Maryland?s Aggressive New Pay Law Goes Into Effect on October 1st: 5 Key Changes

On May
19, 2016, Maryland Governor Larry Hogan signed The Equal Pay for Equal Work Act
of 2016, bolstering the state’s protections against pay discrimination.  Maryland will officially join the ranks of
New York and California when this aggressive new pay law goes into effect on
October 1, 2016.

We have identified five key aspects of the new law that
employers with locations in Maryland should bear in mind:

  1. Maryland has
    prohibited pay differentials based upon an employee’s gender identity. 
  2. It is no longer just
    about compensation. 
    In addition to
    protecting against discrimination in pay, the new law forbids employers from
    providing “less favorable employment opportunities” based on employee’s sex or
    gender identity. This precludes employers from : assigning or directing an
    employee into a less favorable career track or position, if offered; failing to
    provide information about promotions or advancement in the full range of career
    tracks offered by employer;  and limiting
    or depriving employee of employment opportunities which would otherwise be
    available to employee but for employee’s sex or gender identity.
  3. Employees do not have
    to work in same establishment to be comparators.
     
    Maryland has expanded the pool of comparators
    beyond the “establishment” where an employee works to include employees who
    “provide work of a comparable character or work on the same operation, in the
    same business or of the same type” for the employer at workplaces in the same
    county
    of the state. 
  4. Maryland has
    instituted strong pay transparency and anti-retaliation provisions aimed at
    shielding employee discussions around pay.
     
     Employers may not prevent
    employees from (i) inquiring about, discussing, or disclosing wages to other
    employees; (ii) questioning employers about their wages; and (iii) aiding or
    encouraging other employees to exercise their rights under the new law.  Employers are prohibited from taking adverse
    action against employees for engaging in any of the aforementioned activities;
    nor may employers enter into agreements, which require employees to waive their
    rights to discuss or disclose wages.
  5. Employers must
    institute written policies in order to take advantage of the law’s affirmative
    defense
    .
      Under the law, employers
    may issue written policies prohibiting certain employees from discussing or
    discovering the wages of another employee without that employee’s permission (e.g., supervisors and those whose jobs
    directly reveals such information, such as payroll and HR, where the wage information
    was learned in the employee’s performance
    of  his/her job duties came from the employee’s performance of  his/her job duties).  Employers may also establish reasonable
    workday limitations of the time, place and manner for employee inquiries and
    discussions about pay, provided that the limitations are in writing and
    consistent with standards, yet to be issued by Maryland Equal Pay Commission,
    and with state and federal laws, including the National Labor Relations
    Act.  These written policies must be
    distributed to employees in order for an employer to utilize an employee’s
    failure to comply with these restrictions as an affirmative defense.

In addition to New York, California, and now Maryland equal
pay laws, employers should also be aware of a sweeping new pay equity
legislation, which was recently enacted in Massachusetts.  When that law goes into effect in July 2018,
Massachusetts will become the first state to restrict employers from requiring
that applicants disclose prior salary history. 

Next Steps

Given these tough new state laws, and the focus on
compensation collection and enforcement efforts by the Equal Employment
Opportunity Commission and the Office of Contract Compliance Programs,
employers should consider taking the following steps to ensure that their
compensation practices and pay differences are lawful and defensible.
 

  •  Conduct a comprehensive compensation compliance audit that
    includes: identifying the factors that influence compensation, conducting a
    statistical analysis of similarly situated employees, and thoroughly review
    their compensation policies, practices and procedures.  The assessment should be conducted under the
    guidance of experienced counsel in order to protect audit results under the
    attorney-client privilege;
  • Train all personnel involved in compensation decisions
    (hiring and raises) on the new legal requirements and standards; and
  • Ensure that all supervisors and HR understand the new pay
    transparency and anti-retaliation protections.

Please
contact your FortneyScott attorney if you have specific questions about the new
Maryland equal pay law, or if we can assist you with complying with the new
equal pay laws and regulations.