Washington State has joined the ranks of jurisdictions that have adopted expanded equal pay legislation.1 The Equal Pay Opportunity Act (EPOA) was signed into law on March 21, 2018, and will take effect on June 7, 2018.2 The EPOA significantly expands Washington’s existing gender pay law for the first time since its enactment in 1943.3

Employers Covered by the New Law

The EPOA applies to all employers that employ any employees in the State of Washington.

Employers’ Compensation Obligations

The EPOA prohibits discrimination in compensation between “similarly employed” employees. Individuals are similarly employed if: (1) they work for the same employer; (2) the performance of the job requires similar skill, effort, and responsibility; and (3) the jobs are performed under similar working conditions. Job titles are not determinative.

The EPOA prohibits discrimination in the payment of discretionary and nondiscretionary wages as well as employment benefits.

Discrimination does not include differentials in wages based in good faith on a bona fide job-related factor or factors that: (1) are consistent with business necessity, (2) are not based on or derived from a gender-based differential, and (3) account for the entire differential. Such factors may include education, training, experience, a seniority system, a merit system, a production-based earnings system, or regional differences in compensation levels, including differentials based on local minimum wage ordinances. An individual’s previous wage history is not a defense.

The EPOA prohibits discrimination on the basis of “gender,” rather than “sex,” and does not restrict its application to discrimination against women.

Other Employer Obligations

The EPOA also prohibits employers from limiting or depriving employees of “career advancement opportunities” on the basis of gender. A bona fide job-related factor, as defined above, is a defense, except that regional differences do not justify limitations on career advancement opportunities. The EPOA does not define “career advancement opportunities.”

Additional Prohibited Acts

Under the EPOA, employers cannot prohibit employees from disclosing their wages. However, an employer may prohibit employees who have access to other employees’ compensation as part of their essential job functions from disclosing the wages of other employees, unless disclosure is required for a complaint, charge, or investigation.

The EPOA also prohibits employers from retaliating against employees for discussing their wages, asking the employer to explain their wages or a lack of opportunity for advancement, filing a complaint or testifying in a proceeding under the EPOA, or aiding or encouraging other employees to exercise their rights.

Enforcement and Remedies for Violations

An EPOA violation occurs when a discriminatory decision or practice is adopted, and each time discriminatory compensation is paid or another discriminatory practice is applied to an employee. Employees have two options for enforcing their rights under the EPOA. An employee may file a complaint with the Washington State Department of Labor & Industries (L&I). If L&I determines that there has been a violation after investigating the complaint, it must first attempt to resolve the issue with the employer by agreement. If it is unable to resolve the complaint by conciliation, L&I may issue a citation and order the employer to pay actual damages, statutory damages equal to actual damages or $5,000 (whichever is greater), interest of 1% per month on all compensation owed, and payment to L&I of the costs of investigation and enforcement. Wages and interest owed must be calculated back four years from the last violation. L&I also may order payment of a civil penalty, with greater penalties for repeat violations.

An employee also may file a civil lawsuit for actual damages, statutory damages equal to actual damages or $5,000 (whichever is greater), interest of 1% per month on all compensation owed, and costs and reasonable attorneys’ fees. Wages and interest owed must be calculated back four years from the last violation. The court also may order reinstatement and injunctive relief. The employee must bring a civil action within three years of the date of the alleged violation, regardless of whether the employee pursued a complaint with L&I. The filing of a civil action terminates any complaint filed with L&I.

For “career advancement” violations, remedies are available only if L&I or the court determines that the employer committed a pattern of violations as to the employee or committed a violation by applying a formal or informal employer policy or practice.

Local Jurisdictions May Potentially Pass Greater Protections

The EPOA does not expressly prohibit local governments from passing additional pay equity laws.

Recommendations

Employers should review their compensation systems carefully to ensure compliance, including an analysis of the compensation of similarly employed workers and documentation of reasons for differentials. An audit directed by legal counsel is generally preferable so that findings can be protected by privilege.4 Employers also should revise policies for setting the compensation of newly hired and promoted employees, consider implementing formal pay scales, and discontinue practices that request an applicant’s salary history or prohibit employees from disclosing wages in violation of the EPOA. Finally, training for HR professionals and managers is highly recommended to ensure that individuals making decisions about compensation and career advancement opportunities understand their obligations under the EPOA.