Equal Pay Day 2022: Key Trends in Pay Equity

Seyfarth Synopsis: Seyfarth Shaw Pay Equity Group is pleased to release our updated 50 State Pay Equity Desktop Reference and Developments in Equal Pay Litigation Reports, and our second annual Global Pay Equity Desktop Reference in connection with Equal Pay Day 2022 which took place on March 15th, 2022.

In contrast to the two most recent Equal Pay Days, this year, Equal Pay Day occurred during a period in which there is a light at the end of the COVID-19 tunnel.  As job seekers, employees, and employers navigate what it means to “return to work,” they face a workplace landscape that has been substantially transformed.  One change the workforce will face that has been gaining momentum during the pandemic is the increased legislative attention to pay transparency and pay data reporting, which is sweeping across the U.S. and globally.  The policy rationale is simple: equipping the general public, employees, and the government with more data about compensation will have a positive impact on organizations and society at large achieving pay equity.

The Push Towards Pay Transparency

Several states have adopted laws that require employers to provide applicants--or in some instances both applicants and current employees--with wage range or rate information for their positions.  The jurisdictions that currently have these types of wage range or rate disclosure laws include:  California, Colorado, Connecticut, Maryland, Nevada, New York City (effective May 15, 2022), Toledo and Cincinnati Ohio, Rhode Island (effective January 1, 2023), and Washington State.  This trend is becoming more and more widespread, and states and municipalities nationwide are considering adopting pay scale disclosure laws.

It is worth highlighting Colorado, which has been on the leading edge of these pay transparency laws.  Colorado’s Equal Pay for Equal Work Act obligates employers to disclose in job postings for roles that will be Colorado-based or remote roles that could be performed in Colorado information regarding compensation and benefits being offered for the position.  The law also requires employers to notify their Colorado employees of promotional opportunities, whether such opportunities exist in Colorado or elsewhere, and whether or not any Colorado employee is qualified for the job.

New York City also passed a pay scale disclosure law set to take effect on May 15, 2022. The ordinance makes it an unlawful discriminatory practice for an employer, employment agency or employee to advertise a job, promotion, or transfer opportunity without including the minimum and maximum salary for such position in the advertisement.

Pay Data Reporting is Taking Hold in the U.S., Following a Global Trend

Globally, equal pay laws have tended to focus on pay data reporting.  Depending on the country, employers may be required to report pay equity data to the government, publish it on the company’s website, or share it directly with employees.

In the U.S., both Illinois and California now have pay reporting laws on the books, which require disclosure of employee compensation and demographic information. While California was the first state to pass a pay reporting law, the Illinois law went a step further requiring that certain private employers doing business in the state provide employee-level pay data to the Illinois Department of Labor every other year. And while data tied to a specific business or specific employee is confidential, aggregate pay data will be publicly available, and employees of an Illinois employer will have the ability to request anonymized data about their job title or job classification.

Not to be outdone, California legislators have recently introduced a bill that would expand pay reporting requirements for California businesses, including making employer pay data reports public. Employers should expect other states to join this trend.

Future of Work and Pay Equity

As society continues to wrestle with the changes COVID-19 has brought to the work environment, many employers are developing creative solutions to attract and retain talent. However, these efforts may raise unintended pay equity consequences. The proliferation of remote work arrangements (and the attendant geographical differentials in pay), the growing need to replace talent lost due to the pandemic (the “Great Resignation”), and increasing competition around salaries and bonuses can impact an organization’s pay equity.

Moreover, the increased legislative focus on pay equity and pay transparency coupled with remote workers scattered across the country requires employers to contend with a growing patchwork of pay equity laws. Complying with these state and local laws when employees are remote raises several issues such as how to count employees (to determine, for example, if the business meets the threshold employee count within the locale to be covered by its pay equity law) and how the employer must advertise job opportunities to certain populations.

All of the members of the Pay Equity Group look forward to partnering with you in navigating these issues in 2022 and beyond both in the U.S. and around the globe. Stay tuned for additional programming in the coming months as we explore recently enacted laws and continue to preview upcoming pay equity legislation.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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