Proposed State Laws Address Pay Secrecy

Women’s legal groups push for salary transparency between genders

By Rosemarie Lally Feb 23, 2016
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Legislative proposals directed at ensuring equal pay between the genders have been introduced in nearly half the states in the past few weeks partly as the result of a coordinated campaign by women’s legal groups frustrated by the stall-out of the Paycheck Fairness Act of 2014 in the U.S. Senate.

Many of the equal pay bills include provisions similar to those proposed in the federal measure, which would provide employees the right to share salary information with co-workers and require employers to prove pay disparity is related to job performance rather than gender. Some of the state bills go further, proposing to bar employers from inquiring into a prospective employee’s salary history.

So far, equal pay bills have been introduced in a number of state legislatures, with the backing of the State Innovation Exchange, a resource and strategy center that supports progressive state legislators. And more states can be expected to join in, according to Denise Visconti, managing shareholder of Littler’s San Diego office, who said the bills “are spreading a little like wildfire.”

California, Connecticut, Delaware, Illinois, Minnesota, New York and Oregon have enacted gender pay equity measures over the past two years. States currently considering such legislation include Alaska, Arizona, Colorado, Hawaii, Iowa, Kansas, Louisiana, Maryland, Massachusetts, Michigan, Missouri, Nebraska, New Jersey, Ohio, Oklahoma, Rhode Island, Tennessee, Utah, Vermont, Virginia, Washington, West Virginia and Wisconsin.

The White House Council of Economic Advisers found that in 2013, the median woman working full time all year earned 78 percent of what the median man working full time all year earned, or 78 cents for every dollar. Although the proposals share the same goal of achieving pay equity, they differ greatly in their approaches to the issue. 

‘Pay Secrecy Would Be a Thing of the Past’

Nearly all of the proposals would bar employers from firing or discriminating against employees who ask about unequal salaries in their workplace and would allow employees to discuss wage information without repercussions. 

Specifically, these bills would make it illegal for employers to prohibit employees from inquiring about, discussing or disclosing their own or another employee’s wages. Employers would be prohibited from taking any adverse employment action, such as discharge or discipline, against employees for inquiring about other workers’ wages, discussing their own wages, or helping or encouraging other employees to exercise this right. Employers would also be barred from requiring employees to sign a waiver of their right to discuss their wages. 

Some states, such as Michigan, go even further, proposing to allow an employee to ask an employer to disclose wage information regarding similarly situated employees, including the employees’ genders and seniority levels, going back three years. 

These pay disclosure provisions, if passed, would have serious implications for employers, Visconti said, noting that “pay secrecy would be a thing of the past.” She advised employers to include a strong nonretaliation provision in their policies and handbooks, clearly stating that employees are allowed to ask about their pay as well as their co-workers’ pay and also to help their co-workers exercise these rights without fear of retaliation or adverse action. Employers should also review and update their employment policies to see that they don’t prohibit employees from discussing wages. Complaint procedures should be reviewed and employees encouraged to ask questions about the process. “Make sure employees understand that they can--and should—bring complaints forward so that the employer can address them early on,” she said. Finally, employers need to take a hard look at their compensation policies, including the guidelines given to supervisors, to ensure that they clearly lay out the company’s compensation policy and that they are in compliance with what their jurisdiction requires.

Provision to Ban Salary History Inquiries

Another significant provision, contained in Massachusetts’ bill, would prohibit employers and their recruiters from asking prospective hires about their salary histories. The rationale for this is to avoid penalizing employees, especially women, on a continuing basis simply because they have been underpaid in earlier positions, thus perpetuating the existing gender pay gap.

Although this provision is absent from most of the proposals, it is on the radar of many equal pay advocates. California legislators, for example, considered including a provision banning inquiries into prior salary history before ultimately deciding against it, Visconti said. Adoption of this prohibition would seriously impact how employers conduct hiring, eliminating much of their discretion in salary decisions, she said. “They would have to rely on objective, market-based factors in setting salary criteria, paying employees in accordance with their particular skills and their value to the organization.” She added, however, that some HR professionals might like it because it would guarantee reliance on objective factors in salary decisions, which many have been advocating for.

Banning inquiries into salary histories would “greatly diminish” employers’ control over employees’ ability to discuss their salaries, Visconti said, leaving employers with two options: make certain that they are relying on solid, objective factors in all pay determinations or minimize any pay differences between the genders.

‘Equal’ vs. ‘Substantially Similar’ Work

The state bills diverge on their definition of “work.” Many bills would require employers to pay men and women equally for “work that is substantially similar” in terms of skill, effort and responsibility, performed under similar working conditions. This differs from the status quo in many jurisdictions, which is “equal pay for equal work,” relying more on comparative job titles than the nature of the work actually performed. California’s Equal Pay Law, which went into effect Jan. 1 and is considered the most stringent in the country, is keyed to “substantially similar work,” while New York’s recently enacted law kept its existing requirement of equal pay for “equal work.”

States’ adoption of such varying standards will cause compliance challenges for multistate employers, Visconti said. “Differing standards in multiple states means that employers are at risk of potential lawsuits and will have to go state-by-state analyzing whether they’re in compliance, which is costly.”

She advises multistate employers to either examine the standard for each state in which they are located and make sure they are in compliance with each individual law or ensure they are in compliance with the most stringent standard among the states in which they operate.

She also suggests that if an employer does business in a jurisdiction considering one of these bills, it should get involved in the legislative process. “Use your voice, propose changes that would make the law less onerous.” If, on the other hand, an employer is based in a state that has already passed a law, she counsels, “Make sure you’re in compliance because the cost of litigation over perceived gender pay inequity can be devastating, even if at the end of the day you can prove that there was no pay inequity.”

Meanwhile, Noreen Farrell, executive director of Equal Rights Advocates and an organizer of the state legislative campaign Equal Pay Today said that the group will continue “to work to seek state level policy reform” on issues that contribute to the gap, including unequal pay, pay secrecy, job segregation, the current minimum wage, and unfair treatment of pregnant workers and caregivers. The group hopes that “demonstration of support in the states for equal pay provisions will buoy support for [the Paycheck Fairness Act and] similar federal legislation,” she added.

Visconti observed, however, that federal pay equity legislation has been introduced in nearly every congressional session for the past 20 years “but has never gotten much traction,” partly because pay differentials can be the result of many factors, not solely discrimination. However, “disproving alleged reasons for unequal pay is extraordinarily expensive,” she said, adding that the burden of litigation and complying with equal pay laws falls heavily on small businesses.

“We appreciate and applaud the many employers managing workplaces in good faith and with high regard to civil rights laws,” Farrell said. She stressed that fair pay advocates welcome the chance to work with multistate employers concerned about their obligations in different states and those employers with an interest in passing a strong Paycheck Fairness Act.

Rosemarie Lally, J.D., is a freelance legal writer and editor based in Washington, D.C.

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