Boston lawyer discusses firm’s new pay equity practice group

During the 2016 campaign, pledges to make progress on pay equity were an oft-heard refrain.

But just because the election is over does not mean the issue is going away — not with Massachusetts, California, New York and Maryland recently enacting equal-pay laws and other states, including New Jersey and Oregon, set to follow suit.

Indeed, there is so much action on this front that the national labor and employment law firm Fisher Phillips recently announced the formation of its Pay Equity Practice Group, to be helmed by Cheryl Pinarchick, a partner in the firm’s Boston office, along with Kathleen McLeod Caminiti in New Providence, New Jersey, and Cheryl Behymer in Columbia, South Carolina.

New England In-House recently caught up with Pinarchick to learn more about the new practice group and the issues it will be dealing with.

NEIH: Why did Fisher Phillips decide to form the Pay Equity Practice Group?  

CP: The idea for the group was very organic. Many states, including Massachusetts, have recently enacted pay-equity statutes, and pay equity was a hot topic in the presidential campaigns. The more we started to look at the changes in the law and the rise of pay equity litigation, including class-action litigation, the more we realized our firm is particularly well suited to assist employers with pay-equity issues because of our experience conducting pay audits for federal contractors and handling FLSA class-action suits and pay-discrimination suits.

NEIH: How is the law on pay equity evolving?

CP: Equal-pay laws have been on the books in many states for decades. However, as we heard time and again throughout the presidential race, full-time women still earn an average of 79 cents for every dollar earned by men. Hillary Clinton pledged throughout her campaign to take action to close the gap. States are passing new laws, or changing existing laws, in an attempt to do that.

There is a lot of commonality in the laws being passed and some notable differences. One common feature of the new laws is the expansion of pay-equity laws to permit comparisons between employees who do “substantially similar” or “comparable” work, even if they don’t hold the same or substantially similar jobs, and limiting the factors employers can use to justify pay differentials, making it much easier for employees to show pay disparities.

Another common feature is requiring pay transparency, meaning employers can no longer prohibit employees from discussing compensation or inquiring about the compensation of other employees.

There are a couple of interesting nuances to the Massachusetts statute that are very different from the laws passed in the other states. In Massachusetts, beginning in July 2018 when the law becomes effective, employers are no longer going to be permitted to ask job applicants for salary histories prior to making an offer of employment.

However, in Massachusetts, unlike any of the other states, an employer will have the ability to limit their potential liability under the new law by completing a “self-evaluation of its pay practices in good faith” and “demonstrating that reasonable progress has been made towards eliminating wage differentials based on gender for comparable work.”

If an employer can show that it did both of these things, the employer is entitled to an affirmative defense to liability against claims of wage discrepancy or wage discrimination under Massachusetts state law for a period of three years following completion of the self-evaluation. This is a huge benefit for Massachusetts employers who take advantage of the safe harbor.  

NEIH: How are employers getting themselves in trouble with pay equity?

CP: Employers are getting themselves into trouble by assuming everything is fine. Studies show many pay disparities are the result of unconscious bias, not any conscious decision to pay men and women differently. Employers are often genuinely surprised that significant pay disparities exist within their organizations, and the reasons offered to justify those disparities may not be lawful.

NEIH: There reportedly has been a recent uptick in litigation over pay equity. Why do you think that is?

CP: I think the reason for the uptick has a lot to do with the spotlight shown on the issue of pay disparity during the presidential race and employees’ increased access to information through the internet and social media.

NEIH: Employers will soon be dealing with what has been described as “sweeping new reporting requirements” from U.S. Equal Employment Opportunity Commission. What will the impact of those requirements be?

CP: The interesting thing about the new EEO-1 reporting requirements is their potential to wreak havoc in an already changing litigious environment.

The EEOC collects workforce data from all employers with 100 or more employees through an annual EEO-1 report. The EEO-1 report has historically collected data about gender and race/ethnicity by job groupings. While the data itself is confidential, the aggregated data is made available to the public.

The new EEO-1 reporting requirements will require employers to provide salary and pay information. The EEOC’s goal in gathering this additional data is to identify businesses that may have pay gaps and then target those employers through enforcement actions.

The deadline for submitting the new report is March 1, 2018. However, what most employers don’t realize is that they will be required to report pay data on their reports beginning with Jan. 1, 2017, payroll data. As a result, employers have a limited opportunity to analyze their pay practices and correct any unlawful pay disparity before the pay data is disclosed to the EEOC.

NEIH: If you could offer employers one piece of advice on pay equity, what would it be?

CP: Don’t assume everything is OK. Conduct a pay audit, preferably with the assistance of counsel, and make changes now — before the new EEO-1 reporting requirements go into effect and before you get sued.