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Maryland's New Equal Pay for Equal Work Act

In May, Maryland governor Larry Hogan signed the Equal Pay for Equal Work Act of 2016 significantly expanding and strengthening Maryland's current Equal Pay Act. The new legislation took effect on October 1. Here’s what you need to know.

The Current Law

The current Maryland Equal Pay Act largely mimics the federal Equal Pay Act by prohibiting employers from discriminating “between employees in any occupation by paying a wage to employees of one sex at a rate less than the rate paid to employees of the opposite sex if both employees work in the same establishment and perform work of comparable character or work on the same operation, in the same business, or of the same type.”

The New Act

The important “takeaways” include the following:

  • It addresses pay differentials that are based on sex as well as on gender identity.
  • It applies to a “person engaged in a business, industry, profession, trade, or other enterprise in Maryland” and includes “a person who acts directly or indirectly in the interest of another employer with an employee.
  • The disparities targeted by the statute are not limited to salary or pay. Rather, the new law also prohibits providing “less favorable employment opportunities” based on sex or gender identity.
  • The statute defines “providing less favorable employment opportunities" broadly to include the “assigning or directing of an employee into a less favorable career track; failing to provide information about promotions or advancement in the full range of career tracks offered by the employer; or limiting or depriving an employee of employment opportunities that would otherwise be available but for the employee’s sex or gender identity.
  • It extends protection to employees who provide services for the same employer if the employees work at workplaces located in the same county of the state and who “perform work of comparable character or work on the same operation, in the same business, or of the same type.”
  • It prohibits employer efforts to silence employees. Specifically, the New Act bars employers from prohibiting any employees (i) from inquiring about, discussing, or disclosing the employee’s wages with the wages of another employee; (ii) from requesting that the employer provide a reason for why the employee’s wages are a condition of employment; or (iii) from aiding or encouraging another employee’s exercise of rights under the New Act.
  • It bars any agreement with the employee to waive the employee’s right to discuss or disclose the employee's wages.
  • It prohibits employers from taking adverse employment actions against employees for disclosing the employee’s wages; inquiring about another employee's wages; asking the employer to provide a reason for the employee’s wages; discussing another employee’s wages if those wages have not been disclosed voluntarily; and encouraging or aiding another employee to exercise his/her rights under the New Act.

The new law also affirms that employers may make variation in wages based upon:

  • A seniority system that does not discriminate on the basis of sex or gender identity.
  • A merit increase system that does not discriminate on the basis of sex or gender identity.
  • Jobs that require different abilities or skills.
  • Jobs that require the regular performance of different duties or services.
  • Work that is performed on different shifts or at different times of day.
  • A system that measures performance based on a quality or quantity of production.
  • A bona fide factor other than sex or gender identity, including education, training, or experience, in which the factor: (a) is not based on or derived from a gender–based differential in compensation; (b) is job related with respect to the position and consistent with a business necessity; and (c) accounts for the entire differential.

The new act permits employers to have a policy prohibiting employees from discussing proprietary information, trade secret information, or information otherwise subject to a legal privilege or protected by law. It also allows for policies prohibiting an employee from discussing or discovering the wages of another employee without that employee’s permission.

Additionally, it clarifies that a violation will occur when the employer “knew or reasonably should have known” that the employer's actions violate the statute. In the way of enforcement, the new act contains strong features including injunctive relief, attorneys’ fees, and liquidated damages. There is also a three-year statute of limitations that begins to run after the employee receives from the employer wages upon the conclusion of employment.

Next Steps

The New Act is the latest in a series of federal, state, and county laws (i.e., the amendments to the Fair Labor Standards Act, the Montgomery County Sick and Safe Leave Act, “Ban the Box” legislation, etc.) designed to help ensure that employees are fully and fairly considered for employment and, once hired, fully and fairly compensated. Like other new employment statutes, the new act raises as many questions as it purports to address. It will no doubt be a source for advancing new claims against employers.

In light of the New Act, employers should consider the following:

1. Carefully analyze (with the assistance of experienced employment counsel) their existing pay practices to ensure that employees are being properly compensated.
2. Train managers on the requirements of the New Act, and, specifically, the provisions of the legislation that prohibit attempts to silence employees.
3. Remind managers and HR personnel about the dangers of retaliating against employees who complain about violations of the New Act.
4. Explore whether adequate insurance exists for claims based upon the New Act.

Marc Engel is an employment attorney and litigator who regularly counsels clients on how to comply with state and federal employment statutes and wage hour laws. For more information on the new Equal Pay for Equal Work Act, contact Marc at (301) 657-0184 or mrengel@lerchearly.com.

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This content is for your information only and is not intended to constitute legal advice. Please consult your attorney before acting on any information contained here.

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