Hunton Employment & Labor Perspectives

A bill recently signed into law in California will require private employers to submit annual “pay data reports” to the Department of Fair Employment and Housing (“DFEH”) beginning in March 2021. The California law implements a previously announced program rolled back by the Trump administration to expand federal reporting requirements to include employee pay data by race, gender, and ethnicity.

Under California law, an employee’s prior salary cannot be used to justify a pay disparity.  Now, the same is true under federal law – at least in the Ninth Circuit.

In Rizo v. Yovino, the Ninth Circuit recently ruled that an employee’s prior pay history is not a “factor other than sex” that can justify a pay gap under the Federal Equal Pay Act (“EPA”).  This outcome may not surprise employers in California, where state law expressly prohibits using prior salary as a basis for a pay disparity.  But unlike California’s statute, the federal law does not directly prohibit consideration of prior pay.  Rather, the Ninth Circuit looked beyond the plain language of the statute and examined the purpose of the “catch-all” exception, which permits pay differentials based on “any factor other than sex.” The Court concluded that this broadly worded exception “comprises only job-related factors.”

The California Department of Fair Employment and Housing (“DFEH”) just last month filed an enforcement action in Los Angeles Superior Court against Riot Games, Inc. (“Riot Games”) to compel compliance with its ongoing investigation into allegations of gender discrimination, sexual harassment, sexual assault, and retaliation.  While the identified claims are broad, the primary thrust appears to be the contention that female employees at Riot Games are paid less than their male counterparts.

Employers breathed a collective sigh of relief in August 2017, when the Office of Management and Budget (OMB) announced it was staying the requirement that employers report W-2 wage information in the annual EEO-1 Report.   Now, though, the reprieve seems over.  On March 4, 2019, the District of Columbia Federal Court ruled that OMB improperly issued the stay without good cause, and put the wage report back into effect.  See National Women’s Law Center v OMB, No. 1:17-cv-2458 (D.D.C.  March 4, 2019).

Recently-introduced federal legislation could have a significant impact on equal pay class actions. On January 30, 2019, Democratic legislators reintroduced the Paycheck Fairness Act (H.R.7), which provides for various changes to the Equal Pay Act of 1963 (“EPA”).  Earlier versions of this bill, which was originally introduced in 1997, have all died in Congress. However, on February 26, 2019, the House Committee on Education and Labor voted in favor of H.R.7, which means the legislation will now be presented to the full House for a vote.

Some key features of the newly-proposed legislation include:

While the Trump Administration has not declared equal pay to be a key initiative, equal pay challenges for employers are not likely to go away. The Trump Administration has given no indication it will roll-back new EEO-1 reporting requirements, and the void in federal legislation will likely be filled by an increasing hodge-podge of state legislation. Hunton & Williams LLP labor and employment partners Bob Quackenboss and Emily Burkhardt Vicente discuss the challenges that companies will face, and what they can do to prepare.

View the 5-minute video here.