If you should never judge a book by its cover, you can never judge a legislative bill from its title.

After all, you would think that a bill about "Penalties for Violations of Certain Personnel Files Statutes" (H.B. 6185) would actually be a bill about those violations.

While that may have been in the original bill, a Senate amendment to that bill — which passed both chambers yesterday — makes some of the most sweeping changes we have seen in some time to the state’s laws banning employers from discriminating based solely on gender in the amount of compensation paid to employees. (The amendments’ provisions are mainly lifted from Senate Bill 362 (S.B. 362).)

This bill — which now moves on to the Governor for signing — will be effective October 1, 2009 if and when signed.

Summary of Key Provisions

The key provisions of the measure:

  • allow employees to go directly to court to file gender wage claims;
  • expand possible employer defenses against gender wage claims;
  • permit, rather than requires, a court to order awards when an employer is found to violate the law;
  • extend the period to make a claim of discrimination (the statute of limitations) from one to two years following a violation (or in some cases, three years);
  • expand the whistleblower protections to include those who testify or assist in a gender wage proceeding;
  • permit possible compensatory and punitive damages for violations of the whistleblower protections; and

The Office of Legislative Research has a thorough summary here.  Among other provisions that employers may find interesting, the bill also allows employees to ask the court for legal or equitable relief, but the labor commissioner will not have that option. The bill allows employees to seek attorney’s fees and costs (but eliminates the labor commissioner’s ability to seek such fees.) 

Of course, there is still a provision in there about violating the personnel files act. Employers who violate the provisions of that act are subject to a $300 civil penalty for each violation. 

In some ways, the bill is a codification of some of the changes that were made at a federal level under the Ledbetter Fair Pay Act. For example, under this bill, the starting of a statute of limitations period would be relaxed.  It would occur::

when a discriminatory compensation decision or practice is adopted, when an individual is subject to a discriminatory compensation decision or practice, or when an individual is affected by application of a discriminatory compensation decision or practice, and shall be deemed to be a continuing violation each time wages, benefits or other compensation is paid, resulting in whole or in part from such a decision or practice.

What Does This Mean For Employers and What Defenses Are Available?

For employers, the bill is definitely a mixed bag. On the one hand, it greatly expands the type of claim and the time for bringing a claim for employees and adds a great deal more gravitas to the state’s wage discrimination laws. On the other hand, it does provide some additional defenses for employers to use, which, in turn, allows employers to plan their business in a way that is in compliance with the law.

What are those defenses to a claim of wage discrimination? According to the bill, an employer must demonstrate that such differential in pay is made pursuant to "(1) a seniority system; (2) a merit system; (3) a system which measures earnings by quantity or quality of production; or (4) a differential system based upon a bona fide factor other than sex, such as education, training or experience."

The last category of a "bona fide factor defense" will only apply if the employer demonstrates that the factor  (A) is not based upon or derived from a sex-based differential in compensation, and (B) is job-related and consistent with business necessity.

And even then, the employee can overcome the "bona fide factor defense" if he or she can demonstrate that an alternative employment practice exists that would serve the same business purpose without producing such differential and that the employer has refused to adopt such alternative practice.

I’ll continue reviewing the bill (which was just passed in its current form last night) and will post  details on an upcoming program recapping this bill soon.