Published in Business NH Magazine (April 2018)
The Women’s March is a reminder to all NH employers to be vigilant regarding policies and practices impacting women’s civil rights and worker’s rights, including freedom from harassment in the workplace and equality in pay. The #MeToo Movement has called on women to expose sexual harassment in the workplace and sexual violence. One outcome of the movement has been businesses reviewing anti-harassment policies and training, and company culture. Equality in the workplace also includes equality in pay. Employers are well advised to understand their legal obligations to ensure that women are being paid equitably in the workplace and to take remedial measures, if needed.
State Pay Equality Laws
All NH employers are covered by NH’s Equal Pay law, RSA 275:37, which was enacted on January 1, 2015 and prohibits employers from paying workers less for equal work based on their sex. The law provides exceptions to that requirement if the difference in pay is because of: a seniority system; a merit or performance-based system; a system which measures earning by quantity or quality of production; expertise; shift differential; or a demonstrable factor other than sex, such as education, training, or experience. For example, it would not be a violation of the law if a store paid its male cashier a higher hourly rate than its female cashier because the male cashier had more experience as a cashier. The key is that the store has to be able to document the reason for the higher pay in the event that its pay practice is challenged.
NH has joined many other states by making it illegal for employers to prohibit employees from disclosing the amount of their wages, salary or paid benefits and for employers to discipline or fire employees for doing so.
The law also contains an non-retaliation provision making it illegal for an employer to fire or discriminate against an employee for invoking his or her rights, which includes making complaints or causing an investigation. To avoid a claim of retaliation, employers should be cautious when terminating an employee who has recently complained about her belief that she is not being paid fairly or has disclosed her wages or those of another employee. If an employee prevails at the NH Department of Labor on a claim the employer violated this law, the employee will recover unpaid wages and liquidated damages.
Federal Law
Federal laws also prohibit pay inequality and discrimination in pay based on gender. The Equal Pay Act (EPA) of 1963 covers all employers and requires that men and women be given equal pay for equal work in the same establishment. The jobs do not have to be identical, but they must be substantially equal.
Compensation includes salary, overtime pay, bonuses, stock options, profit sharing, bonus plans, life insurance, vacation pay, cleaning or gasoline allowances, hotel accommodations, reimbursement for travel expenses, and/or benefits. Exceptions to the rule are nearly identical to those under NH’s Equal Pay law.
An employee who alleges a violation of the EPA can go directly to court and is not required to file an EEOC charge beforehand. The employee could receive damages for lost back pay, attorney’s fees and liquidated damages. In addition to a claim under the EPA, an employee might have a claim under Title VII which also makes it illegal to discriminate based on gender in pay and benefits. It is important to note that in order for an employee to bring a claim under Title VII, she must work for an employer with 15 or more employees.
However, employers should be mindful that NH’s Anti-Discrimination law which also covers discrimination based on sex related to pay covers employers with 6 or more employees.
Claims under Title VII and NH’s Anti-Discrimination laws have a more relaxed standard because comparisons can be made between the compensation rates of “similarly situated” employees. For example, a female employee could allege that her compensation was lower than similarly situated male employees. An examination of the relevant employees’ compensation would take place and the employer would have to present legitimate non-discriminatory reasons for any pay disparities.
Remedial Measures
Given heightened awareness regarding inequality in pay, employers should take measures now to ensure compliance while not under the shadow of a complaint or litigation. Prior to taking any measures, employers should consult with employment counsel in order to develop a strategy that includes possible use of attorney client privilege.
Proactive measures include reviewing hiring documents, handbooks, and other policies to ensure that any language that bans or discourages employees from disclosing their terms of compensation is eliminated.
Employers should review their compensation system including pay structure, starting pay policies, merit pay increase policies, and promotional pay increases to understand the degree of managerial discretion.
If performance evaluations affect wages, then employers should review that process and the extent to which managers are allowed to exercise discretion in compensation decisions. The higher the degree of managerial discretion, the higher the risk for challenge under anti-discrimination laws.
An audit of pay practices will also reveal any pay disparities that may require correction. It is essential to remember that when making corrections to pay, employers are prohibited from reducing an employee’s wages to comply with the equal pay law. The wages of the lower paid employee must be increased.
Finally, transparency in pay practices will counteract employee perception of inequality in pay and will positively affect the company’s reputation in the community resulting in stronger bottom-line results.
Laws related to equal pay have been in place for many years, however employers often lose touch with pay practices that are being implemented by their managers, with little or no central oversight. Those practices, based in large part on discretionary criteria create a high level of risk to employers and can result in inequitable wages for women.
Beth Deragon, an attorney in the Employment Law Practice and Litigation Group at the law firm of McLane Middleton, can be reached at beth.deragon@mclane.com or at (603) 628-1490.