Prohibiting Employee Wage Information Sharing and Other Dinosaurs

On March 23, 2018, Gov. Jay Inslee signed into law H.B. 1506, also known as the Equal Pay Opportunity Act (“EPOA”). The EPOA is effective June 7, 2018 and, if an employer currently has a policy that prohibits employees from sharing compensation information, that employer is well-advised to update its employment policies and employee handbooks to eliminate any existing prohibitions. An employee in Washington State will have the right to discuss his or her wages with any other employee. But this is just the beginning.

The EPOA is intended to correct the gap in wages and advancement opportunities between men and women, which persist in all areas of employment. In practical terms, the EPOA requires an employer to conduct a retrospective evaluation of its compensation patterns to determine whether there is a differential in compensation between employees who are “similarly employed.” The EPOA’s requirement that women be given equal opportunity for advancement, in my view, will require a similar analysis to ensure that advancement policies and practices do not favor male employees.

Employees are “similarly employed” when: (1) they work for the same employer; (2) performance of their jobs requires similar skill, effort and responsibility; and (3) the jobs are performed under similar conditions. The EPOA expressly states that an employer will not be able to rely on job titles alone when determining if employees are “similarly employed.” The legislature’s use of the word “similar” may prove problematic as courts begin to apply this concept.

An employer whose analysis discloses a compensation differential between male and female employees may be able to defend the differential if there is a bona fide job-related factor or factors. These factors must be consistent with business necessity and cannot be based on or derived from a gender-based differential. Factors that may be taken into account include education, training and experience, the existence of a seniority or merit system, and others (such as piece work). An employer bears the burden of proving that the factors used to explain an apparent compensation differential. The factors must also account for the entire differential.

When setting compensation, an employer is expressly prohibited from taking into account an employee’s wage or salary history. It is a common practice to inquire into an employee’s past wage level and base a compensation offer or decision on that history (formerly viewed as a “win-win” arrangement). This practice has been found to have a profound effect on keeping women’s wages well below those of a “similarly employed” male.

An employee can either file a claim with the state, which “shall” investigate the complaint, or file a civil lawsuit. An employer must be found to have committed “a pattern of violations as to the employee” or that the violation was caused by the application of a “formal or informal employer policy or practice.” So, pull out those employee handbooks and sharpen your pencils….

Not Like Fine Wine

How long has it been since you issued the all-important Employee Handbook? When was the last time it was updated? If you’re like most employers, it’s been a while. Left on the shelf it will not, Like fine wine, improve with age. Have you evaluated the hiring application used by your company? Chances are it has also gathered dust over the years without being updated. Yet the law shifts and changes, making some policies and procedures obsolete, and some even illegal.

Employee benefits, such as health care, are seeing significant changes with  implementation of ObamaCare (aka, the Affordable Care Act) and now with  changes being made by the Trump Administration. Employers should be evaluating whether their plans are or can be grandfathered, whether they are required to provide employees notice of health care exchanges and/or changes to the company’s health care plan to comply with the changes in the law. These matters are often addressed in Employee Handbooks, and an employer should be careful to make sure the information provided to employees is up to date.

Then there’s the social media privacy legislation that was signed into law by Washington Governor Gregoire. Do your device and internet use policies need to be changed? Are you using social media websites to “preview” job applicants? This could be evidence of discrimination if it is used to screen out people over the age of 40, for example.

Seattle employers, you should be aware of an ordinance which took effect way back on November 1, 2013 that prohibits employers from making hiring decisions on the basis of an applicant’s criminal history.

Washington courts have held that handbook language can confer contractual rights, significant care should be taken to ensure a handbook contains the proper disclaimers and appropriate conditional language. For example, including language that the handbook is not a contract or a guarantee of specific treatment in individual situations.

In short, an employer is well-advised to audit (or have an external audit) of its personnel policies, practices, and employee handbooks on a regular basis. If you need assistance, please contact Gail.Luhn@LuhnLawPLLC.com.