This week’s post was co-authored by Robinson+Cole Labor and Employment Group lawyer Emily A. Zaklukiewicz.
National Equal Pay Day, a presidentially-proclaimed day intended to draw attention to gender-based pay disparities in the United States and beyond, was celebrated across the country on March 15, 2022. In recent years, this day has gained even more recognition as pay equity remains at the forefront for employers and lawmakers alike. Specifically, many states and localities have taken steps to address pay equity by introducing and passing laws that prohibit inquiries about salary history, require reporting of pay data, require disclosure of pay information, and protect employees who disclose their pay, among other initiatives. In recent years, manufacturers and other employers have focused on this issue both from the perspective of basic fairness to and ethical treatment of employees, as well as from a legal and compliance perspective.
One emerging pay equity trend among states and localities has been the introduction and enactment of pay transparency legislation requiring that employers disclose certain compensation or wage range information to job applicants and employees. In 2018, California became one of the first states to enact such a law, and since then several other states and localities have followed suit, with Colorado, Connecticut, Rhode Island, Nevada and New York City being some of the most recent states and localities to implement such requirements. These pay transparency laws vary significantly, with some requiring disclosure of wage ranges for various positions upon request, while others impose affirmative obligations to make such disclosures in job postings or at the time an offer of employment is extended.
Further, while the federal Equal Pay Act of 1963 has long required that employers offer employees the same compensation for equal work without regard to sex, many states and localities have broadened the scope of comparisons between work and pay by requiring that employees receive the same pay for comparable work or for similar or substantially similar work. Likewise, several states have expanded pay equity protections to include characteristics other than gender, such as race, color, national origin, and religion, among others. Some states, including California and Illinois, have gone well beyond these requirements by enacting laws which require formal reporting of certain pay equity data. Undoubtedly, this growing trend of pay equity legislation is likely to continue.
In order to maintain positive employee relations, foster fair and ethical personnel processes, mitigate legal risks, and maintain compliance with relevant pay equity requirements, employers may wish to review employee compensation across their organizations to ensure employees are in fact being paid equally for comparable or similar work. Specifically, employers can take proactive steps to identify, understand and remedy potential pay disparities and inequities within their organizations by conducting pay equity audits. Employers can also evaluate and implement changes to compensation policies and practices within their organizations, including with regard to starting compensation, merit increases, promotions, and incentive pay. Conducting pay equity audits or reviews and incorporating changes to pay practices should be entered into in a strategic manner, consistent with best practices in this area, and with the assistance of competent counsel.