In this article, the fourth in our employment regulation series, we review the impact of varying pay equity laws on location decisions. In the case of pay equity among genders and other protected classes, we’ve found that companies don’t always make decisions solely on the numbers. Ancillary social and political effects can play a pivotal role.
In the U.S., states have been rushing to enact legislation addressing equal pay, an issue most recently highlighted by the U.S. Women’s National Soccer Team in the 2019 World Cup. Eleven new state statutes have or will take effect in 2019. On Sept. 1, 2019, Alabama became the 49th state to enact its own equal pay act, which leaves Mississippi as the only state without comparable legislation.
The Equal Pay Act of 1963 requires U.S. employers to give men and women equal wages for equal work. So, why the plethora of state laws in recent years with the same objective? State legislatures are trying to address what they and their constituents see as loopholes in the federal law, allowing businesses too much leeway on the issue. While much of attention has been given to gender pay equity, it should be noted that the topic of “pay equity” also includes reference to equal pay regardless of race, religion, age and or any other protected class. For example, New York recently expanded its equal pay law to apply to all protected groups—not just between members of the opposite sex.
Some of these potential loopholes have been identified by the American Association of University Women (AAUW) and captured in its scorecard on states’ equal pay laws. For example, the scorecard considers whether a state expressly prohibits the practice of reducing pay to other employees as a means to complying with equity statutes. Scores also reflect whether a state expressly prohibits retaliation and discrimination for taking legal action to secure equal pay, and whether it denies the permissibility of an individual’s agreement to accept less pay as a defense against not complying with equal pay laws.
The AAUW deemed California, Colorado, Illinois, Maryland, Massachusetts, New Jersey, New York, Oregon and Washington to have the strongest equal pay protections.
In Canada, with the exception of a handful of federally regulated industries, pay equity laws are the domain of the provinces and territories. Manitoba, New Brunswick, Nova Scotia, Prince Edward Island, Ontario and Quebec have enacted specific pay equity legislation. Saskatchewan, Newfoundland and British Columbia have not, although they have created “policy frameworks” for pay equity negotiations. Alberta has passed neither.
Among the most active points of current debate in Canada is whether companies should only be responsible for responding to complaints, or whether they should have an obligation to proactively self-monitor their performance.
Social, Political and Regulatory Considerations
When it comes to site selection, no BLS & Co. client has never submitted “weak local pay equity laws” as a search criteria, and we don’t expect one ever will. In fact, to the contrary, we see a desire by some companies to make a social statement with their location choice – particularly consumer-facing entities and those competing to find employees among today’s socially conscious workforce. For these companies, equity pay laws, “bathroom bills” and similar laws can take on a far greater role in a location decision than surface-level economics would indicate.
That said, employers also tend to value as little government interference as possible in operating their business, so it shouldn’t surprise us that seven out of AAUW’s best states also rank among the worst on Chief Executive’s 2019 list of Best & Worst States for Business.
We can say, without dispute, that the disparity in laws between states and provinces can be a nightmare from an internal management, compliance and audit perspective for companies located in multiple jurisdictions.
Implications for Location Selection
The location selection process will require each company to determine its own priorities on the issue of local pay equity regulations and regulatory burdens.
Of course, this is just one component of the complex and variable site selection process. For more information, head to www.BLSstrategies.com.
Tracey Hyatt Bosman is a Managing Director at Biggins Lacy Shapiro & Co., one of the largest, most highly regarded site selection and incentives advisory firms in North America. BLS & Co. helps manage the complexities associated with finding optimal locations and securing incentives to support new ventures. Connect with Tracey on LinkedIn or email her directly at TBosman@BLSStrategies.com.
This is the fourth installment in BLS & Co.’s employment law series; read Part I, Part II and Part III here. Stay tuned for Part V of the series, which will cover right-to-work, benefits regulations and more. www.BLSstrategies.com.