Employers should be aware of the recently enacted Equal Pay for Equal Work Act ("Act"). Maryland's existing Equal Pay law prohibits paying an employee less than employees of the opposite sex for "work of comparable character or work on the same operation, in the same business, or of the same type." The Act expands the existing equal pay provisions and adds new pay transparency requirements. The Act applies to all Maryland employers regardless of size and takes effect on October 1, 2016.
Equal Pay Provisions
• adds a prohibition against pay discrimination on the basis of gender identity. Discrimination on the basis of gender identity is already prohibited by the Maryland Civil Rights Act and the EEOC is pursuing litigation to include gender identity within the prohibition against sex discrimination under federal law.
• prohibits providing "less favorable employment opportunities" based on sex or gender identity. "Less favorable employment opportunities" is defined to include assigning or directing an employee into a less favorable career track, failing to provide information about promotions or advancement in the full range of career tracks offered by the employer, or limiting or depriving an employee of employment opportunities that would otherwise be available but for the employee's sex or gender identity.
• clarifies that employees will be deemed working at the "same establishment" for the purposes of a pay discrimination analysis if the employees work for the same employer at workplaces located in the same county in Maryland.
The Act expressly provides that it does not prohibit variations in pay based on: (a) a seniority system or merit increase system which does not discriminate on the basis of sex or gender identity, (b) jobs that require different abilities or skills, (c) jobs that require the regular performance of different duties or services, (d) work that is performed on different shifts or at different times of day, or (e) a system that measures performance based on quality or quantity of production. The Act also does not prohibit a pay disparity which is based on a bona fide factor other than sex or gender identity (including education, training, or experience) in which the factor: (i) is not based on or derived from a gender-based differential in compensation, (ii) is job-related and consistent with business necessity, and (iii) accounts for the entire differential. Under this standard, basing an employee's pay, even in part, on an employee's prior salary may be subject to challenge as perpetuating past gender-based pay disparities.
Pay Transparency Provisions
The Act adds new provisions to the Equal Pay law that are intended to enhance the rights of employees to share pay information with each other. Under the Act employers may not:
• prohibit an employee from inquiring about, discussing or disclosing his/her wages (or the wages of another employee who has voluntarily disclosed such information).
• prohibit an employee from requesting that the employer provide a reason for the employee's wage rate.
• require the employee to sign a waiver or any other document that purports to prohibit the employee from discussing or disclosing his/her wages.
• take any action against an employee for: inquiring about another employee's wages, disclosing his/her own wages, discussing another employee's wages if the wages have been disclosed voluntarily, asking the employer to provide a reason for his/her wages, or encouraging or aiding another employee to exercise his/her rights under the law.
The Act does allow employers to establish written policies that set "reasonable workday limitations on the time, place and manner" for engaging in such inquiries and discussions. Such policies may also include a prohibition on discussing or disclosing the wages of another employee without that employee's prior permission.
The Act does not permit an employee to disclose proprietary information, trade secrets or other information protected by legal privilege or law. Similarly, the Act does not permit employees to disclose wage information to a competitor of an employer.
Pay transparency rules already exist under federal law. The National Labor Relations Act ("NLRA") has long protected the right of employees to discuss and compare wages amongst each other. Such discussions are generally considered to be protected concerted activity under the NLRA and cannot be restricted by employers. The Office of Federal Contract Compliance Programs adopted pay transparency rules in January 2016 that are similar to the new Maryland law and apply to most federal contractors.
Enhanced Remedial Provisions
The existing Equal Pay law entitles a successful plaintiff to recover the difference in wages paid to an employee of the other sex who performs the same type of work, an additional equal amount as liquidated damages, and attorneys' fees and costs of the suit. The Act:
• adds similar remedies for persons subject to discrimination based on gender identity.
• permits plaintiffs to seek injunctive relief.
• provides the same remedies for employees who establish violations of the new pay transparency provisions.
• extends the limitations period for an employee to bring a lawsuit. Under existing law, actions must be filed within three years after the wrongful act occurs. The Act extends the limitations period to three years after the employee receives wages upon termination. Under some circumstances this change will allow employees to file suit may years after an alleged unlawful payment practice takes place.
• provides for the recovery of prejudgment interest.
Equal Pay Commission
Governor Hogan also signed a law establishing an Equal Pay Commission that will be charged with eliminating pay disparities based on race, as well as sex and gender identity. The Commission is required to establish a mechanism to collect data from employers to assist it in its efforts to evaluate disparities and to develop a strategy to determine "best practices" regarding equal pay for equal work. The Commission will submit a report to the Governor by December 15, 2017 and each year thereafter.
Practical Employer Action
Employers should review their employment contracts, employee handbooks, and policies to determine if they contain provisions that violate the Act's new transparency provisions. Employers should consider whether to adopt a written policy which addresses these issues.
Equal pay issues are receiving increased scrutiny under both Maryland and federal law. Employers may want to examine pay differences in their workforce to assess their exposure to potential legal claims for disparities in pay based on sex or gender identity. Note that having an attorney direct an equal pay review may protect a report from disclosure under the attorney-client privilege.
If you have any questions about the new Equal Pay for Equal Work Act, please contact: