Maryland Significantly Changes Pay Discrimination Law with Equal Pay for Equal Work Act of 2016

On May 19, Governor Hogan signed into law the Equal Pay for Equal Work Act of 2016.  The law, which takes effect on October 1, 2016, amends the state’s existing wage discrimination law in several significant ways.

Changes that Protect Employees

There are several notable changes in the amendment that give broader protections to employees, including:

Prohibiting pay discrimination because of gender identity.  LGBT employees are now explicitly protected, as employers may not discriminate against employees on the basis of either sex or gender identity.  (Previously, the law’s protections applied only to sex-based discrimination.)

Expanding the definition of “employers.”  Employer coverage has grown to cover joint employment situations (i.e., “a person who acts directly or indirectly in the interest of another employer with an employee”) and considers multiple franchises or workplace locations within the same county as a single employer.

Prohibiting employers from providing “less favorable employment opportunities” to employees because of sex or gender identity.  In addition to the prohibition on paying different wages to similarly situated employees who perform similar work, employers may not provide “less favorable employment opportunities” to those employees. “Less favorable employment opportunities” include, for example, assigning employees to less favorable career tracks, or failing to provide information to employees about career tracks or promotional opportunities.

Extending the time period to file a claim.  Employees are now given until three years from the day they receive their final paycheck when terminated to file a claim, rather than three years from the date of the alleged discriminatory act.

Restricting employers’ ability to limit discussions of wages in the workplace.  Most significantly, the law protects employees who want to discuss wages with their employer or among themselves.  Neither employers nor employees, however, are required to disclose wage information.  Specifically, employers may not take action designed to bar employees from:

  • Inquiring about another employee’s wages;
  • Disclosing the employee’s own wages;
  • Discussing another employee’s (voluntarily disclosed) wage information
  • Asking their employer about the basis for their own wages; or
  • Aiding or encourage another employee(s) to exercise the same rights.

Changes that Protect Employers

Not all  of the changes are designed to protect employees at the expense of employers. The law also provides certain protections for employers, including:

Allowing employers to enact and enforce policies limiting discussions of wages in the workplace.  Consistent with the National Labor Relations Act, Maryland employers may create and enforce reasonable policies that limit the time, place, and manner of employee wage discussions.  For example, employers may prohibit employees from discussing or disclosing another employee’s wages without that employee’s prior permission.  As another important example, a policy that restricts employee discussions of wages to off-duty hours is still considered lawful.  Employers are free to discipline employees who violate such policies.

Immunizing employers from unknowing violations.  Employers are now only liable for violations of the law if they “knew or reasonably should have known” they were committing a violation.  As a result, unknowing violations are not punishable.

Allowing employers to pay similar employees differently based on output-based systems or any other “bona fide factor” that is job-related.  Employers may also continue to utilize (1) seniority or (2) merit increase systems that do not consider sex or gender identity; demonstrate that the jobs alleged to be similar are different because they require (3) different abilities or skills, (4) different duties or services, or (5) different shifts without violating the law.  The law allows employers to (6) implement a system that “measures performance based on a quality or quantity of production” (think: Jo may be paid more for producing 100 widgets per hour than Sam, who only produces 80 widgets per hour) or (7) any other “bona fide factor” that is job related and consistent with business necessity.  That said, an employee may still prevail if he or she can show that the employer’s justification is actually a pretext for sex/gender identity discrimination.

Employers should take note of these changes and are encouraged to revisit their handbooks and other policies, particularly between now and October 1.

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