Maryland's 2016 General Assembly session has now adjourned. Maryland employers should be aware of the following new laws resulting from this legislative term: (1) Equal Pay for Equal Work; (2) Equal Pay Commission; (3) Hiring and Promotion Preferences – Veterans and Their Spouses; and (4) Maryland Small Business Retirement Savings Program and Trust.
In addition, those employers in Montgomery County should remember that the county’s paid sick leave act goes into effect beginning October 1, 2016. Finally, Maryland employers should recall that the minimum wage will increase in Montgomery County and Prince George’s County on October 1, 2016, and, for the remaining counties, on July 1, 2016.
Equal Pay for Equal Work
On May 19, 2016, Republican Governor Larry Hogan signed into law the Equal Pay for Equal Work bill (SB 481/HB 1003), which expands Maryland’s Equal Pay for Equal Work law to prohibit wage discrimination based on gender identity. Notably, the law also forbids Maryland employers from prohibiting employee inquiries, discussions, or disclosures of their wages, as explained below.
First, the law prohibits employers from providing less favorable employment opportunities—in addition to disparate wages—to employees based on the employee’s sex or gender identity. The law defines “providing less favorable employment opportunities” as:
- Assigning or directing the employee into a less favorable career track, if career tracks are offered, or position;
- Failing to provide information about promotions or advancement in the full range of career tracks offered by the employer; and
- Limiting or depriving an employee of employment opportunities that would otherwise be available to the employee but for the employee’s sex or gender identity.
In short, the law provides that Maryland employers may not discriminate between employees in any occupation by paying a wage to employees of one sex or gender identity at a rate less than the rate paid to employees of another sex or gender identity if both employees work in the same establishment1 and perform work of comparable character or work on the same operation, in the same business, or of the same type.
The law as previously enacted provided for exceptions for variation in wages based on: (1) a nondiscriminatory seniority system, (2) a nondiscriminatory merit increase system, (3) jobs requiring different abilities or skills, (4) jobs that require regular performance of different duties or services, and (5) work performed on different shifts or at different times of day. The 2016 amendments expand an employer’s defenses to include: (6) a system that measures performance based on quality or quantity of production, or (7) a bona fide factor other than sex or gender identity, including education, training, or experience, if the factor: (a) is not based on or derived from a gender-based differential in compensation; (b) is job-related with respect to the position and consistent with a business necessity; and (c) accounts for the entire differential.
Second, the law prohibits an employer from taking an adverse employment action against an employee who inquires about, discusses, or discloses his or her own wages or the wages of another employee, if those wages have been disclosed voluntarily. Employees who have regular access to wage information do not have the protections of this law, unless they obtain the wage information outside of their normal duties. An employer, however, may, in a written policy, establish reasonable workday limitations on the time, place, and manner for inquiries about or the discussion or disclosure of an employee’s wages. (The National Labor Relations Act may preempt this section of the law).
Equal Pay Commission
The General Assembly also established, through HB 1004, the Equal Pay Commission in the Division of Labor and Industry. The Commission, which becomes operative on June 1, 2016, is charged with the following responsibilities:
- Evaluating the extent of wage disparities in the public and private sectors in Maryland between individuals of one race, sex, or gender identity and individuals of another race, sex, or gender identity.
- Establishing a mechanism for the Commissioner of Labor to collect data from employers in Maryland to assist the Commission in its efforts to evaluate the disparities.
- Developing a comprehensive strategy to determine and recommend best practices regarding equal pay for equal work to individuals, employers and policymakers.
- Studying and making recommendations regarding whether and to what extent administrative and legal processes and remedies can be streamlined within the antidiscrimination laws.
- Developing partnerships with private sector entities and other public sector entities to identify data collection methods, methods of outreach and awareness, and potential funding sources.
- Sharing data and findings with the Commissioner to assist in enforcement of the above actions.
On or before December 15 of each year (2017 and thereafter), the Commission must submit a report to the Governor, the Senate Finance Committee, and the House Economic Matters Committee regarding any findings and recommendations, including any recommended legislation. The report will be based, in part, on data collected from Maryland employers.
The Commission will comprise the Secretary of the Department of Labor, Licensing and Regulations (or designee), the Commissioner (or designee), the Executive Director of the Maryland Commission of Civil Rights (or designee), three representatives from businesses in the state nominated by statewide business organizations, two representatives from labor unions, two representatives from organizations whose charge it is to eliminate pay disparities, and three representatives from higher education and research institutions who have experience and expertise collecting and analyzing data on pay disparities.
Hiring and Promotion Preferences – Veterans and Their Spouses
Effective October 1, 2016, Maryland employers may grant a preference in hiring and promotion to an eligible veteran, the spouse of an eligible veteran who has a service-connected disability, or the surviving spouse of a deceased eligible veteran. Granting a preference to a veteran or spouse under this law will not violate any state or local equal employment opportunity law.
Maryland Small Business Retirement Savings Program and Trust
Effective July 1, 2016, all Maryland employers who use an automatic payroll system and do not have an employer-sponsored retirement plan for their employees must participate in a state-run retirement savings program for private sector employees. All companies who participate in the program or have an employer-sponsored retirement plan will receive a waiver for their $300 business filing fee.
The law establishes the Maryland Small Business Retirement Savings Board to implement, maintain, and administer the Program and Trust. The Board will consist of the State Treasurer (or designee), the Secretary of Labor, Licensing, and Regulation (or designee), and nine members with expertise in retirement programs and benefits, investments, financial systems and controls, or small business (equal number appointed by the Governor, President of the Senate, and Speaker of the House of Delegates).
The Trust will be administered by the Board for the purpose of promoting greater retirement savings for Maryland private sector employees in a convenient, voluntary, low-cost, and portable manner. Any contributions paid by employees into the Trust may be only used to (1) pay benefits to the participants of the Program, (2) pay the cost for administering the Program, and (3) make investments for the benefit of the Program.
The Act defines “covered employer” as a person engaged in a business, an industry, a profession, a trade, or any other enterprise in Maryland, whether profit or not for profit, that (1) pays the covered employer’s employees through a payroll system or service. “Covered employee” is defined as an individual who is employed by a covered employer, but does not include (1) those covered under the federal Railway Labor Act or those engaged in interstate commerce so as not to be subject to the legislative powers of Maryland, (2) employees eligible to participate in a qualifying retirement plan, (3) employees covered by a valid collective bargaining agreement that expressly provides for a multi-employer retirement plan, or (4) employees who are under the age of 18 before the beginning of the calendar year.
Once the Program is open for enrollment, covered employers must establish a payroll deposit retirement savings arrangement to allow employee participation in the program. A covered employer must automatically enroll a covered employee in the program, unless the employee elects to opt out. Unless otherwise specified by the employee, a participating employee shall contribute a fixed percentage or dollar amount, which shall be set and may be adjusted by the Board, of the employee’s salary or wages to the program. If a covered employer is not in compliance, the covered employer may not receive a waiver of the business filing fee.
Employers will not be held liable for:
- An employee’s decision to participate in or opt out of the Program.
- The investment decisions of employees whose assets are deposited in the Program.
- The administration, investment, or investment performance of the Trust or the Program.
- The Program design or the benefits paid to Program participants.
Montgomery County Paid Sick and Safe Leave Ordinance
Employers in Montgomery County should remember that beginning October 1, 2016, they must provide most employees in the county with up to 56 hours of paid sick and safe leave. All private businesses and individuals (as well as the county government) who employ one or more persons to work within the county are covered by the Paid Sick and Safe Leave ordinance. All employees are covered (including domestic service workers), except for:
- Individuals who: (a) do not have a regular work schedule with the employer; (b) contact the employer for work assignments and are scheduled within 48 hours after contact; (c) have no obligation to work for the employer unless they initiate contact; and (d) are not employed by a temporary placement agency;
- Individuals who regularly work eight or fewer hours each week; and
- Independent contractors.
Sick and safe leave is earned for all work performed in the county. Employers with five or more employees must provide at least one hour of paid leave for every 30 hours worked, not to exceed 56 hours of earned paid leave in a calendar year. Employers with fewer than five employees must provide leave at the same rate – one hour for every 30 hours worked – and up to 56 hours of leave per year. However, for these small employers, only 32 hours must be paid and 24 hours can be provided on an unpaid basis.
The accrued but unused leave at the end of the year must be carried over to the next calendar year, up to the annual carryover cap of 56 hours. Employers may limit the use of paid leave (or the combination of paid/unpaid leave for small employers) to 80 hours per year. Employees may elect to use leave in the smallest increment available under the employer's payroll system and must not be required to take leave in increments of more than four hours. Earned leave does not have to be paid upon termination.
Minimum Wage Increase
The state’s minimum wage will increase from $8.25 to $8.75 on July 1, 2016. For those employers in Montgomery County and Prince George’s County, though, the county’s minimum wage will increase from $9.55 to $10.75 on October 1, 2016.
What Should Maryland Employers Do Now?
In light of these legislative changes, Maryland employers should consider the following steps:
- Evaluate pay scales to ensure pay equity or to confirm that any disparity falls into one of the enumerated defenses.
- Review handbooks and policies for compliance with the new mandates allowing wage discussions in the workplace.
- Become familiar with the Maryland Small Business Retirement Savings Program and Trust.
- Montgomery County employers should work with counsel to ensure they are in compliance with the paid sick and safe leave requirements starting October 1, 2016.
- Ensure compliance with both state and county minimum wage increases.
- Educate and train managers and supervisors on the new laws.