Equal Pay for Equal Work: What Employers Need to Know About Washington’s New Pay Equity Law

Employers cannot justify current pay gaps based on past compensation levels.

This story appears in the July 2018 issue. Click here for a free subscription.

With heightened attention being placed on gender-based workplace discrimination, Washington has joined a growing list of states passing sweeping new laws to achieve pay equity. Businesses of all sizes should take steps to ensure compliance with these new laws or risk getting swept up in a wave of litigation.

The updates became effective on June 7.

The Equal Pay Act Is Updated and Expanded
Updates to the state’s Equal Pay Act (EPA) will make it easier for employees to sue or file a complaint with the state over unfair gaps in pay or career advancement opportunities. The law prohibits any gender-based discrimination in providing compensation between employees who are “similarly employed.” Businesses will need to justify any pay difference based on “bona fide job-related factors” that may include, for example, education, training, experience or seniority. Importantly, however, an employee’s previous wage history will not be a valid defense. So, employers cannot justify current pay gaps based on past compensation levels. The law also prohibits employers from restraining an employee’s ability to discuss his or her wages, making it easier for coworkers to share information and discover pay disparities.

In addition, the EPA will now go beyond compensation by also prohibiting gender-based discrimination in “career advancement opportunities.” While not clearly defined now, this aspect will certainly broaden the scope of the law.

How to Comply with the Equal Pay Act
The EPA has huge implications for all types of employment. At the very least, employers should review existing policies and practices related to compensation, advancement opportunities and wage disclosure. If compensation differs between similarly situated employees, then employers should examine the basis for that difference to determine whether it is valid under the EPA. Unfair pay gaps can and do exist between genders at all levels of employment, but some situations warrant scrutiny.

Positions for which compensation has been negotiated between employer and employee raise the potential for liability. Negotiated compensation is more likely to have variable results among employees. This applies not only to starting salaries but also to raises and other benefits. Where any form of compensation has been negotiated, employers should examine the agreement to determine whether it is justifiable in comparison to other employees who are similarly employed.

Unfortunately, determining who exactly is similarly employed will not be a simple task. This step requires a fact-intensive examination of the skill, effort, responsibility and working conditions of each employee. Job titles alone are not conclusive. If there is a pay differential, employers should be ready to prove why the employees are not similarly employed or how the entire amount is based on bona fide job-related factors. The same goes for discretionary compensation, such as bonuses. Employers should be prepared to substantiate any discretionary compensation with objective factors, rather than subjective individualized circumstances. Arranging for a proactive and privileged pay audit is a smart way for employers to identify and address pay disparities. 

With the EPA’s additional emphasis on career advancement opportunities, employers should also be conscientious about providing equitable advancement opportunities for all employees. Any policies or practices that could have a disproportionate effect on such opportunities based on gender should be reconsidered. 

Finally, any policies or practices that restrain an employee from discussing his or her own wages, or disciplining an employee on that basis, should be revised. This could benefit employees seeking fodder for a potential lawsuit or complaint but, ultimately, wage transparency in the workplace should improve employee satisfaction and confidence in the employer. 

By taking steps like these, employers can ensure compliance with the EPA and achieve gender pay equity for all their employees. 

Thomas Vogliano is an associate attorney in the Seattle office of Fisher Phillips. Reach him at tvogliano@fisherphillips.com

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