On September 10, 2015, the U.S. Department of Labor’s Office of Federal Contract Compliance Programs (OFCCP) published its final rule on pay transparency, setting a trend for states to enact legislation aimed at strengthening fair pay, pay transparency, and other legal protections in the workplace. We summarized the final rule in our October 7, 2015 article, “OFCCP Publishes Final Rule to Promote Pay Transparency.

On October 6, 2015, California Governor Jerry Brown signed the California Fair Pay Act, an initiative designed to close the gender wage gap in the state. The Act changes terminology to permit an employee to prove that he or she received lower wages for “substantially similar” work instead of “equal work” and also drops the requirement that wage discrimination claims be based on a comparison of the wages of male and female employees in the same establishment. The Act also prohibits employers from interfering with employees’ ability to discuss and share information about their wages.

On October 21, 2015, New York Governor Andrew Cuomo signed into law a number of bills, five of which are of particular importance to employers. The bills include a pay equity bill that, among other things, prohibits employers from discriminating against an employee who inquires about, discusses, or discloses his or her wages or the wages of another employee and narrows the exceptions available to employers under a state law that prohibits differentials in rate of pay due to sex.  

These recent state actions, coupled with the publication of OFCCP’s pay transparency rule, signal increased momentum in the movement toward openness and equality in compensation.

The California Fair Pay Act has been touted by many as the strictest equal pay law in the country, and there is no doubt that OFCCP will be watching the implementation and implications of both states’ pay equity laws. Federal contractors and subcontractors should expect more enterprise-wide reviews of compensation and the possibility that OFCCP may attempt to have employers justify pay disparities despite differences in facility size or location.