Pay equity is a hot topic – and not just in employment and HR circles. Both inside and outside of the courts, the issue has gained national attention and is spurring legislators in states across the country to act. Recent developments are a timely reminder to all employers to start thinking proactively about pay equity and ensure pay is based on proper criteria (performance, experience, effort, skills) and never gender or other protected characteristics.
For instance, in March, a California Court made headlines after allowing a class action complaint alleging systemic pay discrimination on behalf of women in thirty enumerated job positions employed by a high-profile technology company to proceed, in part based on allegations that the company had a business-wide policy of considering new hires' previous salaries when determining starting salary and job level. Additionally, in a case that's grabbing attention from lawyers and non-lawyers alike, Rizo v. Yovino, the Ninth Circuit Court of Appeals reversed course from an earlier decision and held that the employer could not use a female employee's prior salary alone as the basis for her current salary.
Outside the courts, this year saw even greater attention paid to Equal Pay Day, celebrated in 2018 on April 10 – a date which symbolized how far into the year women must work to earn what men earned in the previous calendar year.
On the heels of these court cases and increased attention, several states have taken it one step further by proposing, and enacting, new or enhanced legislation centered around pay equity. California was among the earliest to adopt a state pay equity law, but the trend has continued to gain momentum with other states, such as Massachusetts, Delaware, Oregon, and, recently, Washington and New Jersey, following suit.
For example, last month New Jersey enacted what some consider to be one of the strongest pay equity measures in the country. The law, which will go into effect on July 1, 2018, bans unequal pay for "substantially similar work" and allows victims of discrimination to sue for up to six years of back pay. Successful employee claimants will have the opportunity to seek monetary damages of triple the amount lost. New Jersey's law is considered comparatively strong because it prohibits pay disparities based upon any characteristic protected by the New Jersey Law Against Discrimination—so it is not limited to gender alone.
Likewise, in March, Washington state enacted an updated Equal Pay Opportunity Act. The law, effective June 7, 2018, prohibits discrimination in compensation based on gender (although pay differentials based on a job-related factor or factors that are consistent with business necessity are not prohibited). Employers also may not limit or deprive career advancement opportunities based on gender and may not require nondisclosure of wages (or "wage secrecy") as a condition of employment.
These are just two examples of new laws targeting unequal pay; other states may enact similar laws (or even laws providing broader protections) moving forward—and you can be sure your employees will be paying attention. Prudent employers will review their pay structures now and regularly to avoid potential problems later. If you would like assistance reviewing your pay structure, please reach out to your favorite Troutman Sanders employment attorney and we'd be more than happy to assist.
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