April 4 Tip of the Week

“Beware the Salary Discussion Trap”

            Pay equity has long been an issue in the workplace.  “Equal pay for equal work” was the goal of the Equal Pay Act that was passed in 1963.  The implementation of this law, however, has not achieved its goal.  According to the Pew Research Center, women currently earn 84% of what men earn.  The gender pay gap has been closing, but women are still earning less than men in the workplace. 

            The reasons for this variation in pay for men and women are wide-ranging.  Some attribute the difference in the pay rates between men and woman to the different jobs held by men and women, recognizing that jobs that are traditionally held by women are paid less.  Others have alleged that the fact that women often take extended leaves from work for both maternity leave and to care for elderly parents are a reason for the pay gap.  Still others have placed the blame for these pay discrepancies on differences in education, training, and even the ability to negotiate a salary.  Whatever the reason, the fact still remains that, overall, men earn more than women. 

            Attempts continue to be made to legislate pay equity.  The federal government is considering the Paycheck Fairness Act, which is designed to address situations that are believed to contribute to pay inequality.  One method traditionally used by employers to avoid equal pay claims is to prohibit employees from discussing or disclosing their salaries.  The Paycheck Fairness Act would have prevented employers from retaliating or taking action against employees who share their pay information.  The Paycheck Fairness Act also attacked the “factors other than sex” defense and increased the burden on employers to show the business necessity of pay practices that negatively impact women.  Finally, the Act included additional provisions regarding class action status, remedies, and other enforcement mechanisms that would make it easier for women to prevail in pay equity cases.  While the House of Representatives passed this legislation, it was not passed by the Senate and its future is in question. 

            Despite the unsuccessful federal legislation, many states and localities have taken steps to restrict an employer’s salary related inquiries from job applicants.  One of the causes for lower pay for women was thought to be their salary history – women who have taken leaves of absence or started in lower paying jobs would have lower salaries when they applied for a position.  That lower salary often meant that the starting salary offered to the female candidate was less than that offered to a male candidate who came from a higher paying position.  These salary differentials would then persist throughout the female employee’s career.  In an attempt to level the playing field, the following states have passed legislation prohibiting salary history inquiries for all private employers:  Alabama, California, Colorado, Connecticut, Delaware, District of Columbia, Georgia, Hawaii, Illinois, Maine, Maryland, Massachusetts, Nevada, New Jersey, New York, Oregon, Rhode Island (effective January 1, 2023), Vermont, and Washington.  Certain cities have passed ordinances which also prohibit prospective employers from inquiring about an applicant’s salary history.           

  MyHRcounsel can assist you in determining what rules apply in the states and cities where you conduct your business and can ensure that you do not run afoul of these laws.