United States: Legislative Update: States Continue To Update And Refine Their Pay Equity Laws

2019 is not even two months old and already there are significant developments in equal pay legislation. As we explained recently, there is proposed federal legislation that reignites the battle to pass the "Paycheck Fairness Act." And now states are getting in on the action with a flurry of legislative activity around pay equity issues – particularly among legislatures that saw a change in party control as a result of the November elections. In fact, a number of states have introduced a variety of pay equity proposals, making clear that salary history bans and wage discussion protections are here to stay. Proposed new legislation also looks to refine the bona fide factors that employers may consider in setting pay, as well as remedies available under the pay laws.

Pending legislation including several or all of these types of provisions would introduce sweeping changes in some states, such as the following:

  • Indiana: A joint resolution was introduced that would amend the state's constitution to include an equal pay provision. A new bill would require equal pay for employees who perform substantially similar work. It allows a pay differential to be based on a bona fide factor other than sex, provided that it is job related, consistent with business necessity, and "is not based on or derived from a wage differential that is the result of the job or occupation being a historically undervalued, traditionally female job or occupation." The employer would lose the defense if the employee can prove the existence of an alternative practice that would meet the same business purpose. The bill would also protect wage discussions. A separate bill would make somewhat different changes to the bona fide factors upon which pay differentials may be based, including adding a protection for time spent on family or medical leave. Like the other bill, it would protect wage discussions, but would also include a salary history ban, and include a recurring violation provision for each paycheck based on a violation and establish additional penalties.
  • Pennsylvania: A new house bill would increase the statute of limitations for pay equity violations from two to three years and allow for greater fines and penalties. A competing bill would make similar amendments and also enact more sweeping changes, including establishing an Equal Pay Commission, providing protections for "substantially similar" work, protecting employees from pay differentials based on loss of seniority due to family or medical leave, and allowing pay differentials based on geographic location, education, training or experience, and travel. It would also include a salary history ban, prohibit screening based on wage history, give employees the right to discuss wages, and prohibit retaliation. Further, it would make pay inequity a recurring violation with each paycheck, and provide an affirmative defense to employers who complete self-evaluations and can demonstrate reasonable progress. The Pennsylvania Senate has also introduced a bill that would include wage disclosure protections, a salary history ban, and protection against retaliation. The bill includes several unusual provisions, such as allowing prior salary history to support a wage that is higher than that being offered by the employer, and providing that employers cannot claim prior salary as a defense. It also provides additional remedies and penalties, and allows the Attorney General to bring an action on behalf of employees.
  • South Carolina: A bipartisan bill was introduced concurrently in both the House and the Senate. Known as the Act to Establish Pay Equity, the bill would be the state's first comprehensive pay equity law and would establish pay protections for "comparable work" and would allow for pay differentials to be based on factors other than protected characteristics if the employer can demonstrated that any such differential is job related, consistent with business necessity, and "not based upon or derived from a differential in compensation based on [a protected characteristic]." It would include wage discussion protections, a salary history ban, a requirement to include a position's wage range upon request, and a provision allowing an employer to rely on wage history to set a higher wage than offered, so long as it does not create a differential based on a protected characteristic.
  • Virginia: A new bill would implement sweeping amendments to existing law, including making the "catchall" exception dependent on the employer's ability to show that the factor is job-related, consistent with business necessity, and "not based on or derived from a protected class-based differential in compensation." Moreover, the employer loses the defense if the employee can prove the existence of an alternative practice that would meet the same business purpose. The bill would also prohibit discrimination in opportunities, give employees the right to discuss wages, and include a salary history ban and retaliation provisions, as well as wage range disclosures to applicants, recordkeeping requirements, and extensive remedies and civil penalties.

Pending legislation in other states would introduce more targeted protections (i.e., salary history bans or extended statutes of limitations). These include:

  • Colorado: The Senate introduced a new bill that establishes specific factors on which pay differentials may be based (there is no "catchall" bona fide exception), prohibits seeking or relying on salary history, establishes wage discussion protections and recordkeeping requirements, provides for a private right of action, requires advancement opportunities to be announced along with pay ranges, expands on available damages and remedies, and amends the administrative complaint procedures.
  • New York: Proposed legislation would add a salary history ban.
  • Texas: A new bill would establish that a violation occurs each time someone is affected by an unequal pay practice, including upon receipt of each paycheck, and would extend liability back to include similar or related compensation discrimination that occurred outside the period for filing a complaint.

Time will tell how many of these proposed bills make it through the legislative process. In the meantime, several newly-elected governors have already established pay equity provisions within their governments, such as:

  • Illinois: On his first day in office, Governor J.B. Pritzker signed an executive order requiring the Department of Central Management Services and the Department of Human Rights to review the State's pay plan and eliminate bias generated by asking employees for salary history.
  • Michigan: New governor, Gretchen Whitmer signed an executive order prohibiting state employers from asking applicants about salary history.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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