Pay equity laws: The latest trend
Many states are enacting laws to protect equal pay for equal jobs. It’s important for dentists who own practices to be aware of these laws so they do not do anything illegal when paying their staff members.
Eighty percent. That figure represents how much women earn compared to their male counterparts as of 2016. At the current rate of change, it will take many years until that gap is closed.
Some take issue with these statements and claim they’re not true. This article will not attempt to convince readers one way or another. A number of states have already decided they stand firmly in the “it’s true” camp and have taken matters into their own hands. That’s what should concern you as a dentist as it may impact you. States are applying new and more aggressive standards of which employers must be mindful.
State trend No. 1: Salary history ban
The new laws prohibit employer inquiries or reliance on a candidate’s prior salary history during the hiring process to set the candidate’s salary. This new stance goes beyond long-held beliefs that salary is a “factor other than sex” and can be used in the hiring process. These new laws will represent a change in how salary is negotiated in the states that have enacted this type of legislation.
In the bills in which this type of inquiry is prohibited, the thought process is this: if women are being paid less in jobs, whether intentionally discriminatory or not, using their pay from other jobs will perpetuate low salaries in future jobs. Therefore, the salary for the job and the offer to the candidate should be based on the job being performed—not what someone may or may not have earned with prior employers.
State trend No. 2: Broader protections
States are broadly defining the equal pay standard. Under the Federal Equal Pay Act, employers are required to pay employees “equal pay for equal work,” meaning pay equity for jobs similar in skill, effort, responsibility, working conditions, same establishment, and more.
Under new state laws, the standard may require equal pay for “comparable work” or “work of a comparable character.” It may also include comparison for employees in separate locations, or same geographic region, or within the same county. In other words, there is overall broadening of what can constitute pay discrimination. These laws also include new rules for justifying pay differences.
State trend No. 3: Pay transparency
Also wrapped up in these laws are more specific protections for employees to openly discuss their pay with one another. This is building upon the National Labor Relations Act (NLRA), which ends any questions about whether an employer can have wage secrecy policies. Employers cannot have these policies, no matter the state, and the consequences can be more significant with the state laws.
States with pay equity laws (as of the writing of this article)
- California: Effective January 1, 2016, 2017, and 2018
- Maryland: Effective October 1, 2016
- Massachusetts: Effective July 1, 2018
- New Jersey: Effective July 1, 2018
- New York: Effective January 19, 2016
- Oregon: Effective October 2017 and January 1, 2019
- Washington: Effective June 7, 2018
With a few exceptions, these laws focus primarily on gender inequality. This does not mean that other pay practices may not be illegal and cause problems. In general, the laws are there to ensure that everyone is treated without regard to protected characteristics.
While it remains to be seen how these new laws will shape the litigation landscape, it’s a good time to audit pay practices. Now more than ever employers need to ensure that their pay practices are based on objective criteria and are not discriminatory. Employers must focus on determining what the job is and how much it pays, regardless of how much someone made at a previous position.
The expansion of pay transparency means many employers with policies, in writing or not, that prohibit employees from discussing wages, benefits, or working conditions have a serious potential liability that should be remedied immediately. Consequences for failing to follow these new laws will be steep but avoidable if employers simply pay employees fairly and equitably regardless of race, gender, or other non-job-related characteristics.
Tim Twigg is the president of Bent Ericksen & Associates and Rebecca Boartfield is an HR compliance consultant. For more than 30 years, the company has been a leading authority in human resources and personnel issues, helping dentists successfully deal with ever-changing and complex labor laws. To receive a complimentary copy of the company’s quarterly newsletter or to learn more, call (800) 679-2760 or visit bentericksen.com.