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Wage Gap and #MeToo Movement Legislation: Impact on Washington Employers

March 27, 2018

Overview

Last week, Governor Inslee signed several pieces of important legislation that will impact Washington employers.  We have seen significant media coverage in recent years about the gender wage gap and how women are still paid less than men for equal work.  We have also seen almost daily coverage about sexual harassment in the workplace, particularly allegations by multiple employees against the same individual and how employers are dealing with such allegations.  Below is a brief summary of Washington’s recent legislation regarding these issues. 

Wage Gap: Amending Washington’s Equal Pay Act

The legislature found a continued gap in wages and advancement opportunities among workers based on their gender.  Amending Washington’s Equal Pay Act for the first time since 1942, this expanded law attempts to address income disparities, gender discrimination, and retaliation.  Specifically, the new law will prohibit employers from compensating or promoting similarly situated employees differently on the basis of their gender.  The violation will be triggered if a discriminatory policy or practice is adopted or if an employee is subjected to a discriminatory compensation or promotion decision.  Violation of this statute is a misdemeanor and subjects employers to civil penalties, actual damages, and potentially attorneys’ fees.  

Some key provisions are:

  • Applies to all employers.  No minimum number of employees.
  • Compensation is defined to include “discretionary and nondiscretionary wages and benefits provided” to the employee.
  • “Similarly situated” means the “individuals work for the same employer, the performance of the job requires similar skill, effort, and responsibility, and the jobs are performed under similar working conditions.” 
  • Job titles are not determinative.
  • Differences in compensation, however, are permitted if based “in good faith on a bona fide job-related factor or factors.”  These factors must be a business necessity, gender-neutral, and account for the entire differential.  For example, “bona fide factors” may include education, training, experience, seniority, merit, a system that measures by quantities or quality of production, regional differences, or local minimum wage requirements.
  • Differences in promotion decisions can be made on the same bona fide job-related factors.
  • Employee’s prior wage or salary history is not a defense.
  • Employer bears the burden of proof on whether they are compensating and promoting similarly situated employees fairly and on a gender-neutral basis.
  • Employers cannot require employees not to disclose, discuss, and compare their wages or the wages of other employees.  (Unless that person’s job pertained to compensation issues, e.g. HR.)
  • Employers cannot retaliate, discharge or discriminate against anyone for filing a complaint with L&I, participating in an investigation, or otherwise pursuing a claim for violation of this amended act.
  • A three-year statute of limitations applies to filing claims in a civil action.  However, recovery of wages and interest owed “must be calculated from four years from the last violation” before filing the action.  Thus, potential damages have a deeper reach than the three-year statute of limitations.

Employers should carefully review their compensation practices (discretionary, nondiscretionary, and benefits) to ensure equal treatment of similarly situated individuals.  To the extent an audit reveals an issue, identify and resolve it quickly. 

#MeToo/Stormy Daniels Legislation

The WA legislature expanded employer prohibited practices as it relates to issues we’ve been seeing in the news about the #MeToo movement and scope of nondisclosure agreements for claims of sexual harassment.  Sexual harassment is defined as “unwelcome sexual advances, requests for sexual favors, sexually motivated physical contact, or other verbal or physical conduct or communication of a sexual nature” if agreeing to that conduct or communication(a) is a term or condition of employment, (b) is used as a factor in an employment decision , or (c) has the “purpose or effect of substantially interfering with an individual’s … work performance, or of creating an intimidating, hostile, or offensive … work environment.” 

Bill 5996: Prohibits employers from requiring employees to sign nondisclosure agreements that prevent those employees from disclosing sexual harassment or sexual assault in the workplace, at a work-related event, or even between the employer and employee off the work premises.  Any such restriction on employees from being able to disclose or discuss such actions is against public policy and void and unenforceable.  Further, employers are prohibited from retaliating against an employee for disclosing or discussing sexual harassment or sexual assault.  Importantly, however, an employer can enter into a confidential settlement agreement with an employee or former employee.  Finally, for purposes of this bill, human resources staff, supervisors or managers who are expected to maintain confidentiality as part of their jobs as well as employees who participate in sexual harassment investigations (and request confidentiality) are excluded from the definition of employee. 

Bill 6068: If an employer enters into a confidential settlement agreement with an employee or former employee, any language limiting, preventing or punishing that employee or former employee from providing evidence of past instances of sexual harassment or sexual assault against the employer in a civil or administrative action is unenforceable.  In other words, even with a confidential settlement agreement, an employee or former employee can testify or provide other such evidence of their experience with sexual harassment or sexual assault at that same employer in a civil or administrative action.  Before this law, obtaining that information would typically have required a subpoena (a court order) to which the employer could have objected.  Now, discovering past incidents of sexual harassment or alleged sexual harassment at the employer may be easier to obtain.

Bill 6313: This bill effectively eliminates private, confidential arbitration for any state or federal discrimination claim.  No employee can be compelled to arbitrate their discrimination claims against any employer confidentially.  Employees may publicly pursue such claims.  Employers should review their arbitration provisions to ensure they do not require confidentiality in the proceeding or outcome.

Bill 6471: The legislature has directed the formation of a “stakeholder work group” to develop model policies and best practices for employers and employees to keep the workplaces safe from sexual harassment.  This work group “may consider” workplace leadership and their obligation to model behavior, creating anonymous reporting channels, holding HR departments accountable for enforcing harassment policies, protecting against retaliation, establishing employee affinity groups, use of surveys and exit interviews, and evaluating managers on how they support workplace inclusion and prevent sexual harassment.  The commission must adopt model policies by January 1, 2019.

In sum, confidential settlement agreements for sexual harassment claims are currently permitted under Washington law; however, they are not enforceable to the extent the employee or former employee provides discovery or evidence in a civil action against the same employer regarding past incidents of sexual harassment.  In addition, Washington employers cannot require employees to privately arbitrate state or federal discrimination claims.

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