We all know the uncomfortable questions everyone wants answered, but no one wants to ask:
- Am I getting paid fairly?
- How does my paycheck compare to my co-workers’ paychecks?
- How much will my new position pay?
- How much did you get paid in your last position?
These questions are boiling up the workplace watercooler, and regulations about pay equity and salary history inquiries are trending in the local, state, and federal legislatures. These topics are important to both employers and employees, and each side does not always agree on what information the other is entitled to know.
Pay Equity Trends
Equal pay requirements at the federal level have existed for quite some time. For example, Title VII of the Civil Rights Act of 1964 prohibits compensation discrimination on the basis of race, color, religion, sex, national origin, age, or disability. In addition, the Equal Pay Act requires that men and women be given equal pay for equal work. Federal law, however, does not cover all employers in all states or localities.
That’s why many states are adopting and enforcing their own equal pay requirements, along with stricter requirements than federal law. Below is a summary of what’s happening in California, Oregon, and Massachusetts.
California’s Fair Pay Act
California has had an equal pay act on the books for several decades that prohibits pay discrimination between employees of the opposite sex for equal work performed. In 2016, California passed the Fair Pay Act to strengthen and expand upon California law. This law required equal pay for employees who perform substantially similar work, when viewed as a mix of skill, effort, and responsibility. Most recently, California further expanded the Fair Pay Act to prohibit pay discrimination based on race or ethnicity for substantially similar work.
Oregon’s Equal Pay Act
Oregon recently passed its own Equal Pay Act, under which employers may not discriminate between employees on the basis of a protected class in the payment of wages or other compensation for work of comparable character. Oregon defines “work of comparable character” to mean work that requires substantially similar knowledge, skill, effort, responsibility and working conditions in the performance of work, regardless of job description or job title. This is different than the federal Equal Pay Act, which requires “equal pay for equal work.”
Massachusetts’ Pay Equity Act
Similarly, Massachusetts recently passed a pay equity act that prohibits wage discrimination on the basis of gender by requiring equal pay for comparable work.
Can Employers ask about Salary History?
Closely related is whether employers should be prohibited from seeking salary history and compensation information from job applicants. An increasing number of states and cities are trending toward making it unlawful for private employers to screen prospective employees based on their salary histories, or to request this information as a condition of being interviewed for employment.
Delaware, Massachusetts, and Oregon have each passed legislation that makes it unlawful for an employer to screen applicants based on their compensation histories or seek the compensation history from the applicant or a current or former employer. Employers are also prohibited from requiring that an applicant’s prior compensation satisfy minimum or maximum criteria.
These laws make some exceptions for situations such as when an applicant voluntarily discloses their salary history, permitting employers to negotiate compensation expectations with an applicant, and permitting employers to confirm an applicant’s wage or salary history after extending an offer of employment that includes negotiated compensation for the position.
Some cities, such as New York City and Philadelphia, have started to jump on the bandwagon as well.
Further, this topic is getting attention at the federal level. Federal legislation has been introduced in the House of Representatives this year which would add a new section to the Fair Labor Standards Act that would make it unlawful for an employer to screen applicants based on their previous wages or salary histories, or to request or require this information as a condition of being interviewed or considered for employment. The bill would also prohibit employers from seeking salary history information from a prospective employee's current and former employers.
Many other equal pay laws and laws prohibiting inquiries into salary history have been proposed and failed across the U.S. Employers and employees can expect, however, to continue seeing these types of proposed laws, as advocates for closing gender pay gaps continue to lobby the legislatures.
In light of these trends, employers should review their equal pay policies and application processes to determine whether questions about an applicant’s salary history are included, and whether it is permissible. Employers may choose to proactively update their job application forms to remove questions regarding salary history. In addition, employers should ensure managers who are involved in the recruiting process are trained on equal pay and salary history inquiry requirements.
Kelly Dougherty is Senior Compliance Counsel at Ceridian with years of employment law counseling and litigation experience. At Ceridian, Kelly enjoys tackling employment-related compliance issues in the HCM world and working to help develop cutting edge products.View Collection