Maryland’s New Equal Pay Law Taps the Power of Transparency

Last Thursday, Maryland Governor Larry Hogan signed a bill into law that is intended to help close the gender pay gap, partly by making it harder for employers to prevent employees from revealing to each other how much they earn. Vox’s Emily Crockett explains how the law is supposed to accomplish its goals:

Some employers either explicitly or implicitly ban the discussion of salaries, because they’re afraid of stoking resentments or revealing inequities. And this lack of pay transparency is one major cause of the wage gap. Unconscious bias means women are frequently offered lower salaries for various reasons, and sometimes employers have no idea that they’re consistently paying women less than men until they conduct pay audits.

The way the system is currently set up is also incredibly unfair to low-wage workers, most of whom are women, [Charly Carter, executive director of Maryland Working Families,] said. For practical purposes, many of them have little or no legal protection against retaliation. All they can do is appeal to the National Labor Relations Board (NLRB) — a lengthy process that not even all workers can avail themselves of.

“If you’re making minimum wage, if you’re making $30,000 a year, you don’t have two years and lawyers’ fees to go after your employer for treating you badly,” Carter said.

Maryland’s law also bars discrimination in the form of “providing less favorable employment opportunities,” not only unequal pay, and protects workers on the basis of both sex and gender identity, meaning that transgender people also stand to benefit from it. Carter tells Crockett that Maryland’s equal pay law is the second strongest in the US after California’s, which was signed into law last October.

However, employment attorney Brian W. Steinbach observes at Lexology, the law does leave employers with some rights when it comes to restricting discussions of pay:

[A]n employer may in a written policy provided to each employee establish reasonable workplace limitations on the time, place and manner for inquiries relating to employee wages, so long as it is consistent with standards adopted by the Commissioner of Labor and Industry and all other state and federal laws. (For example, under the National Labor Relations Act, rules limiting discussions to non-working time have been held valid). For example, a limitation may include prohibiting discussion or disclosure of another employee’s wages without that employee’s prior permission, except where the employee has access to that information as part of the employee’s essential job functions and uses it to respond to a complaint or charge, or in furtherance of an investigation, proceeding, hearing or action under the Act. Violation of such a policy may be a defense for adverse action.

Maryland employers may not have too much cause for alarm here, as organizations are increasingly discovering numerous upsides to pay transparency in terms of employee engagement and enhanced performance. Meanwhile, as Washington Post reporter Fenit Nirappil revealed in March, both Hogan’s office and the Maryland legislature have significant gender gaps of their own when it comes to how much they pay their staff, so it will be interesting to see what effect the new law has on the very institutions that created it.