On July 10, 2019, Governor Andrew Cuomo signed new legislation amending New York’s Equal Pay Law. Proposed by Democratic Senators Alessandra Biaggi and David Carlucci, the primary purpose of the legislation is to expand equal pay protections, prohibit pay differentials for “substantially similar” work, and protect against the potential adverse effects of disclosing salary history to employers. This makes New York the most recent state to join in efforts to eradicate pay discrimination, not only on the basis of sex, but all protected categories under New York State’s Human Rights Law (NYSHRL).
The New York law consists of two bills: the “Pay Equity Bill” and the “Salary History Bill.”
Pay Equity Bill
Effective October 8, 2019, the Pay Equity Bill prohibits wage differentials based on a person’s age, race, creed, color, national origin, sexual orientation, gender identity or expression, military status, sex, disability, predisposing genetic characteristics, familial status, marital status or status as a victim of domestic violence, pursuant to the NYSHRL.
The new law not only expands the current prohibition against gender-based pay inequity, but it also requires equal pay for “substantially similar work,” as opposed to the previous requirement of “equal” work. Thus, employees cannot be paid a wage at a rate less than the rate at which an employee outside the same protected class in the same establishment is paid for either equal work (as defined above) or “substantially similar work, when viewed as a composite of skill, effort and responsibility, and performed under similar working conditions.” New Jersey, California and Massachusetts are among the states who have also made this significant change, which inevitably results in a lower burden on employees who challenge the practices of their employers.
Despite this amendment, the law does not bar an employer from pay differentials based on a seniority system, merit system, earning measurements by quantity or quality of production or a bona fide non-discriminatory factor such as education, training or experience.
Employees are considered to work at the “same establishment,” for purposes of equal pay, if they work for the same employer at workplaces located in the same geographical region, no larger than a county, and considers population, economic activity and presence of municipalities. This determination differs from that of New Jersey, which has no geographical limitation in its application of state equal pay laws.
Salary History Bill
Effective January 6, 2020, the Salary History Bill will prohibit all New York State employers from inquiring, orally or in writing, about an applicant or a current employee’s salary history. The salary history prohibition resembles that of New York City and Westchester County and makes it a statewide ban as of 2020.
Employers cannot rely on the wage and salary history of an applicant, or current employee seeking a promotion, in making employment and/or wage decisions. Employers are further barred from retaliating against an applicant or employee who refuses to provide his or her salary history or files a complaint with the Department of Labor alleging a violation of this law.
The salary history ban is not to be interpreted as prohibiting employees or prospective employees from voluntarily offering salary history information. For example, an employee may discuss salary history, on his or her own volition, for the purposes of negotiating salary. Moreover, employers are also permitted to verify wage or salary history if an applicant or current employee voluntarily provides prior wage or salary information to support a wage or salary higher than offered by the employer.
The bill applies to private, governmental and public employers. Further, the amendment specifically states that it shall not supersede any federal, state, or local law enacted prior to the effective date of the amendment that requires the disclosure or verification of salary history information to determine an employee’s compensation.
Under the Equal Pay Bill, employees may be awarded counsel fees and triple the amount in damages for violations of Section 198 of New York’s Labor Law.
Under the Salary History Bill, an aggrieved party may bring a civil action and a court may grant compensatory damages, injunctive relief and reasonable attorneys’ fees to a prevailing plaintiff.
New York’s statewide amendment of the equal pay law is not the least bit surprising given other states and localities’ (New York City, Suffolk and Westchester Counties) recent efforts in providing increased protections under equal pay laws. In 2018, the State of New Jersey enacted equal pay legislation covering all protected categories under New Jersey’s Law Against Discrimination (NJLAD).
Given the current climate regarding equal pay, it is recommended that employers revise their payroll to ensure that salaries, hourly rates, benefits and all forms of compensation are equal among employees performing substantially similar work. When determining who performs “substantially similar,” it is imperative for employers to focus more so on job duties and responsibilities and less on job titles. In other words, employees with different job titles may be performing substantially similar work as defined by law, thus, requiring equal pay regardless of the position they hold.
It is also important that employers do not attempt to reduce the compensation of employees in order to be compliant with the new amendments as this practice is in direct contradiction of the law.
Furthermore, existing job applications, handbooks and policies must be revised and amended to prohibit pay discrimination, inquiries regarding salary history and retaliation. Human Resources personnel, as well as any individual involved in the interview or recruiting process, should be trained on the new prohibitions in order to protect the company from liability.
Employers should also be aware that the possibility of an award of treble damages for a prevailing plaintiff may cause a significant financial strain on the company. Thus, compliance with the law should be a main priority.
Lastly, employers who work with public entities must ensure that payroll records and other information regarding the “gender, race, job title, occupational category and rate of compensation” of every employee that is part of the project is current and sent to the public entity.
It is always advised to consult with legal counsel for guidance to ensure compliance and effective practices for protection against liability.