New York employers should be aware of various new laws that have been enacted with the stated purpose of protecting and furthering women's equality in the State of New York. These new laws impose a number of significant burdens on New York employers.
One of the more significant developments is the enactment of a law governing the disclosure of compensation information. Specifically, on October 21, 2015, New York State Governor Andrew Cuomo signed into law the Achieve Pay Equity Act (“APEA”). The APEA amends the State’s existing Equal Pay law (Section 194(1) of the New York Labor Law) in several significant ways. One particular change affects the ability of employers to require their employees to keep compensation information secret. This is intended to address the existing wage gap between men and women by making it easier for workers to discover potential pay discrimination and act upon that information.
Pay secrecy policies have long been prohibited by the National Labor Relations Act, 29 U.S.C. §§ 151-169 (the “NLRA”), as the statute has been interpreted by the courts and the National Labor Relations Board (“NLRB”).1 However, courts and the NLRB have also read several limitations into the NLRA. For example, as interpreted, under the NLRA an employer may restrict the disclosure of certain compensation information where a legitimate and substantial business justification outweighs its employees’ interests.2In addition, the NLRA does not cover “supervisors” and managers, and as such, even under the NLRA, employers may ban employees falling into those categories from discussing their wages. To address these limitations, beginning in the 1980s, several states, including California, Colorado, Connecticut, Illinois, Louisiana, Maine, Michigan, Minnesota, New Hampshire, New Jersey, Oregon, and Vermont, passed their own pay secrecy laws that include protections broader than those provided by the NLRA.
New York follows these other states in enacting its Achieve Pay Equity Act. Under its terms, the APEA restricts an employer from prohibiting an employee from “inquiring about, discussing, or disclosing” the employee's wages or the wages of another employee.3
Although drafted broadly, the law does include several limitations. For example, an employer is permitted to “establish reasonable workplace and workday limitations on the time, place and manner for inquiries about, discussion of, or the disclosure of wages,” and may prohibit employees from “discussing or disclosing the wages of another employee without such employee’s prior permission.”4 The employer must have a written policy in order to make use of these exceptions. If the employer does not have a written policy, the employer risks waiving its rights in this regard. In addition, even under the new law, an employer can prohibit those employees that have access to the wage information of other employees as part of their essential job functions (for example, an HR manager) from disclosing such information.5
Employers should review their existing policies and procedures to ensure that those policies are not in violation of the APEA. According to a recent study, over 60% of private-sector employees work in settings that formally prohibit or discourage discussing salary information.6 As such, it is expected that this law will have fairly broad impact. Employers may also wish to consider providing training to their managers to ensure that they do not promote a culture that discourages the discussion of compensation information. Finally, employers who wish to establish reasonable limitations on the discussion of compensation information should consider drafting new policies to address these matters. Any such policies should, of course, be drafted after consultation with an attorney to ensure that such policies do not run afoul of various state and federal protections and meet the requirements of the statute.
Bona Fide Factor Defense
In addition to pay secrecy amendments, the APEA also amends New York’s Equal Pay law by limiting an often-used exception to the law’s equal pay for equal work requirement.
Previously, under New York's Equal Pay law, equal pay was required for equal work except where the employer could show that the wage disparity was based on a “factor other than sex.”7 Following the enactment of the APEA, only “bona fide” factors can be used as an exception to the equal pay requirement.8 The statute lists “education, training or experience” as examples of bona fide factors.9 The statute further limits bona fide factors to those that (i) are not “based upon or derived from a sex-based differential in compensation,” (ii) are “job-related with respect to the position in question” and (iii) are “consistent with business necessity.”10 “Business necessity” is defined as a “factor that bears a manifest relationship to the employment in question.”11 Further, under the APEA even a bona fide factor will not serve as a defense to a wage disparity claim if the employee can demonstrate that (a) the employer uses a particular employment practice that causes a disparate impact on the basis of sex, (b) an alternative employment practice exists that would serve the same business purpose and not produce such wage differential, and (c) the employer has refused to adopt such alternative practice.12
It remains to be seen precisely what factors courts will interpret as bona fide for purposes of establishing a defense to a wage claim.
Finally, the APEA broadens the scope of the geographic region considered in determining whether employees are paid equal wages. Previously, the law required that employees working in the “same establishment” and performing equal work must be paid equal wages regardless of sex.13 The term “same establishment” was left undefined. Under the APEA, the term “same establishment” is now defined as “workplaces located in the same geographical region, no larger than a county.”14 Thus, employees may raise wage claims even where the comparator employees work in different cities, as long as both cities are based within the same county. The APEA does, however, allows courts to consider the “population distribution, economic activity, and/or the presence of municipalities” of the two locations in determining whether they constitute the “same establishment” under the law. Undoubtedly, this will trigger a slew of litigation involving the precise contours and factors to be considered in this determination.
At the same time that he signed the APEA into law, Governor Cuomo also signed a series of other laws aimed at protecting and furthering women’s equality in New York State. These new laws are summarized below.
Other Laws Protecting Women’s Equality
The End Family Status Discrimination Act adds “familial status” as a protected class within the New York State Human Rights Law (“NYHRL”).15 Under the amendment, employers may not discriminate against employees based upon their status as having a family. The amendment will prevent employers from discriminating against parents in the terms of employment, compensation, and privileges in employment. Further, employers will be prohibited from taking adverse action against employees based on their familial status. Importantly, the amendment prohibits employers from discriminating on the basis of familial status in the hiring process, meaning that an inquiry into an applicant’s familial status should be avoided.
The Protect Victims of Sexual Harassment Act amends the definition of “employer” within the NYHRL.16Normally, in order to be considered an “employer” under the NYHRL, an entity or person must employ at least four people. However, as of January 19, 2016, all New York State employers can be held liable for sexual harassment – including those with fewer than four employees. The amendment allows employees of even the state’s smallest entities to file a complaint with the state for sexual harassment in the workplace.
The Protect Women From Pregnancy Discrimination Act formalizes and clarifies the obligations employers must undertake to provide a “reasonable accommodation” to employees under the NYHRL.17 The amendment dictates that “pregnancy-related conditions” are to be considered temporary disabilities under the NYHRL and requires that employers make efforts to accommodate pregnant women so that they can perform the functions of their job. Such accommodations include modification of equipment, job restrictions, and modification of work schedules.
Finally, the Remove Barriers to Remedying Discrimination Act amends the NYHRL to allow employees subject to sex discrimination in the course of their hiring or employment to pursue otherwise costly litigation by shifting the attorneys’ fees and costs to the defendant employers upon bringing a successful claim.18 Previously, even successful plaintiffs were presumed to bear the costs of such litigation.
In the wake of these amendments, employers should review their existing policies, both formal and informal, to determine whether they are in compliance. For example, employers should modify any handbooks and other written policies and procedures that contain a blanket prohibition on the disclosure of compensation-related information. Further, supervisors and other managers should be educated and trained on reasonable accommodations as they relate to pregnant employees. We note that the cost-shifting amendment discussed above could result in increased costs to New York employers by making litigation of discrimination suits significantly more expensive, and that it may be worthwhile to consider implementing additional internal training to attempt to reduce litigation risk. In addition, those small employers who were previously exempt from the requirements of the NYHRL by virtue of having fewer than four employees may wish to consider taking action to implement appropriate EEO and anti-harassment policies and training to combat sexual harassment in the workplace.
The APEA and other laws went into effect on January 19, 2016.