Compliance Trends to Watch Part II: Pay Equity

Our second in a two part series, this Tip focuses on our second hot trend to watch: Pay Equity. 

Pay Equity Laws.  Several jurisdictions are expanding and clarifying their laws that already prohibiting gender-based discrimination in pay, including restricting employers from making inquiries into an applicant's pay history during the hiring process, and prohibiting adverse employment actions against employees who discuss or inquire about the compensation of their co-workers.  The rationale for these provisions is that salary history inquiries perpetuate pay gaps, as does behavior that chills pay transparency.

Prohibitions on Salary History Inquiries. While pay equity laws differ amongst the jurisdictions, many of them prohibit employers from seeking compensation history from an applicant or his/her current or former employer before a conditional offer of employment is made. These jurisdictions include:

• Oregon (effective October 6, 2017)
• New York City, NY (effective October 31, 2017)
• Delaware (effective December 14, 2017)
• Massachusetts (effective July 1, 2018)
• San Francisco (effective July 1, 2018)
• Philadelphia (blocked due to pending litigation – watch for developments)

If you are covered by one of these laws, you should remove salary history questions from all application forms and train supervisors and hiring managers to avoid salary history questions during the pre-employment process. Note: Comprehensive Services sample employment application form no longer includes questions about pay history. This trend is expected to continue, so Comprehensive Services considers it a best practice for all employers to exclude this inquiry from their process even if they are not yet subject to an explicit prohibition.

Best Practices. Below are some general best practices for ensuring pay equity:

• Conduct internal audits. Consider working with legal counsel to conduct an internal audit of pay practices to confirm that employees working in similar positions are paid equitably based on skill, merit, and other nondiscriminatory factors.
• Examine policies and procedures. Review pay-related policies and procedures to ensure compliance with all applicable laws. Develop a clear written equal employment opportunity policy and include a complaint process for employees to raise concerns.
• Train supervisors. Provide training on the company's compensation-related policies and procedures and commitment to equal pay.
• Consider pay transparency. Clearly communicate how the company determines employees' compensation.
• Promptly respond to all complaints. Take all complaints seriously and conduct a prompt, impartial, and thorough investigation.
• Document. Confirm employment decisions are made for legitimate, nondiscriminatory reasons and properly document all pay and performance related decisions.