John Hunt’s latest article for HotelExecutive.com covers the history of the Equal Pay Act, the latest updates nationwide, and how this legislation affects hotels and restaurants across the county. Head over to the link to get all the details, or keep reading for the full text! For further questions, clarifications, and conversation no matter your state, please reach out to Stokes Wagner.

During its past several sessions, Congress has considered legislation intended to change the laws that have governed equal pay for men and women over the past fifty years. Early in 2019, the U.S. House of Representative passed the Paycheck Fairness Act with the intention of amending the federal laws that provide for equal pay for men and women who perform the same jobs.

Although this bill remains pending in the Senate, it is possible that a version of it eventually may be passed. In the meantime, a number of states have passed their own laws that attempt to address disparities in pay between the sexes. Although these laws apply to a wide variety of businesses in the private sector, hotel and restaurant management should monitor their progress at the federal, state, and local level.

Congress enacted the Equal Pay Act in 1963 as an amendment to the Fair Labor Standards Act, the federal law that establishes the minimum wage and mandates the payment of overtime. The EPA provides that no employer “shall discriminate, within any establishment … between employees on the basis of sex by paying wages to employees … at a rate less than the rate at which he pays wages to employees of the opposite sex … for equal work on jobs the performance of which requires equal, skill, effort and responsibility and which are performed under similar working conditions …. “

The EPA also contains exceptions for payments made pursuant to a seniority system, a merit system, and a system which measures earnings by quality or quantity of production. Perhaps more importantly, the EPA additionally included an exception for “a differential based on any factor other than sex.”

The following year, Congress passed the Civil Rights Act of 1964, commonly referred to as “Title VII.” Along with prohibiting race, religious, and national origin discrimination in employment, Title VII declared it unlawful for an employer to discriminate against any individual “with respect to his [or her]{:target=”blank”} compensation” because of their sex. Almost twenty years later, Congress added another law that authorized jury trials for Title VII claims and allowed for awards of compensatory and punitive damages where an employer is found to have violated Title VII, including its provisions on discriminatory compensation.

By early 2019, however, the U.S. Department of Labor’s Bureau of Labor Statistics still was reporting that men have higher median earnings than women in most occupations. Based on its examination of data from employers across the country, the Bureau concluded that women who were full-time wage and salary workers had median weekly earnings of $789 in comparison to $973 for men. Although these figures were derived from data from a wide variety of businesses across numerous industries, the Bureau also provided information for occupations traditionally associated with hotels and restaurants.

For example, the Bureau found that the median weekly earnings for male chefs and head cooks were $624 and $562 for women. Other hospitality-related occupations included: “first line” food and beverage supervisors, $668 for men, $539 for women; bartenders, $601 for men, $560 for women; “waiters and waitresses,” $551 for men, $478 for women; and, “maids and housekeepers,” $559 for men, $457 for women.

Given that equal pay laws have been on the books since the 1960’s, how could this happen? Commentators believe that these differences are the consequence of a variety of economic and cultural factors, such as access to post-secondary education. Another frequently voiced concern is that the courts have made unequal pay lawsuits under the EPA and Title VII too difficult to prove.

For example, to prevail in a claim under the EPA, a plaintiff must compare her job to the job of a male employee and show that the jobs are substantially equal in terms of skill (measured by factors such as experience, ability, education, and the training required to perform the job), effort (the amount of physical or mental exertion required to perform the job), responsibility (the degree of accountability associated with the job) and working conditions. She also must show that the jobs were within the same “establishment,” a concept subject to differing interpretations.

Some federal courts have gone so far as to say that there must be a showing the plaintiff and the person to whom she is comparing herself “had equal jobs … in the strict sense of involving ‘virtually identical’ work, skill, effort and responsibility, not in the loose sense of having some comparative value.” Other federal courts are not quite as exacting.

While claims for compensation discrimination based on sex under Title VII are not quite as demanding from a proof standpoint, a plaintiff still needs to demonstrate that a similarly situated male employee was paid more. Further, some courts require that a plaintiff prove that the employer’s stated reason for any disparity in pay is a pretext for sex discrimination. Partially in response to these concerns, the House of Representatives passed the 2019 Paycheck Fairness Act. The House bill expressly stated that the EPA “has not worked as Congress originally intended. Improvements and modifications to the law are necessary to assure the Act provides effective protection to those subject to pay discrimination on the basis their sex.”

Among other things, the proposed legislation would remove the “any other factor than sex” defense from the EPA and substitute “a bona fide factor other than sex, such as education, training, or experience” in its place. A “bona fide factor” would be limited to one that: “(i) is not based upon or derived from a sex-based differential in compensation; (ii) is job-related with respect to the position in question; (iii) is consistent with business necessity; and (iv) accounts for the entire differential in compensation at issue.” Further, an employer would not be able to rely on the bona fide factor defense “where the employee demonstrates that an alternative employment practice exists that would serve the same business purpose without producing such differential and the employer has refused to adopt such alternative practice.”

Aside from limiting the defenses available to an employer in an EPA case, the Paycheck Fairness Act also would expand the definition of retaliation under the Fair Labor Standards Act to include two new kinds of protected activities. First, employers would be prohibited from disciplining an employee who “has inquired about, or disclosed the wages of the employee or another employee (such as inquiring with the employer why the wages of the employee are set at a certain rate or salary.” Second, an employer would be unable to “require an employee to sign a contract or waiver that would prohibit the employee from disclosing information about the employee’s wages. Finally, the Act would allow for awards of compensatory as well as punitive damages and provide for class actions.

Whether the Paycheck Fairness Act emerges from the Senate anytime soon is open to question. It may, however, be a preview of legislation to come if there were a change in the control of the Senate or the makeup of the administration following next year’s elections. In the meantime, a number of states have enacted their own equal pay laws which are binding on the companies that do business within their borders.

While states such as California, Massachusetts, Maryland and Illinois have had such laws for some time, Maine and Alabama had new legislation take effect this year. Alabama’s new Pay Equity Law took effect in September. It largely follows the EPA as it presently exists and although the Alabama law does forbid discrimination on the basis of sex in compensation, it also retains the “any factor other than sex” defense that was criticized in the Paycheck Fairness Act. The Alabama law, however, adds a new requirement by prohibiting employers from declining to “interview, hire, promote, or employ,” or retaliate against a job applicant because that person has failed to provide their wage or salary history.

Maine similarly has decided to restrict an employer’s ability to ask about wage or salary history. Earlier this year, Maine enacted “An Act Regarding Pay Equity.” The new law will prohibit businesses from inquiring about an applicant’s wage and salary history until after a job offer has been fully negotiated and made to the applicant. The offer must already include compensation terms. The Act imposes fines on employers who violate the law and any complaints can be investigated by the Maine Human Rights Commission.

Meanwhile, New York has revised its longstanding law on equal pay. While the New York law already resembles certain aspects of the Paycheck Fairness Act, the new legislation goes further. It extends the prohibitions on pay discrimination to national origin, race, creed, color, age, sexual orientation, gender identity or expression, disability, military status, genetic characteristics, marital status, familial status, and domestic victim status. It also broadens New York’s protections by allowing employees to prove they were underpaid for “substantially similar” work rather than “equal work” as required by the current federal law. As might be expected, California has had its own Equal Pay Act for decades and substantially updated and amended its Act in 2015. Among other things, the California EPA requires equal pay for employees who perform “substantially similar work,” rather than the narrower concept used by federal law.

Unlike the federal EPA, the California Act does not contain a “same establishment” requirement, restricts an employer’s use of the “bona fide factor other than sex” defense, creates additional requirements that an employer must meet when asserting the reasons for any pay disparities, and prohibits retaliation.