Partner Colleen Coveney: Let’s Talk About Pay
On January 12, 2024, Washington D.C. Mayor Muriel Bowser signed legislation broadening the scope of the D.C. Wage Transparency Act of 2014. The new law – which will apply as of June 30, 2024 – will change the landscape for D.C. employers and employees. Here is what you need to know.
What does the law say?
- Wage Transparency Act of 2014
In 2014, D.C. enacted the D.C. Wage Transparency Act of 2014 (the “2014 D.C. Wage Act”). This law was intended to facilitate conversations among employees in the workplace about wages and make information about wages in the workplace more transparent. To achieve this, it prohibited employers from requiring, as a condition of employment, that an employee refrain from inquiring about, disclosing, comparing, or otherwise discussing the employees’ wages or the wages of another employee. It also prohibited retaliation against an employee who did so. While this law was a positive development, the absence of an affirmative obligation on the employer to provide employees with information about wages limited its reach.
- Wage Transparency Act of 2024
On January 12, 2024, D.C. joined a growing list of states to enact a more robust – employer focused – pay transparency law that places affirmative obligations on employers to make information about pay in the workplace more accessible. This new law – the Wage Transparency Omnibus Amendment Act of 2023 (the “2023 DC Wage Amendment Act”) – does not replace the 2014 D.C. Wage Act, but instead amends it in several ways.
- Employers with at least one employee will be required to comply.
The 2023 DC Wage Amendment Act clarifies the definition of “employer” in the 2014 D.C. Wage Act to make clear that the law will apply to “an individual, firm, association, or corporation that employs at least one employee in the District” except it does not include the District or federal government.
- Employers will have affirmative obligations to provide information about pay and benefits.
The 2023 DC Wage Amendment Act will place affirmative obligations on employers to provide information about pay under certain circumstances.First, employers will be required to “provide the minimum and maximum projected salary or hourly pay in all job listings and position descriptions advertised. In stating the minimum and maximum salary or hourly pay for the position, the range shall extend from the lowest to the highest salary or hourly pay that the employer in good faith believes at the time of the posting it would pay for the advertised job, promotion, or transfer opportunity.”
Second, employers will be required to disclose to prospective employees the existence of healthcare benefits that employees may receive before the first interview.
- It has a salary history ban.
The 2023 DC Wage Amendment Act also includes a new salary history ban provision that will limit an employer’s ability to inquire about a prospective employee’s wage history. The provision specifically prohibits an employer from screening “prospective employees based on their wage history, including by requiring that a prospective employee’s wage history satisfy minimum or maximum criteria or by requesting or requiring as a condition of being interviewed or as a condition of continuing to be considered for an offer of employee that a prospective employee disclose the prospective employee’s wage history” or “seek the wage history of a prospective employee from a person who previously employed the individual.”
- It also has a notice requirement.
The 2023 DC Wage Amendment Act will require employers to “post a notice in its workplace notifying employees of their rights” under the act.
- The Attorney General will have the power to investigate violations of the act and bring a civil action in court.
The Attorney General will have the power to investigate whether violations of the act have occurred. This power includes the power to examine witnesses under oath, issue subpoenas, and to compel attendance of witnesses and the production of documents.The Attorney General will also have the ability to bring a civil action in a court of competent jurisdiction against an employer or other person violating the act for restitution or injunctive, compensatory, or other authorized relief for any individual or the public at large. There is also a fee shifting provision, allowing the Attorney General to obtain reasonable attorneys’ fees and costs as the prevailing party, and to recover “statutory penalties equal to any administrative penalties provided by law.”
- Employers with at least one employee will be required to comply.
Why does it matter?
Pay transparency is not just an abstract concept intended to satisfy an employee’s curiosity about what others make – it is a critical component in the fight for equal pay. As far back as data has been collected, women have been paid less than men, with the gap in earnings between women and men being particularly acute between Black and Hispanic women and White men. Colloquially termed the “gender gap,” this gender-based earning differential has long been the source of legislative action. Over the past decade, that legislative action has primarily involved the enactment of pay transparency laws – i.e. laws intended to make information about pay in the workplace more transparent. Pay transparency is vital in the fight for equal pay because secrecy around pay limits access to information that employes need to advocate for equal pay: if an employee does not know how much similarly situated colleagues are getting paid for the same job, they cannot advocate for equal pay for equal work. Thus, pay transparency will assist employees in determining whether their employer discriminates in compensation based on a prohibited base – be it sex, age, race, religion, national origin, or disability.
While many states initially enacted pay transparency laws similar to the 2014 D.C. Wage Act, i.e. laws permitting employees to talk about their pay in the workplace, these laws had limitations. Chief among them was the absence of an affirmative obligation on the employer to provide employees information about wages diluted the effectiveness of these laws. By placing the onus on employees to proactively seek information about pay – and only then stating that the information could but need not be provided – employees were placed in the uncomfortable position of talking to their colleagues about pay while having no guarantee that the employee would get the wage information they requested.
Perhaps in recognition of these limitations, states, including now D.C., have started enacting or amending their existing pay transparency laws to affirmatively require employers to provide information to their employees about pay. This shift is important because it ensures that employers remain cognizant of how they are setting pay and monitor their pay practices more regularly.
What to expect in the future?
The passage of the 2023 DC Wage Amendment Act is a step in the right direction toward pay equity. However, ensuring that the law is effective will take work. Employers will need to implement organizational changes and planning to ensure that they are consistently posting adequate and defensible salary ranges. This task may be most urgent among publicly traded companies as regulating bodies such as the Securities and Exchange Commission are becoming increasingly focused on human capital disclosures. And, employees, for their part, will need to make sure to enforce their rights – to get the information about pay to which they are entitled and advocate for equal pay.