Hunton Employment & Labor Perspectives

One month into 2017 and new pay equity laws already are springing up.  Philadelphia is now the first city to prohibit employers from using pay history information in making employment decisions.  New York Governor Andrew Cuomo has issued executive orders mandating that: (1) agreements entered into by the state require contractors to report their employees’ pay information; and (2) state agencies can no longer use candidates’ current or prior pay in making employment decisions.  Likewise, the Mayor of New Orleans has now issued an executive order prohibiting city departments from asking job applicants about salary history and requesting a study of pay disparity among city employees.

Philadelphia

On January 23, 2017, Philadelphia Mayor Jim Kenney signed Philadelphia’s wage equity bill into law, making Philadelphia the first city to enact a law prohibiting employers from seeking or requiring a prospective employee’s wage history.  Massachusetts became the first state to enact such a prohibition in August 2016.

The law is based on findings that women in Pennsylvania are paid less than men, that women of color suffer from an even greater disparity, and that “basing wages upon a worker’s wage at a previous job only serves to perpetuate gender wage inequalities[.]”  Under the new law, employers and employment agencies are prohibited from inquiring about a prospective employee’s wage history, requiring the disclosure of a prospective employee’s wage history, or conditioning a prospective employee’s employment or consideration for an interview on the disclosure of that person’s wage history.  The law also prohibits employers and employment agencies from relying on compensation information received from a prospective employee’s current or former employer to determine that person’s wages “at any stage in the employment process, including the negotiation or drafting of any employment contract, unless such applicant knowingly and willingly disclosed his or her wage history[.]”  These prohibitions do not apply where a federal, state, or local law specifically authorizes disclosure or verification of compensation information for the purposes of employment.

Philadelphia employers and employment agencies also are prohibited from retaliating against a prospective employee for failing to comply with any request for wage information or for otherwise opposing any act made unlawful under the law.  Employers are required to post any notice of the law’s provisions prepared by the Philadelphia Commission on Human Relations “prominently, in any place of business where employment is carried on[.]”  Though an official poster has yet to be published, the Commission expects to have one ready by the time the new law takes effect on May 23, 2017.

Individuals can file a complaint with the Philadelphia Commission for any violation of the law’s provisions within 300 days of an alleged violation.  The Commission can then order injunctive or other equitable relief, compensatory damages, punitive damages not to exceed $2,000 per violation, and payment of reasonable attorneys’ fees and costs.  If the Commission dismisses an individual’s complaint or does not enter into a conciliation agreement to which the individual is a party within one year after the complaint is filed, the individual may bring an action in the Court of Common Pleas of Philadelphia County for relief, including attorney’s fees and costs.

New York

After enacting one of the most expansive pay equity laws in 2015, in January, Governor Cuomo continued New York’s reach into fair pay issues by issuing two executive orders on the topic, one requiring government contractors to report pay information and another prohibiting state agencies from requesting job applicants to provide prior compensation information before a conditional offer of employment has been made.

Executive Order No. 162 directs state agencies on or after June 1, 2017, to require contractors and subcontractors to provide a detailed workforce utilization report that includes the job title and salary of each employee of the contractor or subcontractor performing work on the government contract, or of each employee in the contractor’s or subcontractor’s entire workforce if the contractor or subcontractor cannot identify the individuals working directly on the contract.  The information must then be reported to state agencies and authorities on a quarterly basis for all prime contracts having a value in excess of $25,000 and on a monthly basis for all prime construction contracts having a value in excess of $100,000.  Under the order, the New York State Department of Economic Development is mandated to set the form and manner by which this information is to be communicated and report that form and manner to all state agencies and authorities by June 1, 2017.

Executive Order No. 161 prohibits state entities from asking prospective employees for their current compensation, or compensation history, until a conditional offer of employment that includes the compensation offered for that employment has been provided to the applicant.  Once an offer is made the entity may request compensation information and verify it.  If the state is already in possession of the applicant’s compensation information, the state entity is ordered not to rely on it in determining the applicant’s salary, unless required by law or a collective bargaining agreement.  Nothing in the order prohibits an applicant from providing his or her wage information voluntarily or impairs rights under a collective bargaining agreement.  Under the order, an applicant’s refusal to provide his or her wage history cannot be considered in making the employment decision.

New Orleans

New Orleans Mayor Mitchell J. Landrieu signed an executive order last week prohibiting its city departments from asking about an applicant’s salary history throughout the application and interview process.  The order also requests that the Civil Service Commission conduct a study of pay disparity among city employees, including an estimate of the cost to close any wage gap.  While the order does not apply to private employers, the action is purportedly part of a larger pay equity plan to be developed by the city with key strategic partners throughout the year.

These new developments make it clear that states and localities will continue to proffer their own individualized pay equity laws into 2017.  This series of new laws will create challenges for multi-location employers who seek a uniform pay practice throughout their organization.  Employers should regularly review their pay policies and consider engaging in an attorney-client privileged analysis of their employee compensation structure to ensure compliance with recent developments, particularly as the law continues to evolve.