Effective October 1, 2016, employers in Maryland can no longer enforce rules requiring that employees keep their wages confidential from each other. This change comes in the form of a strict equal pay law that directs that employees, including managers, can communicate their pay information to one another to ensure that men and women are receiving equal pay for equal work.
The Equal Pay for Equal Work Act of 2016 applies to all employers in the state, regardless of size. Following the trend of President Obama’s recent executive order as to government contractors, see Executive Order 13665 (April 8, 2014), the law requires so-called “pay transparency”.
Pay transparency means that employers cannot require employees to keep their pay rates confidential, except in limited instances. (Such as when an employee has access to others’ pay rates by holding a financial position in the company). Under the new Maryland law, employees can still decline to share their pay rates with each other, but cannot be punished for asking each other about pay rates or sharing their pay rates during non-working time, and can demand from the employer an explanation of any pay disparities.
The law, which expands the Maryland Equal Pay Law, also adds “gender identity” to the prohibition of unequal pay on the basis of gender. Like the Lilly Ledbetter Fair Pay Act of 2009, the new law expands the statute of limitations for equal pay claims to start running from the last payment received by an aggrieved employee.
In response to the new law, Maryland employers should have their confidentiality and pay policies and practices reviewed before October 1st.