Pay Equity: Increasing Focus and Legislation
Lockstep with the #MeToo movement and the recent focus on sexual harassment, legislators in New York and New Jersey have also recently increased their focus on pay equity issues in the workplace. With a longer statute of limitations and the potential for treble damages, employee claims in this arena of pay discrimination could be amongst the most costly for employers in our region.
New Jersey Legislation
The most recent sweeping changes to state pay equity laws occurred with the New Jersey Governor’s signing of the Diana B. Allen Equal Pay Act on April 24, 2018, to take effect July 1, 2018. This amendment to the Law Against Discrimination (LAD) does the following:
- Prohibits paying employees who are in a protected class at a lower rate of compensation, including benefits, for substantially similar work, when viewed as a composite of skill, effort and responsibility.
- Expands protected characteristics beyond gender and race/ethnicity.
- Prohibits retaliation against any employee for discussing or disclosing compensation information about any current or former employee.
- Prohibits requiring employees to waive or agree to not make such disclosures as a condition of employment.
- Places additional reporting requirements on state contractors.
- Extends statute of limitations for pay equity violations to six years.
- Awards treble damages where an employer is found in violation.
- Stipulates unlawful employment practice occurs each occasion that an individual is affected by a discriminatory compensation decision.
The NJ Senate also passed a bill (awaiting Assembly vote), which would prohibit any employer from inquiring into the salary history of a job applicant and from relying on an applicant’s salary in determining a salary amount in any stage of the hiring process.
New York State and New York City Legislation
New York was an early adopter in this arena, but here is a reminder of related laws passed recently in the NY region:
- October 31, 2017, NYC became the first municipality in the nation to enforce a law prohibiting all employers from inquiring about job seekers’ salary history during the hiring process.
- Westchester and Albany Counties have also passed similar laws banning salary history inquiries, with NY State currently considering legislation (bill under Senate review)
- Achieve Pay Equity Law amended New York State’s existing equal pay act effective January 19, 2016, which imposed the following changes:
- No longer can rely on “any factor other than sex” to explain pay differential, but must be “bona fide factor other than sex” which cannot be based on a sex-based differential, must be job-related and consistent with business necessity.
- Expands definition of “same establishment” to include establishments within the same geographic region within the size of a county.
- Liquidated damages up to 300 percent on the unpaid wages for a willful violation.
- Employers may not restrict employees from sharing wage information or take adverse action against an employee who inquires about, discusses, or discloses his or her wages or the wages of another employee (with some limitations).
In light of this increased attention, consider how confident you are in the answers to these questions for your business:
- How do I know if I am paying employees equitably in comparison to one another internally in my company?
- Have we identified the most critical positions in our company or job factors for which we will compensate differently?
- Do our employees understand how they are paid and do they view their compensation as a positive or a negative?
- Are we aware of all the areas where the company may have legal exposure for discriminatory pay practices and do we know how to mitigate that risk?
Recommendations for Employers
- Ensure all company policies, procedures and practices are updated to be consistent with new pay equity laws.
- Consider engaging in attorney-client privileged equal pay studies to ensure that compensation disparities can be explained based on legitimate, non-discriminatory reasons.
Contact us today for a consult on how CWS can partner with you on understanding pay equity and reducing risk for your business.