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State Lawmakers Continue to Grapple with Gender Pay Gap

June 23, 2023 (5 min read)

For more than half a century, we’ve been talking about equal pay for women. 

Sixty years ago, the U.S. Congress passed the Equal Pay Act of 1963, which required employers to pay men and women equally for equal work. (For more on this see Equal Pay Act: Key Compliance Issues and Equal Pay Act Video from LexisNexis® Practical Guidance.)

And yet, the gender pay gap persists. A study this year by Payscale found that women earn an average of 83 percent of what men make when data aren’t controlled for key factors such as job title, education, experience, industry, job level and hours worked. This uncontrolled gender gap means the distribution of highly-paid, elite jobs favors men over women.

When pay factors are accounted for, women make 99 percent of what men make. But even that gap means women doing the same jobs as men and with the same qualifications are making less for no attributable reason other than gender. And a 1 percent difference in earnings can add up over the course of a career.

At the state level, legislators continue to wrestle with this inequity, rolling out proposals to narrow the gap in a multitude of ways. In fact, according to the LexisNexis® State Net® legislative tracking system, at least 26 states are considering bills pertaining to equal pay.

States Continue to Seek New Research into Gender Pay Inequality

Even with years of research, legislators in some states still feel more data is needed to better understand pay inequality.

In Arizona, Sen. Juan Mendez (D) has introduced SB 1668, which would direct the Industrial Commission of Arizona to conduct a study on the gender pay gap in the teenage labor force by the beginning of 2025.

In Hawaii, companion measures HB 736 by Rep. Natalia Hussey-Burdick (D) and SB 873 by Sen. Stanley Chang (D) direct the state Department of Human Resources Development to find a qualified consultant to study gender pay inequality among state employees.

It may seem strange for lawmakers to request even more studies on an issue we’ve been struggling with for decades. But new research continues to offer new insights into the complexities that drive the gender pay gap. Indeed, research by the National Bureau of Economic Research has suggested that family-friendly policies in the United States may, in fact, be keeping the gap open, not closing it. 

Equal Pay Measures Introduced in Nearly Half of States

At least 24 states have considered legislation this year dealing with equal pay issues, including pay disclosure and transparency requirements for job listings and employer salary history inquiry bans. Colorado enacted such a measure (SB 105) this month. 

Some States Consider Using “Stick” to Close Gender Pay Gap

Other states are attempting to address the pay gap through more punitive measures.

The Missouri legislature is considering two bills, HB 148 by Rep. Jo Doll (D) and HB 214 by Rep. Emily Weber (D), which would not only prohibit employers from engaging in wage discrimination based on gender, but also allow victims of gender pay inequality to recover actual and compensatory damages, creating real legal liabilities for companies that don’t pay women the same as men.

The California Legislature, meanwhile, is considering SB 699 by Sen. Anna Caballero (D), which would expand the state’s ban on noncompete agreements to make such agreements with California employers void and unenforceable “regardless of whether the contract was signed and the employment was maintained outside of California.” The bill explicitly states: “Noncompete clauses are associated with suppressed wages and exacerbated racial and gender pay gaps, as well as reduced entrepreneurship, job growth, firm entry, and innovation.”

In January, the Federal Trade Commission released a Notice of Proposed Rulemaking to outlaw noncompete clauses. In announcing the rulemaking, the FTC said research has found that banning noncompete agreements nationwide would “close racial and gender wage gaps by 3.6-9.1 percent.” (See FTC Noncompete Ban Could Open State Litigation Floodgate and FTC Proposes the End of Employment-Based Non-Compete Agreements.)

At Least One State Looking at Using “Carrot”

The New York Legislature is considering another approach to closing the gender pay gap: recognizing companies that successfully pay women equally.

AB 887 by Assemblywoman Linda Rosenthal (D) would create a program in which the state would issue certificates to employers that achieve wage differentials of 10 percent or less between women and men in the same jobs. Under the program, employers could post the certificates publicly and the information would also be published on a state website.

The idea behind this bill, of course, is to use “the carrot” of public praise to attempt to close the gender wage gap, instead of relying on “the stick” of penalties.

Businesses Must Closely Monitor Laws to Avoid Liability

“There are a lot of laws being enacted to address this gap,” said lawyer Elias Kahn, senior product manager for labor & employment, tax and employee benefits and executive compensation on the LexisNexis Practical Guidance Team.

Among those laws, he said, are pay transparency and disclosure laws, which require businesses to post salary ranges when they advertise a job; ban employers from asking prospective job candidates how much they made at their previous job; and prohibit employers from barring employees talking to each other about their salaries. (See Pay Disclosure and Transparency Requirements for Job Postings State and Local Law Survey (Private Employers); Wage Transparency State Law Survey: Bans on Employers Preventing Employees from Discussing Their Pay; and Salary History Inquiry Ban State and Local Law Survey.)

Kahn said it’s critical that businesses stay current on these laws, noting that all levels of government are proposing or passing gender pay gap and pay transparency laws.

He said: “To comply with these laws, you must keep up, not only with federal and state law but also local law.” (See Pay Transparency and Disclosure Requirements Compliance Checklist. Also see the Wage and Hour Retaliation and Discrimination Laws column of the Wage and Hour State Practice Notes Chart.)

Due to the explosion of equal pay and pay transparency laws, Kahn said it’s important for businesses to regularly audit their payrolls to ensure equal pay between men and women for equal work. The frequency of such audits really depends on the business itself, he said, but it could be as often as every 6-12 months. (See Pay Equity Audits: Best Practices and Pay Equity Audits Video.)

The risk, if companies don’t take this seriously, is, of course, potential liability.

“Employers really need to educate management about all these equal pay and pay transparency laws,” Kahn said.

—By SNCJ Correspondent BRIAN JOSEPH 

Please visit our webpage to connect with a State Net representative and learn how the State Net legislative and regulatory tracking solution can help you identify, track, analyze and report on relevant legislative and regulatory developments. 


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