Toledo’s Pay Equity Act Will Go into Effect in June 2020: Is Your Company Ready?
On June 26, 2019, the City of Toledo passed the Pay Equity Act, which restricts the use of salary history in hiring and is targeted at eliminating the gender wage gap. Toledo is the second city in Ohio to pass an act of this kind, joining Cincinnati. The Act will go into effect on June 25, 2020.
To whom does the Act apply?
Toledo’s Pay Equity Act applies to employers who maintain a location within the City of Toledo and who employ 15 or more employees for services performed within the City of Toledo. The Act only applies to the extent that the applicant is applying for employment that will be performed in Toledo and that the application, at least in part, will be solicited, received, processed or considered in the City of Toledo.
Who is exempted?
If an employer does not maintain a location in Toledo, the employer will not be affected, even if its employees reside in Toledo or will perform work at a non-employer facility in Toledo. The Act does not apply to work performed as an independent contractor or to positions for which salary, benefits and other compensation are determined pursuant to a collective bargaining agreement. The Act also does not apply to internal transfers or promotions of current employees or to applicants who are re-hired within five years, if the employer already had salary history for that applicant. Finally, the Act does not apply to federal, state or local subdivisions, except for the City of Toledo.
What does the Act prohibit?
To the extent it applies, Toledo’s Pay Equity Act prohibits employers from asking about salary history, including current or prior wages, benefits or compensation, and from screening applicants on that basis. Even if the employer inadvertently learns of the applicant’s salary history from the applicant’s unprompted and voluntary disclosure or through a background or reference check, the Act prohibits employers from relying on salary history in deciding whether to offer employment or in determining the salary, benefits and other compensation for an applicant in the hiring or contract negotiation process. The Act further prohibits an employer from refusing to hire or otherwise disfavoring or retaliating against an applicant for not disclosing his or her salary history.
What can an employer ask about?
The Act does not prohibit employers from asking employees about their work history, including objective measures of productivity that are not related to compensation. Employers are also expressly allowed to discuss an employee’s expectations regarding salary, benefits and compensation, including any deferred compensation or unvested equity that the applicant might forfeit by resigning his or her current position, provided the employer does not ask about the current or prior salary and compensation history when doing so.
The Act also requires the employer to provide an applicant who has been given a conditional offer of employment with the pay scale for the position, upon request.
What are the consequences for violations of the Pay Equity Act?
The Act provides applicants with a private cause of action against the employer for violations of the Act and contains a two-year statute of limitations. Applicants who successfully pursue a private cause of action may be entitled to compensatory damages, attorney’s fees, costs and other legal or equitable relief.
What should my company do to prepare?
Affected employers should examine their hiring practices, policies and associated applications and forms. Any questions or evaluation criteria related to salary history should be removed. Employers should also educate supervisors, human resources personnel and anyone else who may be involved in the hiring process to ensure that all individuals involved in the hiring process are aware of the Act’s prohibitions and the consequences for violations of the Act.
If you need assistance with an analysis of your hiring process or policies or have questions regarding Toledo’s Pay Equity Act, please contact Eastman & Smith's Labor & Employment attorneys for guidance.
Disclaimer: The article in this publication has been prepared by Eastman & Smith Ltd. for informational purposes only and should not be considered legal advice. This information is not intended to create, and receipt of it does not constitute, an attorney/client relationship.