Is Equal Pay becoming the new #MeToo?

By Lindsey A. White - Shawe Rosenthal LLP

June 7, 2018

In the era of the #MeToo movement, it may be easy to overlook that equal pay is also having a moment. A huge moment. The federal Equal Pay Act (“EPA”) of 1963 requires “equal pay” for “equal work.” If the plaintiff shows a difference in pay for such work, the employer must prove the wage difference is due to a legitimate reason, which includes:

• A seniority system
• A merit system
• A system based on quantity or quality of production
• A differential based on any other factor than sex. Courts recognize type of or years of experience, education, and certifications.

Perhaps deciding that the federal EPA (or resulting jurisprudence and similar legislation in some states) is not sufficiently robust, in recent years, several states and jurisdictions have enacted legislation aimed to strengthen equal pay protections for workers.  The specifics of the laws vary, but they generally prohibit requesting prior salary during the hiring process (e.g. “pay history bans” or “salary history bans”), under the rationale that setting current salary on past salary perpetuates the wage gap.

Last month, Connecticut became the latest state to pass a salary history ban.  The law takes effect January 1, 2019, and provides a private right of action for violations that would permit plaintiffs to recover compensatory, punitive, and attorneys’ fees and costs. Vermont also passed a law last month preventing prospective employers from requesting salary history.  This law takes effect July 1, 2018. We also wrote in April about New Jersey’s expanded equal pay law, which included a new salary history ban.

These are only the most recent legislative developments—Massachusetts, New York City, Delaware, Oregon, California, and Philadelphia, have all passed similar legislation.  While D.C. does not ban inquiries regarding past salary, it also beefed up its equal pay protections in April 2018.

Throughout this legislative flurry, the full Ninth Circuit Court of Appeals issued Rizo v. Yovino, in which it reversed an earlier decision in the same case by a panel of that same court, which had relied on 1982 precedent holding that prior salary was a legitimate reason for a pay differential. As we discussed in our April 2018 E-Update, the full Court has now held that, under the federal EPA, setting current salary on an employee’s past salary is not a legitimate factor other than sex that would justify a pay difference between a male and female employee.

Also last month, the U.S. Equal Employment Opportunity Commission—the federal agency tasked with investigating and enforcing EPA violations—announced a staggering $2.7 million settlement with a six-year consent decree against the University of Denver’s Sturm College of Law on behalf of seven female law professors. One allegation included a male professor was paid $75,000 more than a female colleague despite both being hired in the same year.

What does this all mean for employers? A couple of things—First, pay close attention to the laws as they develop in the jurisdictions where you operate. The proliferation of salary history bans mean that employers may need to revise their application forms, which frequently ask for salary in past jobs, and train their hiring managers to avoid asking about prior pay. In addition, many employers are voluntarily undertaking compensation reviews to ensure there are no disparities between similarly-qualified employees who perform “equal work” and making appropriate adjustments if needed.