While new pay data reporting requirements in California and Illinois have grabbed pay equity headlines, we are seeing a ground swell in another type of pay transparency requirements: mandatory pay disclosures to applicants, current employees, or both.
Pay range disclosure laws go beyond the host of state laws that came online several years ago and establish employees’ rights to request information, disclose, and discuss their own wages. Rather, these laws obligate employers to affirmatively (and sometimes proactively) disclose the pay range for a given position under specific circumstances. Employers in nine jurisdictions and counting are subject to such requirements: California, Colorado, Connecticut, Maryland, Nevada, Rhode Island, and Washington, as well as Ohio cities Toledo and Cincinnati. At present, another nine states have similar bills pending. READ MORE
Employers face increasing demands and pressure to ensure and declare equitable pay for employees, not only from within their own workforces, but also from clients, customers, and government leaders. While states continue passing increasingly progressive pay equity laws, the requirements of such laws may not align with the purpose and intent of federal or state equal pay laws. Employers should be mindful of the risks associated with how state agencies may use pay data collections and be prepared to explain their practices and provide further response, if needed. READ MORE
On September 23, 2020 the Securities and Exchange Commission (“SEC”) adopted amendments to 17 C.F.R. § 240.14a-8 (“Rule 14a-8”), raising the bar for shareholders seeking to force votes on proposals. The rule comes on the heels of persistent and repeat shareholder proposals in various areas including, notably, pay gap data reporting.
On July 16, the EEOC announced plans to fund an independent study to evaluate pay data submitted by employers for fiscal years 2017 and 2018 through Component 2 of the EEO-1 form, both to inform potential next steps for the data, as well as to guide any potential future collections. As we reported last March, after a tumultuous history, the EEOC decided against renewing its request for authorization to continue collecting pay data under Component 2 of the EEO-1 form, which reflected employees’ W-2 earnings and hours worked across broad job categories, broken down by gender, ethnicity, and race. The EEOC’s decision in March ended a four-year saga – including litigation – over whether the pay data collection would go forward at all. Much of the controversy stemmed from critiques that the burden and confidentiality concerns implicated by the Component 2 submissions outweighed any potential benefit, particularly given the form’s reliance on W-2 earnings (as opposed to base pay or total compensation awarded for work performed in a given year), combined with the breadth of the pay bands and job categories used, as well as the inability for most employers to accurately track or report hours worked by exempt employees (as we reported here, here, here, here, here, here, here, here, and here). Despite last March’s announcement, the EEOC has not stated whether or how it plans to use the data it already has collected. READ MORE
The federal Equal Pay Act (EPA) and its many state analogs require equal pay for equal (or, in some states, “substantially similar”) work. The EPA contains a so-called “catch-all” defense to equal pay claims, permitting wage differentials if employers can show that they are “based on any factor other than [protected category].” But this catch-all defense has been under scrutiny in courts and legislatures around the country. As we recently reported, an en banc Ninth Circuit rejected an employer’s argument that sole reliance on prior pay could be a “factor other than sex” within the meaning of the EPA. The Ninth Circuit’s finding is an outlier among circuit courts in this respect, but it fits a broader trend to narrow the “catch-all” affirmative defense, particularly at the state level. READ MORE
On March 6, 2020, U.S. Secretary of Labor Eugene Scalia published Secretary’s Order 01-2020, which is among the first of his management decisions since his confirmation back in September. The Order, titled the “Delegation of Authority and Assignment of Responsibility to the Administrative Review Board,” establishes the Secretary’s authority to review, at his discretion, decisions of the Department of Labor (DOL)’s Administrative Review Board (ARB), including decisions arising out of enforcement actions brought by the Office of Federal Contract Compliance Programs (OFCCP). The Order represents a shift in procedure before the Office of Administrative Law Judges (OALJ) and introduces various new process and substantive legal questions to be aware of in connection with contractor pay discrimination enforcement actions. READ MORE
On February 6, 2020 the U.S. Court of Appeals for the Third Circuit upheld a Philadelphia pay equity ordinance banning employers from inquiring into prospective employees’ prior pay or relying on prior pay in making compensation decisions unless candidates knowingly and willingly disclose the information. In upholding the ordinance, the Third Circuit vacated a lower court decision that enjoined enforcement of the inquiry provision on the grounds that it violated employers’ First Amendment free speech rights. While the Third Circuit acknowledged that the ordinance implicated First Amendment rights, the court found that there was “a plethora of evidence” provided by the city to meet its burden of clearing intermediate scrutiny for commercial speech. Consequently, it was reasonable for the city to conclude that the inquiry provision would address gender and race-based wage gaps based on experiments, witness testimony, and historical research concluding as much. READ MORE
The EEOC’s revised pay-data collection rule is back in force and the September 30, 2019 deadline is at our doorstep. Here is a quick overview of what employers should know and links to available resources. READ MORE
This year has seen states enact a litany of laws aimed at addressing pay equity issues, chief among them salary history bans. We previously reported on these issues here, here, and here. Mid-way through 2019, more and more states continue moving full speed ahead with legislation to bar employers from asking about candidates’ prior salary during the hiring process. Since our last report on this topic, the latest newcomers in this area are Washington and New Jersey. These states (like others) have expressly justified these bans based on legislative findings that “[t]he long-held business practice of inquiring about salary history has contributed to persistent earning inequalities” (see H.B. 1696, § 3(a), 66th Leg., Reg. Sess. (Wash. 2019) (enacted)), while courts evaluating such provisions have found that “more is needed” to establish the presumed connection. See Chamber of Commerce for Greater Philadelphia v. City of Philadelphia, 319 F. Supp. 3d 773, 797-98 (E.D. Pa. 2018). Regardless, though, these laws are now on the books and employers should be mindful of their requirements going forward. READ MORE
For nearly five years, major U.S. corporations have been subject to intense scrutiny over their decisions on whether to release internal pay gap percentages in response to shareholder proposals by Arjuna Capital, LLC and other activist shareholder groups. As these activist groups maintain a keen interest in seeking compensation-related disclosures from industry giants, employers should be mindful of certain issues in considering their response. READ MORE