As seen on Forbes.com
As a national debate rages over equal pay in the workplace, New York is one of the latest states to broaden its pay equity law and ban employers from asking job candidates about their salary histories.
In a symbolic move, New York Gov. Andrew Cuomo signed the legislation into law on July 10, moments before joining a ticker-tape parade through New York City to celebrate the World Cup–winning U.S. Women’s National Team. The team is involved in its own fight for fair compensation after filing a lawsuit against the U.S. Soccer Federation, citing unequal earnings and working conditions.
While the pay gap between U.S. men and women has narrowed in recent years, women still earn about 15% less, according to the Pew Research Center, and that difference is driving efforts like New York’s to reach equal pay for all. For employers, these expanded laws should force hard looks at their own pay practices.
New and Expanded
New York lawmakers took several actions to close the gap, falling in step with other state and local laws across the country.
They expanded the state’s existing Pay Equity Law to require equal pay for “substantially similar work,” not just “equal work.” In other words, employers can no longer simply base compensation packages on, for example, a job title. They will need to look across various jobs and the skills, efforts and responsibilities required to ensure that all workers with “substantially similar” assignments are paid the same.
Legislators broadened the list of protected classes to include not just gender, but also gender identity and expression, race, sexual orientation, marital status, genetic characteristics and age, among others.
And they also spelled out how employers, in some cases, can pay workers with similar skills more. The new law states that any wage differential must be based on a seniority or merit system that measures the quantity and quality of work or other “bona fide factor,” such as education, training and experience, but not gender or a worker’s status in another protected class.
These new rules go into effect on October 8.
In a separate action, Cuomo signed another bill that bans employers from “requesting, requiring, or seeking” a job applicant’s or current employee’s salary or wage history. The ban, which takes effect January 6, 2020, aims to stop employers from justifying lower pay rates or small pay increases based on an applicant’s or employee’s previous earnings. That practice has perpetuated wage inequality because women have historically earned less than have men.
More to Come
New York is amongst the latest jurisdiction to act on the issue. Just this summer, salary history bans took effect in Suffolk County, New York, on June 30 and Washington state on July 28. More efforts to close the wage gap will come online in Alabama on September 1; Maine on September 17; Illinois on September 29; Kansas City, Missouri on October 31; Cincinnati on March 13, 2020; and Colorado on January 1, 2021.
It doesn’t end there. Lawmakers in Georgia, Iowa, Pennsylvania and South Carolina are considering similar measures. And local city councils could approve laws at any time should they feel that their states aren’t progressing quickly enough.
Here’s how employers should take action to comply with existing laws or prepare for new ones.
Pick a Strategy
Employers have a couple of options. They can choose a piecemeal solution where they comply with pay equity laws or salary history bans only in jurisdictions where they are in effect. Or, they could take a more holistic approach and simply take action to eliminate salary questions from the interview process and ensure employees are equitably paid across operations. A blanket approach to compliance will often put the employer in the best possible position in complying with jurisdiction-by-jurisdiction laws and will help the employer be prepared for any future regulations that may come about.
Consider the Third Parties
In many cases, these laws apply not just to employers, but also their agents, including third-party recruiting or staffing firms and background check vendors. An employer could be liable for that third party’s noncompliance with the law if the vendor asks a job candidate their salary history. Make certain any third-party vendor you work with understands the law and your policies and abides by them.
Spread the Knowledge
These new laws can require substantial changes to a company’s hiring practices and pay policies and require a mind shift for some supervisors who have spent decades asking job seekers, for example, how much they earn. That’s why it’s critical that employers circulate information about any updates to managers involved in hiring and salary decisions and regularly check in with them to ensure they’re complying.
Complete a Pay Analysis
Investigations should consider salary, wages, bonuses and incentives and root out and fix any discrepancies based on gender or race. These analyses have always been a good idea to shore up pay scales and protect employers against wage discrimination claims. But now, lawmakers are codifying them. In Colorado, for example, the pay equity law that takes effect in 2021 provides a safe harbor for employers who conduct proactive pay audits and remedy any pay discrepancies.
Lawmakers are embracing pay equity, and that means employers must get on board if they haven’t already. Now’s the time to tailor your own workplace policies and practices to ensure that all workers earn a fair and equitable wage based on their work product and skill, and nothing else.