Illinois Next to Prohibit Salary History Inquiries?

The Illinois state legislature passed House Bill (HB) 2462 which would prevent employers from inquiring about a job applicant’s salary history and lower the burden on employees claiming equal pay violations. The Bill now awaits Governor Bruce Rauner’s signature.

HB 2462, which seeks to amend the Illinois Equal Pay Act of 2003, prohibits employers from: (i) screening job applicants based on their wage or salary history, (ii) requiring that an applicant’s prior wages satisfy minimum or maximum criteria, (iii) requesting or requiring as a condition of being interviewed or as a condition of continuing to be considered for an offer of employment that an applicant disclose prior wages or salary; and (iv) requiring an employee to sign a contract or waiver that would prohibit the employee from disclosing or discussing information about the employee’s wages. Employers also would be prohibited from seeking salary, including benefits or other compensation or salary history, of a job applicant from any current or former employer. HB2462 also lowers the burden on employees claiming equal pay violations by replacing the requirement that an employee prove that the jobs being performed require “equal skill, effort, and responsibility” with a “substantially similar” standard.

Illinois HB 2462 is one of a growing number of state and local jurisdictions to attempt to close the pay gap by restricting employers from obtaining salary history information or using that information to set salary. Delaware, Massachusetts, New York City, Oregon, PhiladelphiaPuerto Rico and San Francisco have passed similar laws, and a number of other jurisdictions, including California, North Carolina, and Pennsylvania, have proposed similar bills.

With no slowdown of this trend in sight, employers should review their employment application forms and hiring and pay practices and begin to educate recruiters and managers on how to comply with pay history prohibitions. Illinois employers also should review any confidentiality agreements that they may use to ensure the language of those agreements cannot be interpreted to prohibit an employee from discussing his or her wages.

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

San Francisco Joins the Salary History Inquiry “Ban” Wagon

The City of San Francisco (SF) is the latest governmental entity to join the trend towards prohibiting employers from asking job seekers about current or prior salary or wage rate or pegging starting pay to prior pay.  The SF Ordinance is based on the following premise:

The problematic practices of seeking salary history from job applicants and relying on their current or past salaries to set employees’ pay rates contribute to the gender wage gap by perpetuating wage inequalities across the occupational spectrum… In effect, to the extent employers consider applicants’ salary history in setting salaries of new hires, historical patterns of gender bias and discrimination repeat themselves, causing women to continue earning less than their male counterparts and less than they would have earned but for their gender.

While not every employer or social scientist agrees with this statement, New York City, Philadelphia, Delaware and Oregon have passed similar laws.  The State of California also appears poised to pass such a law with A.B. 168 pending in the California Senate.

Each of these laws is subtly different and the parameters of the laws remain to be determined. For example, the SF Ordinance defines “inquire” to mean “any direct or indirect statement, question, prompting or other communication, orally or in writing, personally or through an agent, to gather information from or about an Applicant, using any mode of communication, including but not limited to application forms and interviews.”

The SF Ordinance also broadly provides, “An Employer shall not consider or rely on an applicant’s Salary History as a factor in determining whether to offer Employment to an Applicant or what Salary to offer an Applicant.”

Other Notable Provisions

In addition, the SF Ordinance:

  • Prohibits employers from releasing salary history information for any current or former employee to a prospective employer without written consent, unless required by law;
  • Allows an applicant to voluntarily “and without prompting” disclose prior salary, in which case the employer may consider the prior salary but may not peg the applicant’s salary based solely on prior salary or justify paying the applicant differently than other employees doing substantially similar work;
  • Permits employers to discuss a job applicant’s salary expectations without inquiring about salary history.

The Take-Away

As salary history inquiry laws continue to proliferate, employers in all jurisdictions should review their pay practices and determine whether and to what extent their organizations rely on prior salary to set starting pay and how prior salary factors, if at all, into the employer’s system for determining and defending pay.

New Jersey Governor Chris Christie Vetoes Wage History Legislation

New Jersey Governor Chris Christie has vetoed legislation that would have prohibited employers from requesting salary history information from prospective employees. As previously reported, the prohibition would have been enacted through amendments to the New Jersey Law Against Discrimination.  In vetoing the bill, Governor Christie reaffirmed his commitment to ending wage discrimination but felt the law, as written, was too broad and “would punish, as discriminatory, otherwise innocuous conduct done with neither discriminatory intent nor a discriminatory impact.”

State Assembly member Joann Downey (D-Monmouth), who authored the bill, reportedly decried Governor Christie’s veto as “an insult to New Jersey women and an insult to middle class families who are suffering because of lost wages caused by the gender wage gap.”

This is not the first time Governor Christie has vetoed legislation aimed at remedying pay discrimination. Governor Christie previously vetoed a bill that would have expanded wage protections, including requiring equal pay for “substantially similar work.”

Stay tuned to the Jackson Lewis Pay Equity Advisor blog for updates on new and pending legislation.

Will New Jersey Be Next to Jump on the (Wage History) “Ban” Wagon?

New Jersey is moving closer to enacting a law that would prohibit employers from inquiring about applicants’ salary histories. The bill, passed in the Democratic-controlled state Assembly and now the state Senate, is one of several similar bills that have passed or are being considered across the country.  Governor Chris Christie now will decide whether to sign the bill into law.

The proposed legislation would amend New Jersey’s Law Against Discrimination to prohibit employers from (1) screening a job applicant based on the applicant’s wage history, including by requiring that an applicant’s prior wages, salaries or benefits satisfy any minimum or maximum criteria, or (2) relying on an applicant’s salary to determine a salary amount for the applicant at any stage in the hiring process, including finalizing an employment contract. Employers also would be prohibited from asking about the salary history, including compensation and benefits, of a job applicant.  However, an employer may seek the salary history if the prospective employee voluntarily, without employer coercion, provides the employer with written authorization to do so.

Delaware, Massachusetts, New York City, Oregon, Philadelphia, and Puerto Rico have passed similar laws, and a number of other jurisdictions, including California, Illinois, North Carolina, Pennsylvania, and San Francisco, have proposed similar bills.

As these types of laws are introduced and passed across the country, employers should review their employment application forms and hiring processes to ensure compliance with the new laws. Stay tuned to the Jackson Lewis Pay Equity Advisor blog for updates on new and pending legislation.

New York State Releases Draft Compensation Reporting Documents for State Contractors

In January, New York Governor Andrew Cuomo signed Executive Order 162, which requires most state contractors and subcontractors to disclose employee job title and salary data, in addition to the equal employment opportunity information (such as sex, race, and ethnicity) already required.  With the Executive Order that took effect on July 1, 2017, the New York State Division of Minority and Women’s Business Development released draft guidelines and supporting materials detailing state contractor requirements.  New York State solicited public comments to the draft documents and those public comments are now under review.

The draft guidelines provide clarity on many issues, including who must report, what reports must be filed, the compensation information to be reported, when to report, and how to file.  Employers can also review a Frequently Asked Questions document, which covers how the state will use the data, as well as the confidentiality of the data submitted.

Workforce Utilization Form (EEO-1)

The state released a sample Workforce Utilization Form that contractors will use to report on employee job title and salary data. Notably, the form requests information regarding the total number of employees within each job title, the number of hours worked, and total compensation, broken down by minority groups and gender.

Per the draft guidance, the compensation reported should be exclusive to the state contract, not compensation paid to contractors for work outside the state contract. The draft guidance also states that contractors need only execute the Workforce Utilization for contracts entered into on or after June 1, 2017, with the first reports due after January 1, 2018.  The guidance specifies that most state agencies and authorities will require that contractors submit reports within seven to ten days following the end of each monthly (for construction contracts) or quarterly (for commodities and services contracts) reporting period.

Implications for Employers

Employers can do several things to prepare for the New York State reporting requirements. First, employers should review the proposed Workforce Utilization Form, guidance documents, and frequently asked questions.

Employers who are entering into state contracts on or after June 1, 2017, should review their systems to ensure they can track all information required, including which employees are working on state contracts as well as the amount of time the employees spend working on those state contracts.

Employers also should remain current on other state laws aimed to close the pay gap, which may impose similar reporting requirements. Jackson Lewis will keep you informed on significant changes to pay equity laws forthcoming.  Please contact us with any questions.

Business Group Files Amended Complaint in Lawsuit Challenging Philadelphia Wage History Law

Philadelphia’s Wage History Ordinance, initially scheduled to take effect on May 23, 2017, remains on hold. The Ordinance has been subject to a federal court stay pending resolution of a lawsuit for a preliminary injunction brought by the Chamber of Commerce for Greater Philadelphia. The City of Philadelphia agreed to halt enforcement of the Ordinance pending the litigation’s outcome. Following a motion to dismiss filed by the City, the court dismissed the lawsuit on May 30. Thereafter, on June 13, the Chamber filed an amended complaint. Click here to read the full article on this development and its implications for employers.

Oregon Enacts Expansive Pay Equity Law

The Oregon Equal Pay Act of 2017 greatly extends pay equity protections to a variety of protected classes, prohibits employers from asking for applicants’ salary history, and expands existing remedies available to employees. House Bill 2005 also offers key protections and a safe harbor for employers. Click here to read the full article on this development and its implications for employers.

Court Dismisses Lawsuit Challenging Philadelphia Wage History Law

Philadelphia’s Wage History Ordinance lives on, for now. The Ordinance, initially scheduled to take effect on May 23, 2017, has been subject to a federal court stay pending resolution of a lawsuit for a preliminary injunction brought by the Chamber of Commerce for Greater Philadelphia.  On May 30, the court dismissed the lawsuit.  Click here to read the full article on this development and its implications for employers.

Unhidden Figures: U.K. Requires Public Gender Pay Gap Reporting

The U.K. Equality Act 2010 (Gender Pay Gap Information) Regulations 2017 went into effect in April. The new law requires private employers with 250 or more U.K.-based employees to publish, for 2017 and every year thereafter, information showing differences in pay between male and female employees.

What Must Be Reported? Employers subject to the Regulations must publish the following information:

  • mean gender pay gap based on hourly pay and bonus;
  • median gender pay gap based on hourly pay and bonus;
  • mean gender bonus gap;
  • median gender bonus gap;
  • proportion of male and female employees receiving bonus pay; and
  • proportion of male and female employees in the company’s lower, lower middle, upper middle and upper quartile hourly rate pay bands (excluding paid leave).

How Are The Data Calculated?

Pay and Bonus. Employers will have to calculate employees’ gross hourly pay, using pay data for the pay period falling within the mandatory “snapshot date” of April 5. Gross hourly pay is based on all “ordinary” and bonus pay for the relevant pay period.  Ordinary pay includes basic pay, allowances, pay for piece work, pay for leave, and shift premium pay.  Bonus pay includes any remuneration in the form of money, vouchers, securities, securities options, or interests in securities, relating to profit sharing, productivity, performance, incentive or commission.

Quartile Bands.  Quartiles are calculated by ranking employees by gross hourly pay from lowest to highest.  The list then is divided in four equal sections to the extent possible, and reporting how many men and women are in each quartile.

Detailed instructions on how to calculate each factor can be found on here the HM Government website.

How Is The Information Reported? The required information must be published on the employer’s website in a manner accessible to all employees and to the public. The information must be accompanied by a signed statement of a corporate director or equivalent, confirming the information is accurate.  The information must be maintained on the employer’s website for at least three years from the date of publication.  The information and signed statement also must be submitted to the Secretary of State for publication on a government website.  Employers additionally may (but are not required to) submit a written narrative explaining why a gender pay gap is present and what the organization intends to do to close the gap.

What is the Deadline for Reporting?  Employers must publish the required information each year within 12 months of the mandated “snapshot date” of April 5.  Thus, 2017 information must be posted and reported by April 4, 2018.

What are the Sanctions for Non-Compliance?  The Regulations do not contain any explicit sanctions for failure to comply.  However, the Explanatory Memorandum to the Regulations provide that failure to comply will constitute an “unlawful act” and thus would fall within the enforcement authority of the Equality and Human Rights Commission.

What Does This Mean for Employers with U.K.-Based Employees?  The information that must be published is a simple comparison of average and median pay between all men and women in a covered employer’s relevant workforce.  The published data will not account for legitimate, non-discriminatory, business reasons accounting for any average or median pay differences, such as differences in job type or function, tenure, time in position, experience, performance, location, etc.  Unless employers include the permissible (but not mandatory) written narrative, there will be no opportunity to explain or qualify possible gaps which appear in the data.

Employers subject to the Regulations should begin reviewing and gathering payroll data and demographic information necessary to calculate the required information. Moreover, covered employers should consider performing privileged pay analyses prior to submitting any information to identify the reasons for any gender pay gap differences.  This will enable an employer to better determine whether to provide the additional voluntary narrative and other public relations communications before releasing the data.

We will continue to monitor this developing story and keep you apprised of any updates. Jackson Lewis’s Pay Equity Resource Group attorneys are available to provide strategic guidance and assist in interpreting and correcting possible pay gaps.

Third Time’s the Charm: California’s Proposals to Expand its Equal Pay Protections . . . Again

With amendments to the California Fair Pay Act (“CFPA”) in effect for less than six months, the state legislature has introduced three new bills to further expand the state’s equal pay laws.

Past Salary History Inquiries Prohibited. Once again, the state legislature has proposed a bill to prohibit employers from seeking salary history from applicants.  The proposed bill also would require private employers to provide the pay scale for a position, upon an applicant’s request.  Assembly Bill (AB) 168 is the third attempt by the legislature to pass a bill addressing requests for salary history.

In 2015, AB 1017 was vetoed by Governor Jerry Brown. At the time, Governor Brown said AB 1017 would prohibit employers “from obtaining relevant information with little evidence that this would assure more equitable wages.”  Governor Brown wanted to give the CFPA “a chance to work before making further changes.”  The next year, the legislature revised AB 1676 before it reached the governor.  The legislature removed the ban on asking for salary history and instead included a perhaps more palatable requirement that salary history shall not, by itself, justify any wage differential.

This time around, Democrats control both the California State Senate and Assembly. More importantly, Democrats have gained a supermajority which means they can vote to override any bills vetoed by Governor Brown.  Thus, this may be the year that California joins other jurisdictions like Massachusetts, Puerto Rico, and New York City, and passes a law to prohibit employers from asking for applicants’ salary history.

Gender Pay Differential Reporting Requirement. The second proposed bill, AB 1209, would require employers to publish information on the difference between the median and mean salaries of male and female employees exempt under the white collar exemptions  and between male and female board members.  Employers would be required to publish this information by July 1, 2020, on a publicly available website.  Employers thereafter would be required to update and republish the information annually by July 1.

In addition, employers would be required to submit this information to the California Secretary of State. This reporting obligation would apply to employers with more than 250 employees that are required to file a statement of information with the Secretary of State.  As currently written, AB 1209 would impose no penalty on employers that choose not to publish this information.

Clarification on Application of CFPA. Lastly, AB 46 would amend the CFPA to clarify that its provisions apply to both public and private employers.

We will continue to monitor these proposed bills and keep you apprised of any updates.