Equal Pay Law Targets Gender Pay Gap
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New Equal Pay Law Targets the Gender Pay Gap

7/5/2017 | By: Julian S. Brod, Esq. | GDB 2017 Summer Newsletter
Elimination of gender inequality in the workplace has been an important public policy goal for decades. However, while sexual harassment, wrongful termination, and similar employment discrimination claims have been extensively litigated, pay equality claims have been comparatively rare.
All that may change in New York as a result of aggressive changes to New York’s equal pay laws, which went into effect last year. Part of Governor Andrew Cuomo’s “Women’s Equality Agenda,” the new law provides far more stringent protections than its federal equivalent, the Equal Pay Act. As a result, all employers should revisit their pay practices to ensure that they are compliant.
Key changes in the new law make it much harder to justify pay differentials among similarly situated employees. The new law also significantly increases the damages that an employee can recover—potentially including quadruple damages, in addition to attorney’s fees, and interest.  Because claims under New York’s equal pay law can be brought by both current and former employees and can be brought either individually or as class actions, the changes mean that employers face increased litigation costs, wider and more intrusive discovery, and much greater potential legal liability.
As a result, all employers should revisit their pay practices to ensure that they are compliant.

Key Changes to the Law

To make out a case of salary discrimination, an employee is required to show that: (1) the employer pays different wages to employees of the opposite sex; (2) the employees perform equal work on jobs requiring equal skill, effort, and responsibility; and (3) the jobs are performed under similar working conditions.  
The law provides a list of reasons that the employer can use to attempt to justify any differences in pay, including seniority, merit, and the use of a production-based systems to determine pay. Under the prior law, this list also included a broad catchall provision for “any factor other than sex,” which employers could use to justify differences in pay. 
The new law makes several key changes which strengthen the law and increase the damages that an employee can recover. 
First, the new law makes it much more difficult for employers to justify pay differentials between men and women on business grounds.  The law eliminates the broad catchall provision for “any factor other than sex” and replaces it with a narrower defense, under which the employer must demonstrate that it has relied on a “bona fide factor other than sex, such as education, training, or experience.” Moreover, it is not enough that this factor is “job-related,” it must be “consistent with business necessity”— a much more stringent standard.
Other changes add to the scope of the law. The new law imposes “disparate impact” liability on employers that choose a policy that results in a gender-based pay differential over an alternative that would serve the same business purpose without causing a pay differential. The new law also permits an employee to prove salary discrimination by comparing his or her pay with that of employees across all of the employer’s workplaces within the same county — not just the location at which the employee works. Both changes may significantly increase the scope and burden of discovery in the event of a lawsuit.
In addition, the new law ramps up the amount of damages that an employee may recover. The old law permitted an employee to recover the amount of the “underpayment” plus an equal amount of additional damages in the case of willful violations. Now, an employee who proves a willful violation may recover the amount of the underpayment plus additional damages equal to three times the amount of the underpayment. The employer must also pay a prevailing employee’s attorney’s fees, costs and interest.
Finally, the new law makes it unlawful to ban employees from discussing wages or salary. An exception to this rule permits employers to place reasonable time, place and manner restrictions on such discussions. The exception, however, is narrow, and any restrictions must be part of a written policy justified without reference to the content of the speech. 

The Take-Away

New York’s new equal pay law has implications for businesses large and small. Employers should review their pay practices to verify that they pay men and women an equal wage for equal work. Employers should also review their employee handbooks to ensure that they comply with the new rule on workplace sharing of salary information. Employers concerned about compliance with the new law should consult an employment attorney.