Our colleague Brian G. Cesaratto at Epstein Becker Green has a post on the Technology Employment Law Blog that will be of interest to our readers in the financial services industry: “Washington State Considers Comprehensive Data Privacy Act to Protect Personal Information.” Following is an excerpt:

Washington State is considering sweeping legislation (SB 5376) to govern the security and privacy of personal data similar to the requirements of the European Union’s General Data Protection Regulation (“GDPR”). Under the proposed legislation, Washington residents will gain comprehensive rights in their personal data. Residents will have the right, subject to certain exceptions, to request that data errors be corrected, to withdraw consent to continued processing and to deletion of their data. Residents may require an organization to confirm whether it is processing their personal information and to receive a copy of their personal data in electronic form.

Covered organizations will be required to provide consumers with a conspicuous privacy notice disclosing the categories of personal data collected or shared with third parties and the consumers’ rights to control use of their personal data. Significantly, covered businesses must conduct documented risk assessments to identify the personal data to be collected and weigh the risks in collection and mitigation of those risks through privacy and cybersecurity safeguards. …

Read the full post here.

For the second time in as many years, California Governor Jerry Brown has vetoed “wage shaming” legislation that would have required employers with 500 or more employees to report gender-related pay gap statistics to the California Secretary of State on an annual basis beginning in 2019 for publication on a public website. Assembly Bill 1209 (“AB 1209”), which we discussed at length in last month’s Act Now advisory, passed the Legislature despite widespread criticism from employers and commerce groups.  This criticism included concerns that publication of statistical differences in the mean and median salaries of male and female employees without accounting for legitimate factors such as seniority, education, experience, and productivity could give a misleading impression that an employer had violated the law.  Opponents also decried the burden the bill would place on employers to do data collection and warned that it would lead to additional litigation.  In vetoing the measure, Governor Brown noted the “ambiguous wording” of the bill and stated he was “worried that this ambiguity could be exploited to encourage more litigation than pay equity.”

However, the same pen that vetoed AB 1209 signed another pay-equity law last week: Assembly Bill 168 (“AB 168”).  AB 168 precludes California employers from asking prospective employees about their salary history information.  “Salary history information” includes both compensation and benefits.  Like similar laws passed recently in several other states and cities, the policy underlying the inquiry ban is that reliance upon prior compensation perpetuates historic pay differentials.  Opponents have argued that such a ban will make it more difficult for employers to match job offers to market rates.  Go to our Act Now Advisory on AB 168 for a comprehensive review of this new law.

Our colleague Joshua A. Stein, a Member of the Firm at Epstein Becker Green, has a post on the Retail Labor and Employment Law blog that will be of interest to many of our readers in the financial services industry: “Latest Website Accessibility Decision Further Marginalizes the Viability of Due Process and Primary Jurisdiction Defenses.”

Following is an excerpt:

In the latest of an increasing number of recent website accessibility decisions, in Gorecki v. Hobby Lobby Stores, Inc. (Case No.: 2:17-cv-01131-JFW-SK), the U.S. District Court for the Central District of California denied Hobby Lobby’s motion to dismiss a website accessibility lawsuit on due process and primary jurisdiction grounds.  In doing so, the Hobby Lobby decision further calls into question the precedential value of the Central District of California’s recent outlier holding in Robles v. Dominos Pizza LLC (Case No.: 2:16-cv-06599-SJO-FFM) which provided businesses with hope that the tide of recent decisions might turn in their favor. …

Read the full post here.

Equal pay for equal work has been required for many years, but, as of late, this rather static requirement has become the focal point of regulators, state and local governments, and activists. In order to achieve equality in compensation, the efforts are becoming increasingly creative with new pushes for transparency, privacy, and/or disclosures. Financial services firms are often the target and should not only be aware of these innovative measures and requirements but also consider what proactive actions to put in place.

Eliminating Pay Secrecy

The National Labor Relations Board made it clear years ago that “employees” (as defined under the National Labor Relations Act) could not be restricted from discussing the terms and conditions, including compensation, of their employment, based on their rights to engage in “concerted activities for the purpose of collective bargaining or other mutual aid or protection.” Yet, many employers continue to have policies or agreements, or informal rules, which restrict employees from doing so. Recently, there has been a concentrated effort to prevent employers from designating employee compensation as “confidential” and/or restricting discussion of it. For example, in connection with the former administration’s determination to eradicate equal pay impediments in the workplace, in a 2014 executive order, then-President Barack Obama prohibited federal contractors from retaliating against employees who talk about their salaries or other compensation information.

A number of states and localities that have been passing their own equal pay laws have been addressing pay secrecy as well. Such states include the following:

  • California: The California Fair Pay Act, which became effective as of January 1, 2016, takes pay secrecy head on. It not only restricts policies that prevent employees from discussing their own compensation but also prevents them from prohibiting an employee from disclosing the employee’s own wages, discussing the wages of others, inquiring about another employee’s wages, or aiding or encouraging any other employee to exercise his or her rights under the law.
  • Connecticut: Connecticut’s Act Concerning Pay Equity and Fairness (“Connecticut Act”) prohibits an employer from (i) barring employees from disclosing or discussing the amount of his or her wages or the wages of another employee of such employer that have been disclosed voluntarily by such other employee, (ii) inquiring about the wages of another employee of such employer, or (iii) requiring employees to sign documents waiving their rights under the Connecticut Act or taking actions against employees. The Connecticut Act does note, however, that it will not be construed to require any employer or employee to disclose the amount of wages paid to any employee.
  • New York: New York State recently enacted the Achieve Pay Equity Act (“APEA”), which modified the existing equal pay law in a number of respects. One particular change bars an employer from prohibiting an employee from “inquiring about, discussing, or disclosing” the employee’s wages or the wages of another employee. However, the APEA specifically provides for limitations. The APEA states that employers may maintain, in a written policy, reasonable workplace and workday limitations on the time, place, and manner for inquiries about, discussion of, or the disclosure of wages. Also, the APEA provides that no employee is required to discuss his or her wages with another employee, and employees who have access to other employees’ wage information as a result of their job duties (e.g., human resources staff) may be limited in the disclosure of such information by their employer.

Prior Compensation: Don’t Ask, Don’t Tell

Another focus of equal pay activists has been on employers’ asking employees for their current pay information to be used in determining their pay rates. Opponents to this practice claim that it perpetuates wage gaps for women that may “follow” women from job to job. Massachusetts is the first state to take the issue head on and prohibit employers from seeking information about applicants’ compensation history in the hiring process. The Massachusetts equal pay law, which becomes effective in 2018, bars employers from asking about an applicant’s salary history on an application or during interviews for employment. Pursuant to the law, after an offer of employment with compensation terms has been negotiated and made, a prospective employer may seek or confirm a prospective employee’s wage or salary history.

Activist Investors Turn Their Sights to Wall Street

In an effort to push for pay equality, activist investors have begun to exert pressure on large financial institutions to disclose compensation information. Such investors have already filed proposals with a number of large financial services institutions, such as Citigroup, Bank of America Corp., and Wells Fargo & Co. The investors are demanding that these institutions publish statistics about the race and gender of employees, as well as compensation information. Last year, activist investors took similar initiatives with respect to large technology firms, the majority of which complied with making public pay gap information and taking steps to close any gaps.

What Employers Should Do Now

In light of this increased focus on pay information, policies, and procedures, employers should do the following:

  • Undertake pay audits to determine any disparities and the genesis of such disparities. Pay audits should be conducted with legal counsel to maintain the information in a privileged manner as much as possible.
  • Thoroughly review their pay-setting policies and procedures. If you are a Massachusetts employer, take specific steps to ensure that pay information is not improperly requested through the hiring process. While most states and localities do not prohibit an employer from asking employees for their pay histories, relying solely on such information for setting starting pay may lead to pay inequities.
  • Determine appropriate compensation ranges based on factors other than pay history—such as market conditions, job requirements, experience, and skills, among other things.
  • When providing raises or determining bonuses, consider and document an employer’s rationale for compensation decisions in order to defend against any claims of inequity based on gender or another improper reason.
  • Consider training managers not to restrict (or appear to restrict) employees from discussing wages in compliance with applicable local laws. Managers may be unfamiliar with the new focus on prohibiting pay secrecy and could be improperly handling such matters.
  • Review their policies and agreements as they relate to sharing pay information to make sure that they are compliant with applicable laws, contain non-retaliation provisions, and direct employees to avenues for complaints.

A version of this article originally appeared in the Take 5 newsletter Five Employment Issues Under the New Administration That Financial Services Employers Should Monitor.”

On December 9, 2016, Los Angeles Mayor Eric Garcetti signed ordinances no. 184652 and 184653, collectively referred to as the “Fair Chance Initiative.” These ordinances prohibit employers and City contractors (collectively “Employers”), respectively, from inquiring about job seekers’ criminal convictions until after a conditional offer of employment has been made. Both ordinances will go into effect on January 22, 2017 and will impact all employers in the City of Los Angeles and for every position which requires an employee to work at least an average of two hours per week within the City of Los Angeles and all City contractors and subcontractors, regardless of their location.

No Criminal Inquiry Until After Offer

Specifically, these ordinances prohibit Employers from inquiring about a job applicant’s criminal history, at any time or in any manner, unless and until a Conditional Offer of Employment has been made to the applicant. Following the Conditional Offer of Employment, Employers are permitted to request information regarding the applicant’s criminal history. However, Employers can only withdraw or cancel the conditional offer as a result of the applicant’s criminal history after engaging in the “Fair Chance Process.”

New “Fair Chance Process” Required

The “Fair Chance Process” requires Employers to prepare a written assessment highlighting the specific aspects of the applicant’s criminal history that pose an inherent conflict with the duties of the position sought by the applicant. Employers must provide the applicant with written notification of the proposed withdrawal of the conditional offer, a copy of the written assessment regarding the risks posed by the applicant’s criminal history, and any other relevant documentation. The applicant is then given an opportunity to provide the Employer a response to the written assessment, including any supporting documentation. Employers must wait at least 5 business days after the applicant is informed of the proposed withdrawal before taking any action, including filling the position for which the applicant applied.

New Posting and Recordkeeping Requirements

Additionally, Employers’ job postings must now include a notice stating that they will consider all qualified applicants regardless of their criminal histories, in compliance with these ordinances. Employers must also conspicuously post a notice regarding the “Fair Chance Initiative” in a location in the workplace visible to all job applicants; this notice must also be sent to each union or workers’ group with which the employers have any agreement that governs over employees. Further, Employers must retain all job application documents for three years. Penalties for violations of these ordinances may be assessed at up to $500 for the first violation, up to $1,000 for the second violation, and up to $2,000 for subsequent violations. The City may then, at its discretion, distribute a maximum of $500 from that penalty directly to the applicant. The penalty provision of the ordinances will not go into effect for employers in Los Angeles City until July 1, 2017.  However, the penalty provision for City contractors is effective immediately.

Exceptions from these ordinances include: (1) employers who are required by law to seek a job applicant’s criminal history; (2) positions for which an applicant would be required to possess or use a firearm; (3) positions which, by law, cannot be held by an individual with a criminal history; and (4) employers who are prohibited, by law, from hiring persons with criminal convictions.

Employers with operations in the City of Los Angeles should:

  1. Remove questions regarding criminal history from job applications;
  2. Ensure future job postings include required equal employment notices;
  3. Defer inquiries regarding criminal history until making conditional job offers; and
  4. Ensure the Fair Chance Process is followed before denying employment based on criminal history.