Although Washington has prohibited all employers from paying men and women differently for the same work since 1943, this year the Washington legislature amended the state Equal Pay Act (EPA)—effective June 7, 2018—to combat what it sees as persistent differences in compensation for men and women.
The 2018 EPA amendments will likely make claims of gender discrimination in pay easier to pursue and harder to defend. The original state EPA prohibited pay discrepancies between men and women working in the same jobs, but provided a defense to the employer if a pay discrepancy was caused by any reason unrelated to gender. Under the 2018 EPA amendments, however, gender discrimination in pay between “similar” jobs is prohibited, and the employer will be required to justify any gender pay difference as being based on a factor consistent with “business necessity.”
Additionally, the 2018 EPA amendments prohibit gender discrimination in career opportunities, and policies generally requiring employees to keep wages confidential.
In more detail, the statute has three primary components:
1. Prohibits discrimination in compensation based on “similarly employed” individuals of different genders. Employers may not discriminate in compensation between “similarly employed” individuals based on their gender.
Employees are “similarly employed” if:
- They work for the same employer;
- Their jobs require similar responsibility, skill, and effort; and
- The jobs are performed under similar working conditions.
Job titles alone do not determine whether employees are similarly employed.
“Compensation” includes discretionary pay, nondiscretionary pay, and benefits.
Compensation differentials that do not constitute “discrimination” under the new law:
- Differences that are based in good faith on bona fide job-related factor(s) that are consistent with business necessity, are not based on or derived from a gender-based differential, and altogether account for the entire differential.
Bona fide factors include education, training, experience, seniority systems, merit systems, pay systems based on quantity or quality of production, and bona fide regional differences in compensation levels. This is not an exhaustive list.
The bona fide factors accounting for a compensation difference must also be consistent with business necessity. “Business necessity” is not defined in the bill. We anticipate that future implementing regulations will address that definition, but in the meantime, applying common sense will help in most situations. For example, for a job delivering pizzas, requiring a valid driver’s license would be consistent with business necessity, while requiring a college degree likely would not.
- Differences in compensation based on a local government ordinance that provides for a minimum wage different from state law are lawful. For example, a difference in pay between a male employee working in Seattle and receiving Seattle’s higher minimum wage and a female employee outside Seattle and receiving the state’s minimum wage would not be considered discriminatory under this bill.
Finally, one of the most significant changes is that compensation differentials based on an individual’s previous wage or salary will not be a defense to a claim of gender discrimination in pay.
2. Prohibits employers from limiting career opportunities based on gender. An employer may not, on the basis of gender, limit or deprive an employee of career-advancement opportunities that would otherwise be available. A differential in career advancement based on a bona fide job-related factor or factors (see above) is not a violation. If it is determined that an employer has a pattern and practice that violates this provision, the bill provides for damages, statutory penalties, or both.
3. Prohibits general wage confidentiality policies. Finally, an employer may not prohibit an employee (of any gender) from disclosing the employee’s wages or discussing wages with other employees, or take any action against an employee for such disclosures or discussions. Hourly employees already have a statutory right to disclose and discuss their wages under federal labor law. Washington’s EPA amendments expand that right to salaried supervisors and other salaried employees. The employer may prohibit an employee with access to confidential compensation information of other employees from disclosing the information, unless it is in response to a complaint or charge or is consistent with the employer’s legal duty to provide such information.
An employee who believes that he or she has been discriminated or retaliated against in violation of these provisions may file a complaint with the Department of Labor & Industries (“DLI”) or may file a lawsuit against the employer in court.
If DLI determines that there has been a violation, it may order the employer to pay the employee actual damages, double damages or $5,000 (whichever is greater), 12 percent annual interest, and DLI’s costs for conducting the investigation and enforcement. DLI may also impose additional statutory penalties.
An employee may file a private lawsuit within three years of the last alleged violation. If the employee is successful, the employee may recover actual damages, the greater of double damages or $5,000, 12 percent annual interest, and costs and attorney fees. The employee may also seek reinstatement. There is no requirement that the employee file with DLI before filing a court complaint.
For either an agency determination or a private lawsuit, actual damages are recoverable from the date of the last allegedly discriminatory or retaliatory action to occur as of the filing of the complaint and going back four years. So, for example, a current employee could file an action alleging an ongoing violation and seek damages beginning four years before filing the suit. On the other hand, a former employee could file a lawsuit in July 2025 based on her last paycheck received in July 2022, and recover back wages from July 2018 through July 2022, plus interest, doubling, and so on. While emotional-distress damages are not available under the EPA, it is possible that facts supporting an EPA violation would also support a claim of discrimination under the Washington Law Against Discrimination, which does allow emotional-distress damages.
A violation occurs when a discriminatory compensation decision or practice (a) is adopted, (b) the employee becomes subject to it, or (c) it affects the employee. While the effective date of this bill is June 7, 2018, a court might hold that a past discriminatory decision that “affects” an employee’s compensation after June 7, 2018, gives rise to a cause of action for damages at that point, and that the employee may recover damages going back four years.
The EPA applies to all employers in Washington, regardless of the number of employees.
There are still many uncertainties about how this law will be implemented and what regulations the DLI will adopt. At this time, we recommend that employers do the following:
- Review and update job prerequisites. To be a valid basis for a difference in compensation, a bona fide factor must also be consistent with business necessity. Job descriptions should not list qualifications that are not actually required, and compensation differences should not be based on factors not realistically related to the job in question. Likewise, if there is a bona fide factor being used that is consistent with business necessity, it should be listed on the job description or posting to demonstrate that the employer used the factor in good faith.
- Don’t ask for an applicant’s pay history. If you use an applicant’s pay history to determine how much you will pay the person if hired, you will not be able to rely on that pay history to justify any resulting gender pay differentials. Just asking for that information could create a risk.
- Audit existing payrolls for gender discrepancies. If you find apparent discrepancies, determine the basis for them. Some nondiscriminatory reasons that would have previously provided a defense to a gender-discrimination claim may no longer justify the discrepancy, such as a lower hiring salary based on a female employee’s compensation with a prior employer.
- Create a contemporaneous record. Records should reflect the bona fide factors and nondiscriminatory basis for the compensation paid to an employee. This is particularly so for positions that allow the hiring manager some discretion on an individual employee’s compensation. It is worth the effort to put these reasons down in writing at the time of the decision rather than relying on the manager’s memory, particularly since the hiring manager may be a former employee when an action is filed many years later.
- Keep your records. Given that an employee can bring a claim up to three years later, and then go back up to four years for damages, pay records and any other records that demonstrate nondiscriminatory bases for pay decisions should be kept for seven or more years.
- Check workplace policies. Ensure that no workplace policy could be construed as prohibiting employees from discussing their wages with one another. Employers cannot discourage employees from disclosing or discussing their own compensation, nor can they take disciplinary action against employees if they do.
If you have any questions or need further assistance, please feel free to contact an attorney on Miller Nash Graham & Dunn’s Employment Law and Labor Relations team.