

The decision arises in a case brought by the National Women’s Law Center and other plaintiffs against OMB and the EEOC in which the plaintiffs challenged OMB’s decision to stay the EEOC’s pay data collection efforts. The expanded pay data collection was initially approved by OMB under the Obama Administration in September 2016. The Trump Administration stayed the pay data collection in August 2017, after concluding the pay reporting requirements would be too burdensome. The plaintiffs argued the pay data collection efforts are central to closing the race and gender wage gaps.

Judge Tanya S. Chutkan held that OMB’s stay of EEOC’s pay data collection was illegal because it did not comply with OMB’s regulations. In particular, the court held that OMB had not shown that a relevant circumstance changed or that there was good cause shown after consultation to support the change in position.

Having found that the OMB’s stay of the EEOC’s pay data collection was inappropriate, Judge Chutkan acknowledged that there was discretion to fashion an appropriate remedy. Judge Chutkan held that vacatur of the OMB stay was appropriate and immediately restored the EEOC’s prior pay data collection requirements. Judge Chutkan dismissed arguments that vacatur and restoration of the prior directive would cause disruption, saying that the argument was unsupported by the record.

The current EEO-1 filing deadline for 2018 is May 31, 2019. We will continue to monitor developments and provide updates as they become available. Please contact a member of our Pay Equity Resource Group for further assistance.

On Technicality, U.S. Supreme Court Vacates Ninth Circuit Ruling Barring Reliance on Prior Salaries As Defense In Pay Discrimination Dispute

Because the judge who authored the ruling died before the decision was issued, the Ninth Circuit erred in counting him as a member of the majority, the U.S. Supreme Court ruled in Yovino v. Rizo, No. 18-272 (Feb. 25, 2019). On this technicality, the Supreme Court vacated the Ninth Circuit ruling that prior salary alone or in combination with other factors cannot justify a wage differential between male and female employees under the Equal Pay Act.

The case was brought by a female employee of the Fresno County Office of Education, Aileen Rizo, after she learned she was paid less than male counterparts for the same work. Fresno County asserted the “catch-all” affirmative defense of the federal Equal Pay Act, which provides, in pertinent part, that wage differentials are permissible if “based on any factor other than sex.”

The district court denied summary judgment to the County. On appeal, a three-judge panel of the Ninth Circuit reversed, holding that using prior salary to calculate wages is permissible under the Equal Pay Act if the employer can establish the use of prior salary was reasonable and effectuated a business policy. However, the en banc court reversed the panel decision (link to Rizo v. Yovino, No. 16-15372 (April 9, 2018). It held that prior salary alone is not a “factor other than sex” under the Equal Pay Act. For a full discussion of the prior decision, please see our earlier publication.

Judge Stephen Reinhardt passed away on March 29, 2018, but was listed as the author of the en banc decision issued on April 9, 2018. A footnote indicated that voting had been complete and the decision had been written before Judge Reinhardt’s death. All eleven judges on the Ninth Circuit agreed that the plaintiff’s suit should be revived, and five of the judges agreed with Judge Reinhardt’s rationale, meaning it was deemed to be a majority opinion, constituting precedent for future Ninth Circuit panels. However, without Judge Reinhardt, his opinion would not have majority support.

In overturning the Ninth’s Circuit ruling, the Supreme Court held that Judge Reinhardt was not an active judge when the Ninth Circuit issued its opinion in the case and “by statute he was without power to participate in the en banc court’s decision at the time it was rendered.” The Court further held that counting him as a member of the majority “effectively allowed a deceased judge to exercise the judicial power of the United States after his death. But federal judges are appointed for life, not for eternity.”

The Supreme Court remanded the case to the Ninth Circuit for further proceedings.

Jackson Lewis’ Pay Equity Resource Group will continue to monitor this and other case law developments. Please contact Jackson Lewis with any questions.

Colorado Equal Pay Bill Moves Forward…With Amendments

Colorado’s Equal Pay for Equal Work Act (SB 19-085), originally introduced on January 17, received its first hearing in the Senate Judiciary Committee on February 20, 2019.

Hearings lasted for over four hours and included passionate testimony from members of the civil rights and business communities. After the dust had settled, the Committee adopted a number of employer-friendly changes to the law, including:

  1. Adding consideration of shift differential to the definition of substantially similar work
  2. Including several additional justifications for wage differential, including geographic location, education, training, and travel to the extent that are reasonably related to the work in question
  3. Eliminating a reposting requirement that would have mandated that if an employer is unable to fill a position at the posted wage rate, it would have to re-publish the job opening at a new rate before hiring for the position
  4. Striking a provision that would have presumed bad faith on the part of an employer who did not appropriately maintain employment records and clarified that liquidated damages will not be awarded for good faith violations of the law
  5. Limiting back pay to three years
  6. Delaying the effective date of the Act until January 1, 2021

Senate Democrats also rejected several amendments, including those that would have removed the employer’s new job wage posting requirement, clarified that an applicant may voluntarily disclose prior wages, and changed the Act to more closely mirror federal law by allowing any factor other than sex as an acceptable reason for wage differences between men and women.

Looking Ahead

After clearing the Senate Judiciary Committee on a 3-2 party-line vote, the Colorado Senate Appropriations Committee will review the minimal fiscal implications of the bill. This will also provide another opportunity for new amendments to be raised and considered. We will continue to monitor this and other equal pay laws as new developments arise.

Court Holds New Jersey’s Equal Pay Act Will Not Be Applied Retroactively

The Diane B. Allen Equal Pay Act (NJEPA) does not apply retroactively to conduct occurring before its effective date, July 1, 2018, a federal district court has ruled. Perrotto v. Morgan Advanced Materials, 2:18-cv-13825-WJM-MF (D. N.J. Jan. 14, 2019). The court granted the employer’s motion to dismiss.

The NJEPA provides enhanced equal pay protections for New Jersey employees. It is considered one of the most expansive and aggressive pay equity bills enacted to date, providing a six-year statute of limitations, treble damages for violators of the Act, and renewed violations for each paycheck in which an employee is paid less than someone who performs substantially similar work.

The plaintiff’s employment was terminated prior to the NJEPA becoming law. She asserted gender-based pay discrimination and retaliation under the law.

The court noted that there is a presumption that statutes will be applied prospectively, rather than retroactively. This presumption can be overcome in three situations: i) express or implied legislative intent; ii) the amendment is curative; or iii) when the expectations of the parties so warrant. The court found that none of the exceptions warranted retroactive application of the NJEPA.

Jackson Lewis’ Pay Equity Resource Group will continue to monitor this and other case law developments impacting federal and local pay equity laws.

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.

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