Don’t Run Afoul of Pay Equity Laws

Pay equity is a topic of growing importance, made particularly significant by new pay equity laws in states like California, Massachusetts, New York—and Connecticut.
Of course, several states and the federal government have long had laws banning employers from paying women less than men for the same job.
But new state and federal laws and regulations significantly raise the stakes for employers.

California Fair Pay Act

The California Fair Pay Act, for example, states that employers may not pay employees less than those of the opposite sex for “substantially similar work,” regardless of title or worksite.
So, in California, a female store clerk may challenge a male clerk’s higher wages at a store owned by the same company but located a short distance away.
Or a female maintenance worker who is responsible for keeping a warehouse floor clean may challenge higher wages paid to a male janitor who cleans the lobby and offices.

New EEOC Rule

What’s more, the Equal Employment Opportunity Commission is requiring employers with 100 or more workers to submit salary data along with their EEO-1 reports.
The new rule applies to 2017 EEO-1 reports, which will not be due until March 31, 2018.
Shareholder initiatives are also putting pressure on large publicly traded companies to report pay equity to shareholders annually.
In advance of any further requirements that may be forthcoming, smaller employers also should consider ensuring that their salary data does not show differences in pay between women and men for substantially similar work.

Connecticut, Massachusetts, New York

In 2015, Connecticut’s state legislature passed, and the governor signed, a law concerning pay equity and fairness.
The law encourages wage transparency by barring employers from prohibiting employees from voluntarily discussing their wages with other employees and/or third parties.
Similar laws were also passed recently in Massachusetts and New York.

Under the Massachusetts Pay Equity Act, which is scheduled to take effect in 2018, employers are prohibited from screening applicants based on their previous salary or asking salary-related questions until after an offer is made.
Additionally, Massachusetts employers will be barred from contacting an applicant’s former employer to discuss their wages until after an offer is made, and only then with written permission from the applicant.
Under New York’s recently passed law, employers are required to justify pay differentials based on a limited number of factors, including a seniority system; a merit system; a system that measures earning by quantity and quality of production; or a bona fide factor other than sex (for example, education, training, or experience).
New York employers also may not prohibit employees from inquiring about, discussing, or disclosing wage information.

Practical Implications for Employers

So what should Connecticut employers take away from all this?
The changes in the pay equity landscape should be a wakeup call for all of the state’s employers, small and large.
If you are an employer in Connecticut, particularly a large employer, you may want to consider conducting a pay analysis for your company.
It’s a good idea to have an attorney conduct that analysis, so that the data is protected under attorney-client privilege.
What should you do if you discover you have problematic pay standards?
Be prepared to act quickly to remedy the situation.

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Author: Miguel Escalera is a partner at the labor and employment law firm Kainen, Escalera & McHale in Hartford.