Benefits and Compensation, HR Management & Compliance

Latest Congressional Action Putting Employer Pay Practices Under Scrutiny

With Congress considering a couple of bills aimed at preventing wage discrimination—and several states with pay equity laws already on the books—employers may want to take a close look at their compensation practices, according to attorneys who help employers with pay matters.

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The House on March 27 passed the Paycheck Fairness Act in a 242-187 vote. Just seven Republicans voted for the bill, which is expected to fail in the Republican-controlled Senate.

The bill would prohibit employers from inquiring about job applicants’ salaries or retaliating against employees who compare wages, and it would require employers to justify pay discrepancies. It also would make it easier for employees to file class-action lawsuits over pay discrimination and create a program providing training for women on negotiation.

Another bill intended to prevent gender pay inequity, the WAGE Equity Act, is being presented as an alternative to the Paycheck Fairness Act.

Remember, Equal Pay Is Already the Law

Even if no new federal legislation is passed, employers should remember that equal pay for equal work already is the law under both the Equal Pay Act of 1963 and Title VII of the Civil Rights Act of 1964, says Dina M. Mastellone, an attorney with Genova Burns LLC in Newark, New Jersey.

With pay practices coming under scrutiny, Mastellone says employers “should consider conducting a privileged pay equity review with legal counsel to ensure that their existing pay practices are in compliance with federal and state equal pay laws to avoid pay discrimination claims,” Mastellone says.

“Pay differentials (even if unintentional) can occur not only on the basis of gender but on the basis of other protected characteristics such as age, race, religion, ethnicity, and national origin,” Mastellone says.

“If, after performing an internal pay practice review, there is a pay differential, unfair or discriminatory pay differences must be immediately corrected,” Mastellone says. “This may include across-the-board pay increases, much to the chagrin of employers, because decreases in salaries are not permitted under most laws.”

Although the Paycheck Fairness Act isn’t predicted to become law anytime soon, Mastellone says employers should review and update their employment applications and train their recruiters, human resources personnel, and supervisors on the do’s and don’ts of conducting interviews.

To shield employers from liability for paying new hires based on how much they earned at their previous jobs, Mastellone suggests employers steer away from asking applicants to reveal their previous compensation and instead ask the safer question: What are your salary expectations?

“Employers may also be forced to limit the scope of their background and reference checks as well to ensure they are not eliciting pay history from job applicants,” Mastellone says.

‘Rigorous’ Pay Audit May Be Needed

John S. Gannon, an attorney with Skoler, Abbott & Presser, P.C., in Springfield, Massachusetts, says the biggest risk the Paycheck Fairness Act poses for employers would be noncompliant employment applications and managers asking prohibited questions during the application/hiring process.

“Plus, the section of the proposed law that would remove barriers to filing class actions would increase the risk of defending these costly lawsuits for employers,” Gannon says. But the bill does point out that pay disparity “is a very real thing and needs to be addressed by employers on multiple levels,” he says.

“The best way to find problematic pay discrimination gaps is to rigorously audit pay practices to be sure there is no wage discrimination between men and women in the workplace,” Gannon says.

Also, managers and supervisors need to be trained so they understand discrimination in pay and hiring won’t be tolerated and that they cannot retaliate against or discipline employees who discuss and compare wages, Gannon says.

Tammy Binford writes and edits news alerts and newsletter articles on labor and employment law topics for BLR web and print publications.