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Our attorneys stay on top of changes in legislation, agency regulations, case law, and industry trends—then craft timely legal alerts to keep clients up to date on legal developments important to their business.

January 19, 2021

What Employers Can Expect Under the Biden Administration: Outlook for Legislation on Fair Pay Equity

This alert is another in the series covering changes employers can expect to labor and employment policy from President-elect Joseph Biden’s administration.

President-elect Joseph Biden and Vice President-elect Kamala Harris have pledged to make significant changes to the American workplace, including an expansion of workers’ rights. Though there is still uncertainty, Barclay Damon’s alert series will shed light on what employers can likely expect to see under the Biden administration.

In the lead up to Inauguration Day, we can anticipate changes to several key areas impacting the American workforce under the Biden administration. One of the areas expected to generate early legislation is fair pay equity. After all, the president-elect was part of the Obama administration that saw the Lilly Ledbetter Fair Pay Act of 2009 passed. The act prohibited sex-based wage discrimination between men and women whose jobs require substantially equal skill, effort, and responsibility under similar working conditions.

Paycheck Fairness Act

During the election campaign, the Biden administration expressed support for the proposed Paycheck Fairness Act (H.R. 7) as part of the Biden Agenda for Women. Sponsored by Rep. Rosa DeLauro of Connecticut, the proposed legislation states that only “a bona fide factor other than sex, such as education, training, or experience” can be relied upon to support a pay difference between men and women who perform substantially equal jobs at the same establishment. Under existing law, factors such as an employee’s prior experience and education often result in pay disparities between employees in similar positions for the same employer. These are currently permitted as legitimate, nondiscriminatory bases for pay differentials. H.R. 7 would impose a new “business necessity” test. Under this test, an employer must explain the manner in which a pay difference is job related. If an employer cannot establish that the reason for the pay difference is strictly job related, the plaintiff prevails. The bill would also ban the use of an applicant’s wage history in deciding whether or not to hire the candidate and in setting a hired employee’s wages, as well as institute a national pay transparency requirement. The Paycheck Fairness Act was passed by the House of Representatives in March 2019 but not voted on by the Senate.

Changes to EEOC Reporting

Given that the Democratic-held Congress still holds a slim margin, the Biden administration is also likely to push forward with fair pay initiatives that avoid Congressional approval. For example, the Biden administration is likely to seek to reintroduce Obama-era programs, such as the pay data reporting requirement and litigation efforts focused on pay discrimination. Both President-elect Biden and Vice President-elect Kamala Harris have included pay data reporting as a key component to closing gender and race pay disparities.

In 2016, President Obama announced the EEOC’s proposed revision of the Employer Information (EEO-1) Report, which is required to be filed by all employers with at least 100 employees. The proposed change to the EEO-1 Report added a required disclosure of W-2 compensation and hours-worked data for several pay bands in the report’s race and ethnicity categories, as well as several job categories. This proposed change, referred to as Component 2, was not implemented by the end of President Obama’s term, and President Trump suspended the requirement in August 2017.

In July 2020, the EEOC announced that it would fund a study conducted by the National Academies of Sciences, Engineering, and Medicine’s Committee on National Statistics (NAS) to assess the quality and utility of the data collected by Component 2. The results of the study could result in either the NAS finding that Component 2 is effective in collecting and exposing pay disparities or NAS may suggest other mechanisms to more effectively collect pay data.

Equal Pay Certification

Vice President-elect Harris has previously outlined an equal pay certification administered by the EEOC. In order to receive this certification, employers would be required to show that they are paying employees comparably for comparable work. Under this plan, the EEOC would administer this program and be enabled to levy fines on employers who failed to satisfy the certification requirements.

Increased Enforcement Litigation Efforts

President-elect Biden has expressed his commitment to enforcing equal opportunity laws. In furtherance of this commitment, he has indicated that he will expand funding to the Department of Justice, the EEOC, and the Office of Federal Contract Compliance Programs to enable these agencies to increase their litigation budgets, including hiring attorneys and paying for the cost associated with more litigation.

While the timing and scope of these initiatives are unknown, we anticipate that the Biden administration will make fair pay a priority. Barclay Damon will continue to monitor these and other anticipated changes to labor and employment policy under the Biden administration. Further alerts in this series will be forthcoming over the next several weeks.

If you have any questions regarding the content of this alert, please contact Brienna Christiano, associate, at bchristiano@barclaydamon.com; Siobhan Tolan, associate, at stolan@barclaydamon.com; or another member of the firm’s Labor & Employment Practice Area.

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