Seeking to strengthen pay equity laws in New York

January 27, 2022 - Though decades have passed since equal pay legislation was first introduced, significant pay inequity persists across gender, race, ethnicity and other protected characteristics. According to the National Women's Law Center, women in New York typically make 88 cents for every dollar paid to men. For Black women, it's 65 cents, and for Latina women, it's 56 cents.

The pay gap compounds and follows these individuals throughout their careers and into retirement. The reasons are complex and the barriers to equity involve sociological, historical and even psychological causes. However, imposing financial and other legal burdens on employers can certainly be a deterrent to discrimination, and New York is and has been taking this approach seriously for over a decade. New York City law has recently given us added protections as well.

Recognizing that pay inequity affects more than gender, the New York State Equal Pay Law (NYSEPL) now broadens the protections to mandate equal pay, not just on the basis of sex, but also race, national origin, age, creed, sexual orientation, gender identity, among others. By contrast, the federal Equal Pay Act ("EPA") only prohibits unequal pay on the basis of sex.

<b>Current laws enforcing pay equity</b>

New Yorkers are protected by various laws that enforce employees' right to equal pay. The EPA requires employers pay men and women in the same establishment equal pay for substantially equal work. The NYSEPL, which mirrored the federal law until 2019, goes further; prohibiting unequal pay between individuals performing "substantially similar work" when considering skill, effort, responsibility, and working conditions.

Both laws allow employees to take legal action against their employers who retaliate against them for opposing pay discrimination. Employees have two years to bring claims under the EPA (three years if the violation was willful). Employees bringing claims under NYSEPL have six years. New Yorkers may also utilize federal, state, and city laws that prohibit compensation discrimination.

<b>Meaningful changes to protect employees</b>

The NYSEPL underwent significant amendments in the past decade to broaden the scope of its protections. In 2015, the NYSEPL limited the defenses an employer can use to justify a pay differential. Before, a New York employer would have to establish that the difference in pay was based on seniority, merit, quantity or quality of production, or on any factor other than sex. Now, employers can no longer use the "any factor other than sex" defense and instead have a higher standard to prove that the difference is based on "a bona fide factor other than sex, such as education, training and experience" and the bona fide factor "shall not be based upon or derived from a sex-based differential in compensation."

The law also allows employees to overcome this defense by showing that (a) the practice causes a disparate impact on the basis of sex, (b) an alternative employment practice exists that would serve the same purpose (c) the employer has refused to adopt the alternative practice. The law also increased the amount of damages if an employer willfully violates the law, to 300% of wages owed.

The 2015 amendments also expanded the definition of "same establishment" to include not just the individual's physical place of work, but now includes individuals in the "same geographic region, no larger than a county, taking into account population distribution, economic activity, and/or the presence of municipalities." Prior to the amendment, and like the EPA, plaintiffs would have to establish that their employer paid them unequally to individuals in their same workplace.

To break the cycle of unfair pay that follows individuals from job to job, the NYSEPL was also amended in 2019 to ban employers from asking prospective or current employees about their salary history, relying on a prospective employee's salary history when determining compensation, and retaliating against anyone who refuses to share their salary history or raises complaints. New York City also enacted a similar salary history ban in 2017. These changes are crucial steps in eradicating practices that systematically depress wages for women and people of color.

In an effort to further narrow the gap, additional amendments in 2015 sought to make compensation transparent and imposed legal obligations and liability on companies that enact policies or take actions that enable pay secrecy. The amendments prohibit employers from restricting their employees' ability to inquire or discuss wages with their co-workers and make it illegal for employers to enact policies that prohibit discussions around pay. Because many employees learn about pay gaps from others in their workplace, that knowledge can empower them to take appropriate action to remedy their pay.

While opponents have argued that transparency could lead to employee resentment and attrition, a 2019 report found that 58% of employees would consider switching jobs for more pay transparency, and for Gen-Z, the number is 70%, signaling that this is an important value among younger generations.

Going even further, a new law taking effect in May 2022 will require New York City employers to post a job's salary range "from the lowest to the highest salary the employer in good faith believes at the time of the posting it would pay for the advertised job, promotion or transfer opportunity." NYC Admin. Code 8-107 (32). Employers who fail to post the salary ranges for New York City-based roles will be considered to be engaging in discriminatory practices.

While other states and localities have enacted laws requiring employers to provide pay information upon an applicant's request, Colorado is the only state requiring employers to include salary ranges in job postings.

New York State has also proposed similar legislation requiring "employers to disclose compensation or range of compensation, a job description, and benefits either for a new employment opportunity, or for an existing employee." Senate Bill S5598B. The proposed bill notes that because "salary decisions are made in the dark, implicit or overt biases continue to shape hiring and salary setting decisions, artificially depressing wages for women and people of color. Meanwhile, lower-wage workers, including those most impacted by the COVID-19 pandemic, lack the information and leverage needed to negotiate fair salaries to escape these discriminatory practices."

These laws could be game changers for prospective employees; gender pay equity studies revealed that when job applicants are clearly informed about compensation, benefits, or other negotiable factors, women are more willing to negotiate and more successful in negotiating.

<b>COVID-19’s impact</b>

Before the pandemic, studies showed that the gender pay gap was narrowing, albeit slowly, between men and women. However, it is no secret that women in every industry have disproportionately struggled during the COVID-19 pandemic. McKinsey & Company reported that women, especially women of color, were more likely to have lost their jobs during the pandemic. McKinsey & Company and LeanIn.org, "Women in the Workplace - 2020."

Women still employed have impossibly juggled their jobs with household and family obligations. As a result, one in four women in the United States are now thinking about slowing down their careers or leaving the workforce altogether. This phenomenon, coined the "shecession," acknowledges how job loss and unemployment have affected women during the pandemic. The fact that so many women have been forced to leave the workplace is a development that could undo years of progress.

Further, a majority of the 34 million "essential" workers in the country are women who occupy traditionally female-dominated industries such as health care, education, and retail. Despite the fact that women are largely represented in these essential roles, the U.S. Census Bureau reported that the disparity between total median earnings for women and men exists across occupations deemed essential. Lynda Laughlin and Megan Wisniewski, "Women Represent Majority of Workers in Several Essential Occupations," United States Census Bureau (March 23, 2021).

<b>Ongoing efforts to narrow the gap</b>

Studies show that the availability of paid family and sick leave aids in closing the gender pay gap. Megan Leonhardt, "Funding paid leave and child care narrows gender wage gap, says new report," Fortune.com (Sept. 29, 2021). New York's Paid Sick Leave law was expanded throughout the pandemic to allow for job protection and leave due to COVID-19 and to care for a family member. Further, New York's Paid Family Leave law, considered one of the most progressive in the country, allows eligible workers to take up to 12 weeks of leave at 67% of their pay, up to a state-mandated cap, to care for such family members. Recently, New York State Governor Hochul signed a bill expanding the law to broaden the definition of "family member." New York can and will continue to broaden these protections to ensure workers have the flexibility to care for themselves and loved ones without risking their jobs.

The remote workplace also provides an opportunity for employers to be more flexible, which will ultimately help women and families and may ultimately narrow the pay gap. A 2020 study by the National Bureau of Economic Research has shown that "the rise in work flexibility during a pandemic recession is likely to be persistent, and disproportionately benefits women who have major childcare responsibilities." Titan Alon, Matthias Doepke, Jane Olmstead-Rumsey, Michele Tertilt, "This Time It's Different: The Role of Women's Employment in a Pandemic Recession," National Bureau of Economic Research (August 2020).

Using a "quantitative analysis, these changes imply that a pandemic recession ultimately reduces the gender wage gap, although it takes many years to fully make up for women's initial skill losses," the study states.

A shift to a remote workplace could also lead to a shift in the law. While NYSEPL has mandated equal pay for individuals within the "same establishment," defined as no greater than a county, New York could go further and eliminate the "same establishment" requirement entirely, as California has, and allow individuals to bring equal pay claims for equal or similar work performed, regardless of location.

<b>Conclusion</b>

While there is still significant work to do, New York has shown that it is dedicated to closing the gap and has provided protections far greater than federal and other state laws. Despite some of the pandemic-related speed bumps, ongoing efforts through new and expanding current legislation will allow the state to move forward toward closing the pay gap.

Moreover, pay transparency is an important step to achieving this, which does not necessarily mean that every individual's salary will be known to all in the workplace. It can be as simple as employees gaining insight into their employer's pay practices and policies and arming them with the knowledge to ultimately negotiate fairer pay and fight discriminatory compensation.