Pay equity, diversity and inclusion
Doing Business in Maryland Requires Equal Pay for Equal Work
3 minute read
2020 was a significant year for the great state of Maryland in its efforts to tackle pay inequities within its borders. In January 2020, the Maryland state legislature voted to override Governor Larry Hogan’s veto of “ban the box” legislation. As discussed by the law firm Morgan Lewis, Maryland’s ban the box law applies to employers with 15 or more employees, and “limit[s] employers’ ability to inquire about job applicants’ criminal or arrest histories during early stages of the hiring process.”
In October 2020, a bevy of new laws took effect, including the Crown Act (expanding anti-discrimination laws to prohibit discrimination based on hair texture and hairstyle), a salary history ban (prohibiting reliance on prior pay in setting wages, as well as retaliation for refusing to disclose prior pay) and a wage transparency provision (requiring employers to provide applicants with wage ranges for the position in question when asked).
Undergirding all of these 2020 legislative changes is Maryland’s Equal Pay for Equal Work Law (EPEWL). Passed in 2016, the EPEWL has two major requirements. Employers are prohibited from discriminating between employees by:
- paying a wage to employees of one sex or gender identity at a rate less than the rate paid to other employees working under similar circumstances; or
- providing less favorable employment opportunities as defined by the law, based on sex and gender identity.
Below, Trusaic guides you through some of the EPEWL’s key terms and employer obligations.
Which employers are subject to the EPEWL?
All Maryland employers, regardless of size, must abide by the EPEWL.
What does it mean to provide “less favorable employment opportunities” based on sex or gender identity?
Providing less favorable opportunities includes the following actions or inaction made on the basis of sex of gender identity:
- assigning or directing an employee into a less favorable career track, if career tracks are offered, or position;
- 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 to the employee.
Which employees are considered to be performing “equal work” for the purposes of determining whether a violation of the EPEWL has occurred?
The EPEWL defines comparable employees as “work[ing] within the same establishment and performing work of comparable character or work on the same operation, in the same business, or of the same type.” The law clarifies that employees are considered to be working in the same establishment if they work for the same employer, within the same county. In other words, comparable employees do not necessarily need to work in the same building or even the same city.
What is the difference between “sex” and “gender identity”?
Generally, the term “gender identity” refers to one’s internal sense of one’s own gender. It may or may not correspond to “sex,” (typically defined as an anatomical assignment at birth), and may or may not be made visible to others. “Gender identity” is specifically broadly defined in the EPEWL as:
- “the gender–related identity, appearance, expression, or behavior of a person, regardless of the person’s assigned sex at birth, which may be demonstrated by consistent and uniform assertion of the person’s gender identity; or any other evidence that the gender identity is sincerely held as part of the person’s core identity.”
What types of compensation or pay are included in the EPEWL?
Similar to other states that have passed stringent equal pay laws, such as Colorado, the EPEWL paints with a broad brush in defining what kinds of pay are to be included in its scope. Specifically, “wage” is defined as “all compensation for employment” and includes “board, lodging, or other advantage provided to an employee for the convenience of the employer.”
Are there circumstances in which employers can pay different wages to employees performing equal work?
Yes. An employer can pay a variation in a wage that is based on:
- a seniority system that does not discriminate on the bases of sex or gender identity;
- merit system that does not discriminate on the basis of sex or gender identity;
- jobs that require different abilities or skills;
- jobs that require performance of different duties or services;
- work that is performed on different shifts or at different times of the day;
- a system that measures performance based on quality or quantity of production; or
- a bona fide factor other than sex or gender identity including education, training, or experience under certain circumstances.
The law provides that an employee may demonstrate that an employer’s reliance on the systems or factors listed above is a pretext for discrimination on the basis of sex or gender identity. In other words, Maryland employers have the burden to show that reliance on one or more of the above factors is legitimate.
What are the risks of non-compliance with the EPEWL?
The EPEWL carries significant penalties for employers that fail to comply with its requirements. Employees or applicants who believe a violation has occurred may file an administrative complaint or seek civil damages in court. Civil penalties imposed by a court include actual damages (such as back pay), liquidated (double) damages, interest, attorneys’ fees and costs, and other injunctive relief, such as reinstatement. Similarly, the Maryland Labor Commissioner may investigate violations and refer them to the Attorney General for litigation.
What can employers do to ensure they are in compliance with the EPEWL?
The short answer is “conduct a pay equity audit.” Experts across the human capital, legal services, and business intelligence industries recommend a pay equity audit as a critical tool in an employer’s risk management tool belt. It is the industry standard for statistically comparing pay.
As is clear from the above overview of the EPEWL, the state of Maryland is strongly committed to pay equity on the basis of sex and gender identity for all employers operating in its boundaries. If you are an employer in the Old Line State, ensure procedures are in place to monitor EPEWL compliance – the costs of non-compliance, including economic and reputational, are steep.
Organizations that conduct a pay equity audit must communicate their progress and achievement along the way. To help you faciliate discussions around compensation, we created the Pay Equity Communications Planner.