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Mind the Gap: Some States Strengthen Laws for Equal Pay

Compliance
Article
08/02/2017
  • In Massachusetts, an act to establish pay equality, which takes effect July 1, 2018, promotes salary transparency, curbs employers from asking job candidates about salary history, and gives businesses legal incentives to perform salary assessments.
  • On June 14, 2017, Delaware enacted a law that will make it the first state to prohibit employers from asking job applicants for their salary history, when the law takes effect later this year. The law is intended to help close the pay gap between men and women.
  • On June 1, 2017, Oregon passed a law restricting inquiries on job candidates’ salary histories, broadening legal remedies available to workers seeking equal pay, and protecting businesses that voluntarily review their pay scales to eliminate discrimination.
  • In April 2017, the New York City Council passed a law barring employers from asking job candidates about salary history.
  • In Maryland, the Equal Pay for Equal Work Act became law on October 1, 2016. It prohibits discrimination based on gender identity, prohibits employers from forbidding employees from discussing or disclosing wages, and allows workers to ask an employer the reason their wages are a condition of employment.
  • California’s Fair Pay Act, which became effective on January 1, 2016, requires equal pay for workers who perform substantially similar work, when viewed as a composite of “skill, effort, and responsibility,” among other provisions. An amendment, effective January 1, 2017, prohibited pay differentials based on employee race or ethnicity, and a bill currently moving through the legislature would further amend the law to prohibit inquiries into the pay history of job applicants.

Other states and local jurisdictions are considering similar laws, including:

  • The San Francisco Board of Supervisors passed an ordinance that will ban employers, including city contractors and subcontractors, from asking about current or past salary or considering salary information in determining whether to hire an applicant or what salary to offer, effective July 1, 2018.
  • The Illinois legislature has passed and sent HB 2462 to the governor to amend the Equal Pay Act of 2003 to prohibit an employer from seeking the salary, including benefits or other compensation or salary history, of a job applicant from any current or former employer.

Pay inequity between genders continues to mark U.S. workplaces

Women in America still earn significantly less than men. As of 2014, women working full-time, year-round, earned on average 79 percent of men’s median annual earnings. The U.S. Department of Labor notes that the wage gap has decreased over the years, but progress has stalled over the past decade. Among the potential barriers to women obtaining equal pay is the timeworn corporate admonition that employees not discuss wages. Some believe secrecy prevents women, in particular, from learning whether they’re being underpaid for comparable work done by men and from seeking justice for such inequities under federal, state, or local laws.

Although most states have existing equal pay laws acknowledging continued wage inequity between genders, several states have passed or are considering additional legislation to specifically prohibit gender-based pay discrimination. This focus on pay equality may include restrictions on salary inquiries, as well as enhanced penalties related to gender bias.

Impact to businesses

Employers need to be aware of applicable local, state, and federal fair-pay laws closely, and ensure their compliance with all provisions in order to mitigate their exposure to litigation.

Guidance

Some best practice recommendations regarding employee compensation include:

  • Scrutinize company pay scales to ensure that employees performing equal or substantially equal work (depending on the applicable law) are paid equally, regardless of gender, race, religion, age, or other irrelevant criteria.
  • Periodically review your hiring policies and employment applications, and update them as necessary to comply with applicable fair-pay regulations.
  • Train your supervisors on nondiscrimination laws, and provide instruction on appropriate interviewing questions.

Remember that Paychex has resources to assist employers with hiring, compliance, employee classification, and wage and hour laws.

Tammy Tyler

Tammy Tyler is a senior compliance analyst with a focus on employment law at Paychex, Inc., a leading provider of integrated solutions for payroll, HR, retirement, and insurance services.

This website contains articles posted for informational and educational value. Paychex is not responsible for information contained within any of these materials. Any opinions expressed within materials are not necessarily the opinion of, or supported by, Paychex. The information in these materials should not be considered legal or accounting advice, and it should not substitute for legal, accounting, and other professional advice where the facts and circumstances warrant.
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