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Posted May 15th, 2019 in Top Stories, Legal Insights with Tags

Colorado Joins Ranks of States Adopting Equal Pay Statutes

Employment Veena Iyer explains recent state and local pay equity statutes.

No area of labor and employment law has seen more state attention in the last two years than pay equity. California, New York, Massachusetts, and Maryland adopted legislation facilitating equal pay litigation and imposing additional regulatory requirements upon employers in 2017 and 2018. 2019 has already seen significant additional action in this area, with more on the horizon.

Initially, Oregon’s Equal Pay Act became effective January 1, 2019. The Oregon statute contains provisions similar to those found in California and New York, requiring equal pay for work of a “comparable character” – a standard that is deliberately designed to be broader than that under the federal Equal Pay Act. The Oregon statute covers ten protected classes, including gender. The Oregon statute allows employers to defend pay equity claims based upon specific enumerated factors, but does not allow employers a general “any factor other than gender” defense. In addition, the Oregon statute allows a “safe harbor” for employers to avoid or limit damages and penalties, but only if the employer performs an audit specifically tailored to Oregon’s statute. Employers would be well advised to conduct an Oregon-specific pay equity audit to limit their liability under the Oregon statute.

Second, Colorado’s legislature just passed the Equal Pay for Equal Work Act, and Governor Polis is expected to sign it into law in the very near future. The Colorado statute tracks the Oregon statute in many respects. Similar to the Oregon statute’s “comparable character” standard, that Colorado statute requires equal pay for “substantially similar work,” regardless of job title, and allows the employer to defend a pay difference only based on specified factors, which must explain the entire wage differential. Like the Oregon statute, the Colorado statute creates a safe harbor, but only if the employer conducts a compliant audit within two years before the filing of a lawsuit. The Colorado statute also has some unique requirements, including forcing employers to include salary ranges in all job postings, requiring employers to announce internal openings to all personnel on the same day, and strengthening records retention requirements. If signed, the law will not go into effect until January 1, 2021, but employers may require that amount of time to prepare to comply with its stringent requirements.

In addition, Maine recently passed a law prohibiting employers from asking applicants about their prior compensation. The Maine Act Regarding Pay Equality mirrors recent legislation in other states, prohibiting an employer from asking about salary history before the employer extends an employment offer. However, the Act but does not preclude an applicant from voluntarily disclosing prior salary information. There are now eight states that limit an employer’s ability to request information about salary history.

Such restrictions, however, are not limited to the state level. At the local level, the City of Cincinnati adopted an ordinance making it illegal for employers to ask applicants about their salary or to rely upon salary history in hiring decisions or determining compensation. Interestingly, the Cincinnati ordinance even bans an employer from relying upon salary information voluntarily disclosed by an applicant to make decisions – thus going farther than the Maine statute, or most other statutes and ordinances on the subject.

Additional equal pay legislation seems likely to be adopted in 2019. Illinois, New Jersey, Washington, and New Hampshire are all currently considering equal pay legislation. It is very likely that some, if not most, of these bills become law, further increasing an employer’s exposure to equal pay lawsuits at the state level.

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