Pay Equality is Long Overdue…

by Shipman & Goodwin LLP

Earlier this week I came across an article that was written by Aebra Coe and published in Employment Law360, entitled “Female In-House Attys Earn 84 Cents For Every Dollar Men Do.” This article is yet another reminder that regardless of occupation, women consistently have earned less pay for the same work. Despite the passage of the Equal Pay Act 55 years ago, gender pay disparities have persisted. But why?

According to a Fact Sheet issued by the Women’s Bureau of the U.S. Department of Labor in 2014, available here, pay disparities present a problem due to “pay secrecy policies” in both the public and private employment sectors. A pay secrecy policy is a rule (written or oral) that seeks to prohibit employees from complaining or even inquiring about their compensation or that of other employees.

To address this problem, several presidential administrations have sought to introduce the Paycheck Fairness Act, whose purpose was to amend the Equal Pay Act primarily by: 1) prohibiting retaliation against employees who discuss their compensation in the workplace; 2) requiring the U.S. Department of Labor to collect wage information from employers, broken down by gender (as well as race); and 3) requiring employers to provide the U.S. Department of Labor with the reasons for any pay differentials between employees who held the same position. Most recently, the Paycheck Fairness Act was reintroduced last year on April 4, 2017, on “Equal Pay Day.” To date, the Paycheck Fairness Act has not been passed. But, there is still hope…

The Equal Employment Opportunity Commission (“EEOC”) and the National Labor Relations Board (“NLRB”) have taken the position that pay discussions in the workplace constitute protected activity, and so an employee who is adversely impacted by a pay secrecy policy may have a factual basis for a retaliation claim against his/her employer. In its Enforcement Guidance the EEOC has noted that pay secrecy policies “may impede knowledge of discrimination and deter protected activity.” As a result, the EEOC has been filing claims against employers on this basis, which have resulted in financial settlements for the plaintiffs-employees involved. Additionally, 13 states, including Connecticut and New York, now have laws that prohibit pay secrecy rules in the workplace. See Conn. Gen. Stat. § 31-40z, available here and N.Y. Lab. Law § 194 (4), available here.

Key takeways:

Employers should ensure that they are relying solely on objective factors in compensation decisions, such as: 1) market or industry rates specific to the work to be performed; and 2) market or industry rates that correlate to the skill or experience level of the prospective employee for a particular job.

Employers should also review the wage and benefits information of employees who hold the same or similar positions within their businesses. If an employer cannot identify a legitimate business reason for any pay differential gaps that may exist, the employer should take steps to rectify the issue — and immediately.

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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