The NJ legislature has been busy in recent weeks with new employment laws.  Yesterday, Governor Murphy signed the Diane B. Allen Equal Pay Act, which will go into effect on July 1, 2018.

The law is probably one of the broadest equal pay laws in the country. Unlike most equal pay laws that prohibit pay disparity based on gender, the law prohibits employers from discriminating against employees in compensation based on membership in any protected class.  This means employers might see claims raised based on race, national origin, sexual orientation, etc.

More details about the new law can be found in our alert here.

This week, the 9th Circuit issued a decision that many say represents a sea change in how employers may defend against Equal Pay Claims. The decision in Rizo v. Yovino issued on April 9, 2018 overturned decades of interpretation of the Equal Pay Act and held that prior salary history may not be considered by employers.  However, there is some language in the ruling that appears to muddy the general rule announced by the Court.

Under the Equal Pay Act, it is illegal for employers to pay men and women different salaries for substantially similar work.  However, an employer may defeat an Equal Pay Act claim by proving that there were legitimate, non-discriminatory reasons for the salary differential.  Traditionally, courts have found that one of those legitimate, non-discriminatory reasons might be that the employer based the salary on the compensation the employee received at a prior job.

Indeed, many employers routinely ask what salaries applicants are currently making.  In that way, employers understand applicants’ salary expectations but also have an awareness of where to set the salary being offered to the applicant.

In recent times, some jurisdictions have passed laws prohibiting employers from asking about prior salary history.  The stated reason for these laws is that it perpetuates prior gender pay discrimination.  Basically, if an employee was subjected to a discriminatory wage rate at a prior employer, using that salary at the new employer would set the employee’s salary lower than other employees and, even if the new employer is not overtly acting in a discriminatory manner, would continue the past discriminatory practice.

Right now, the number of jurisdictions with such laws is limited.  However, the Rizo decision may change that.

Rizo, a school teacher, was hired by Fresno County as a math consultant.  Fresno County had a standard operating procedure that set ten salary steps.  When a teacher was hired, salary was set based on taking the teacher’s former salary and adding 5%.  Once the salary was calculated, the teacher was placed in the appropriate step of the pay scale.  After her hire, Rizo discovered that male math consultants had been hired at higher salary steps.  For its part, Fresno County claimed that the use of prior salary was a long-recognized legitimate factor and that if salaries were reviewed as a whole, more women were placed at higher salary steps than men.

The Ninth Circuit heard the case en banc in order to clarify the law as to whether prior salary history alone or in combination with other factors could be a legitimate factor “other than sex” that justified the salary differential.

The Ninth Circuit held that prior salary alone cannot be a legitimate factor other than sex. It then went even further, which caught most people off guard, and said that prior salary is never a legitimate business factor even if taken into consideration with other factors. The Court did say that there might be individualized cases where salary was negotiated and past salary came into play  and that it took no position on whether prior salary could be considered in those cases.

This ruling is contradictory and employers should not consider this language a safe harbor.  Given the other language in the opinion that repeatedly states that asking about prior salary frustrates the entire purposes of the Equal Pay Act and should never be considered, employers should not bank on the fact that there might be some conceivable fact pattern that allows employers to consider prior salary history.  This is true, despite the very valid points brought out in the concurring opinions, that there are times that prior salary history has nothing to do with gender.  For example, prior salary may have been set based on cost of living or demand for particular jobs.

Based on this ruling, the safest course of action would be for employers within the Ninth Circuit to never ask about prior salary history.  However, what happens if the applicant volunteers it while trying to negotiate terms and conditions of the new job?  This decision doesn’t really answer that question.

At this point, there are other circuits that allow for the consideration of prior salary history in combination with other factors.  It will be interesting to see if the Supreme Court decides to take up the split.

 

As discussed in last week’s Fox Workplace Watch Alert, the Office of Federal Contract Compliance Programs (OFCCP) announced its largest pay equity recovery to date – a $5 million settlement of gender and racial pay discrimination claims it brought against State Street Corporation after a six-year investigation into the financial services firm’s compensation practices.  In essence, OFCCP alleged that a statistically significant disparity existed between the compensation paid to hundreds of women, and more than a dozen black, executives than that paid to their similarly situated male and white coworkers, respectively.

OFCCP’s action demonstrates how it can marshal sophisticated analytics to tease out pay disparities that otherwise may have gone unnoticed.  Like many other issues championed by the prior administration, it remains to be seen whether OFCCP’s recent focus on this issue will continue in the Trump Administration.  But federal contractors should pay attention to this settlement and take the opportunity to perform internal audits and address any potential issues before being the subject of a pay equity action (not to mention blog posts and alerts!).

Today’s post was written by Justin Schwam, an associate in our Labor and Employment Department in the Morristown office.

On Tuesday, the Office of Management and Budget notified the EEOC that it was delaying a rule finalized last year that would require large employers to report salaries of workers.  The rule was implemented to help combat gender pay inequality.

The rule would require any employer who must file an EEO-1 report, which is any private employer with 100 or more employees or federal contractor with 50 or more employees, to provide the previously required information about the number of its employees broken down by gender, race and ethnicity.  The second part of the rule would require employers to also submit W2 payroll data for its employees as they fit in 12 salary bands.  The actual wages paid per employee does not have to be provided.  However, employers would have to list the number of employees in each salary band and break down those numbers by gender and race/ethnicity.

The rule was to go into effect this year for the reports due in March 2018. However, the OMB has now put on the brakes.

The EEOC, however, wants to make clear that this announcement does not mean that there will be a lack of enforcement in this area.  Law 360 is reporting that the EEOC Chair stressed Wednesday that gender pay inequality was still a “high priority.”

In the meantime, the 2017 EEO-1 online portal is temporarily off-line.  Employers will still have to provide the data required by the first part of the rule and should periodically check with the EEOC to see when the 2017 survey is issued.

Today’s post comes to us courtesy of Rachel Severance, an associate in our Washington D.C. office:

On October 1, 2016, new requirements affecting Maryland employers go into effect, expanding the scope of Maryland’s current non-discrimination statute.

The Maryland General Assembly expanded Maryland’s Equal Pay for Equal work law, which previously prohibited discrimination based on sex, to also prohibit discrimination based on gender identity.

The law’s new provisions prohibit an employer from discriminating between employees in any occupation by (1) paying a wage to employees of one gender identity at a rate less than the rate paid to other employees under specified conditions and (2) providing less favorable employment opportunities, as defined by the bill, based on sex or gender identity.

The definition of “less favorable employment opportunities” was also expanded to mean (1) assigning or directing the employee into a less favorable career track, if career tracks are offered, or position; (2) failing to provide information about promotions or advancement in the full range of career tracks offered by the employer; or (3) limiting or depriving an employee of employment opportunities that would otherwise be available to the employee but for the employee’s sex or gender identity. Specified exceptions allow for variations in wages in some situations as long as the reason for the variation is not derived from sex or gender identity.

Additionally, the law provides that an employer may not prohibit an employee from inquiring about, discussing, or disclosing the wages of the employee or another employee or requesting that the employer provide a reason for why the employee’s wages are a condition of employment.

As a result, Maryland employers need to carefully review both their policies and benefits programs to ensure compliance with these new mandates.

As my colleague Christina Stoneburner wrote earlier in the week, we aren’t even through summer 2016, yet the number of new employment laws and regulations enacted that employers must contend with are already piling up.  Massachusetts recently joined the fray, with Governor Baker signing into law earlier this month S.2119 (effective January 1, 2018), which addresses pay equity discrimination based on gender.  Notably, the new pay equity legislation reiterates what Massachusetts and federal law have long stated: pay disparities based on gender are unlawful.  However, this new law goes further, is more employee-friendly than ever, and specifically addresses neutral conduct that arguably affects gender pay equality.

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One unique and notable component of the new law is a first-of-its-kind “ban the box” type prohibition that makes it unlawful to inquire regarding the prior salary history of prospective employees (similar to the prohibition of criminal conviction questions that many jurisdictions have recently adopted). Questions about prior salaries are extremely common and can be found on most employment applications.  However, this practice must now be eliminated in Massachusetts.  The intent of the legislature is to root out historic pay discrimination by forcing pay decisions to be made based on the job and not prior salaries.  The law prohibits, any time prior to making an offer of employment (with salary offer), either directly requesting prior salary information from the prospective employee and/or his or her former employers, or indirectly researching the same.  Moreover, employees cannot be prohibited from discussing their wages amongst themselves (although such policies are already prohibited by current interpretations of the National Labor Relations Act).

In addition, the law reiterates that actual pay differences based on gender are expressly prohibited where employees are engaged in “comparable work,” which is defined as any job(s) (regardless of titles) that require “substantially similar skill, effort and responsibility . . . under similar working conditions.”  Moreover, the law clearly delineates the few bona fide non-discriminatory reasons allowed for neutral pay policies, namely: (i) seniority pay systems, (ii) merit pay systems, (iii) production or sales quality/quantity pay systems, (iv) geographic differences, (v) job relevant education, training, and/or experience, and (vi) job related travel.  Lastly, the statute contains an anti-retaliation provision that prohibits taking retaliatory action against employees or applicants that oppose practices prohibited by the law.

An action enforcing the statute may be brought within three years of any discriminatory act, either by the attorney general or through civil litigation by the affected employee(s) and/or applicant(s), including but not limited to by class action.  Damages recoverable include any owed or diminished wages and benefits, as well as additional “liquidated” damages (which doubles any owed compensation) and any reasonable attorneys’ fees and costs.

The one piece of good news for employers is that an affirmative defense is provided in the statute where an employer, within the prior three years, conducts a good faith self-evaluation of its pay practices in order to eliminate pay discrepancies based on gender. As a result, it is recommended that prior to the effective date of the act that employers conduct a thorough review of all employee handbooks, non-disclosure agreements, employment applications, and other new hire policies and forms, as well as review institutional pay structures and systems, to ensure compliance with the law.  As always, your friendly Fox Rothschild attorneys are here to help in this regard.

 

Today’s post comes to us courtesy of Asad Rizvi, a Labor and Employment associate in our Roseland office:

17813952_sGarden State employers are breathing a sigh of relief.  On Monday, May 2nd, Governor Christie conditionally vetoed a New Jersey pay equity bill that would have presented one of the most dramatic changes to the New Jersey Law Against Discrimination (“LAD”).  Senate Bill No. 992, which passed both houses of the State legislature earlier this year, sought to impose considerably greater liability on employers by surpassing the existing rules governing pay equity.  The veto struck out several of the distinguishing features of the proposed legislation that, in the Governor’s words, would make New Jersey a “liberal outlier.”

For one, the Governor rejected the proposal to adopt an unlimited statute of limitations that would lift the two-year cap on the recovery of back pay by employees subjected to sex discrimination in compensation or the financial terms or conditions of their employment.  Second, the Governor found that employers, in accordance with the law, should not be prohibited from compelling employees to consent to a shorter limitations period on claims under LAD as a condition of employment.  This prohibition, the Governor found “unduly constrains an employer and employee’s ability to negotiate the terms of employment.”

The Governor also rejected the legal standard proposed under Senate Bill No. 992, which prevents employers from engaging in an individualized “intensive fact-based evaluation” to defendant against pay equity claims.  The treble damages provision of the bill was also vetoed, as the Governor found it inconsistent with existing remedies under state and federal law which exclusively provide for back pay.  Finally, as he did in a prior legislative session,  the Governor found the new demographic reporting requirements imposed by the bill on State contractors to be unnecessary and disruptive to the State economy, calling it a “burdensome reporting mandate upon the businesses of this state.”

While employers may have won the battle for now, the war over pay equity is not over.  At the moment, the administration and legislature appear far apart in their negotiations over the bill.  However, State legislators have promised to keep pressing onward for the passage of this dramatic piece of employment legislation, which the Governor finds and employers would agree is “very business unfriendly.”  While the fight continues on in Trenton, employers seeking to review their pay practices should contact employment counsel.  Meanwhile, we will keep our eyes on Senate Bill No. 992.

This week, the US Women’s National Soccer Team filed suit against the USA Soccer, claiming that they are not paid commensurately with their male counterparts.  The USWNT, who is possibly the most popular and profitable female sports enterprise on the planet, has been locked in labor discord with USA Soccer for the better part of the last fifteen years, largely over pay issues.

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There are really two issues to the suit filed by lead plaintiffs Alex Morgan (pictured above), Hope Solo, Carli Lloyd (she of the World Cup hat trick), Megan Rapinoe, and Becky Sauerbrunn, which are applicable to any workplace.  First, are they similar situated to Tim Howard, Clint Dempsey, & Co. on the Men’s team?  And second, if the answer is yes, do the profit centers of each particular team mandate that they be paid in accordance with them?  Attorneys for the USWNT offer an emphatic yes to both questions, arguing that the team has been more profitable than the Men’s team for years.

The lessons are twofold and can be applied to any pay discrimination case.  First, are the comparators true counterparts?  I’m guessing that USA Soccer will argue no, and that the two teams compete in what are essentially two different sports that are no more alike than football is to baseball.  Second, if they are deemed to be similarly situated, the conversation will turn to the revenue produced by each team.  The USMNT knows this, which is why their Complaint provides a detailed account of the revenue numbers of both teams.

Gender pay disputes in professional sports are bubbling to the surface (See also: ATP remarks about women’s tennis).  The most prominent female sports franchise in the world would like to take the first crack at the issue in the courtroom.

(Note:  There are also ancillary issues in the case as to whether certain collective bargaining agreements made between the parties are valid.  This is also an important piece of the case and will affect the claim of discriminatory pay.)

As a follow up to yesterday’s post on the proposed changes to EEO-1 reports, the EEOC is not the only ones trying to increase efforts to combat gender pay inequity.

The New Jersey Legislature recently passed amendments to the New Jersey Law Against Discrimination that provide broader prohibitions on gender discriminatory pay practices.  The bill rocketed through both the Senate and the Assembly and was almost unanimously passed in both houses.

24736999_sThe bill, as passed by the Legislature, greatly extends the possible statute of limitations for pay inequity claims.  The proposed law adopts the Lily Ledbetter rule that each new pay period would be a new event of discrimination even if the discriminatory pay decision was made years prior.  However, the New Jersey law goes farther and would allow employees to go back more than two years prior to the last pay period under either the discovery rule theory or the continuing violation theory.

The bill has not yet been signed by Governor Christie and he has not indicated whether he will sign the bill.

In the meantime, the Firm has issued an alert, New Equal Pay Law on the Horizon in the Garden State, describing the bill in more detail.

 

 

As many of you probably know, the EEOC has issued a proposed rule that, if adopted, would require significant changes to the EEO-1 reporting requirements.  The rule proposal is designed to help the EEOC gather data related to pay discrimination claims.  If adopted, it will require employers who are required to complete annual EEO-1 reports to submit pay data for all employees in addition to the number of employees in each racial classification.

This rule is likely going to increase the number of investigations and complaints filed alleging pay disparity.  The EEO-1 reports, by themselves, will be used in a broad sense to identify statistical anomalies that may trigger an investigation.  Missing from that raw data will be any legitimate reasons for pay disparities, such as experience and education levels.  However, employers will be required to comply with what could be a lengthy investigation process.

The comment period is currently scheduled to end on April 1, 2016.  Recently, ten Republican senators sent a letter to the EEOC asking for the comment period to be extended 90 days.  No word yet on whether the extension will be granted.

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