Pay equity legislation is burgeoning. In 2017, several jurisdictions approved bans on salary history inquiries, and the trend continues in 2018. With these new laws and legal developments, employers will be facing new challenges in developing policies and procedures that comply with these laws—that vary from jurisdiction to jurisdiction—while making good business decisions with respect to starting compensation for newly hired employees. In addition, on April 9, 2018, the Ninth Circuit Court of Appeals issued an en banc decision in Rizo v. Yovino, holding that prior salary does not qualify as a "factor other than sex" to justify a pay difference under the Equal Pay Act— appearing to support the thinking behind the salary history bans. Liz Washko, a shareholder in Ogletree Deakins' Nashville office and cochair of the firm's Pay Equity Practice Group, answers some frequently asked questions that employers may have on this topic.
Jansen Ellis: What are some preliminary steps employers can take to address bans on salary history inquiries?
Liz Washko: Employers can consider a number of steps, including: implementing a process for keeping abreast of developments as other jurisdictions consider and pass similar legislation; working with their human resources, recruiting, and compensation departments to conduct a critical self-analysis of hiring practices and compensation decisions that rely on salary history; reviewing policies and procedures that apply in the affected jurisdictions and considering whether modifications need to be made; and providing training to recruiters and hiring managers (and anyone else involved in the interview and hiring process) regarding the policy and procedure modifications and legal issues regarding salary history inquiries.
JE: What are some compliance concerns of which employers may not be aware?
LW: Many companies utilize informational methods of recruiting—sometimes long before a position is even available. Those involved in informational recruiting processes (networking events, informal lunches and dinners, etc.) may not recognize the application of salary history inquiry bans to such situations. Compliance oversights may also occur if a company chooses to make narrow policy and procedure modifications that apply only to the affected jurisdictions. In such cases, there may be difficulties with ensuring that there is no "cross-contamination" between jurisdictions—especially if the same people are responsible for recruiting and compensation decisions across jurisdictions.
JE: What are your predictions regarding bans on salary history inquiries in the coming year?
LW: It is likely that more jurisdictions will follow suit and enact salary history inquiry bans. Many states and localities have such legislation pending, and it is likely that some of these laws will pass.
JE: What further steps can employers take to improve equity in compensation decisions in jurisdictions with bans on salary history inquiries?
LW: Companies may want to implement written policies and procedures regarding compensation decisions. In those policies, employers can identify legitimate factors (that comply with applicable laws) that may be considered in making pay decisions. Although pay ranges may not work for all businesses, having pay ranges applicable to particular jobs limits discretion and, thus, limits variations in pay. For this reason, companies may want to use pay ranges. In doing so, the company can provide decision- makers with guidance on making pay decisions within the applicable ranges, using objective factors wherever possible, and requiring decision-makers to articulate any subjective factors that were considered. Another proactive compliance step is to consider conducting an attorney- client privileged pay equity audit that incorporates legitimate factors and identifies potentially problematic disparities. Doing so can provide the company with an opportunity to correct problems before they lead to liability.
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