On April 28, 2009, Governor Culver signed into law Senate File 137, entitled an Act "Providing that Wage Discrimination is an Unfair Employment Practice under the Iowa Civil Rights Act and Providing an Enhanced Remedy.” This law (available here) amends the Iowa Civil Rights Act to expressly provide that pay differentials among employees are unlawful if they are based upon the employee’s age, sex, disability, and several other protected characteristics. Local media coverage of Governor Culver’s signing can be found here.
You might ask, isn’t pay discrimination already unlawful under the Iowa Civil Rights Act? The answer is yes, but this amendment appears to be an attempt to make Iowa law consistent with recently enacted federal legislation governing pay discrimination, known as the "Lilly Ledbetter Fair Pay Act of 2009", which was signed into law in January. It also incorporates provisions of the federal Equal Pay Act, first enacted in 1963.
The law amends the Iowa Civil Rights Act, Iowa Code Chapter 216, in three significant ways:
First, it makes an unfair or discriminatory employment practice to pay an employee in a protected class at a rate less than the rate paid to other employees who are employed within the same establishment for equal work on jobs, the performance of which requires equal skill, effort, and responsibility, which are performed under similar working conditions. Protected classes under the law include age, race, creed, color, sex, sexual orientation, gender identity, national origin, religion, or disability.
Second, it provides that an unfair or discriminatory practice occurs not only at the time a discriminatory pay decision is implemented, but also each time wages, benefits, or other compensation is paid that results in whole or in part from the discriminatory decision.
Third, it provides an “enhanced” remedy. That is, an employee is entitled to recover two times the wage differential paid to another employee compared to the complainant for the time period of the discrimination, or three times the differential in the case of willful violations.
Iowa Employer should take note of several importance aspects of this law that create potential risk and exposure to employee lawsuits:
First, these Amendments actually provide greater protection than Federal law, which applies only to employers with fifteen or more employees. The Iowa Civil Rights Act applies if an employer has four or more employees (although family members are not considered employees for this purpose).
Second, to determine whether pay is discriminatory, the law allows an employee’s pay to be compared not only to others who have similar jobs, but to those whose job functions may be very different , but require "equal skill, effort, and responsibility", or are performed under "similar working conditions". This provision should cause employers more than ever before to have detailed and accurate job descriptions. To the extent pay is different among different job categories, employers should develop objective rationales for such differentials.
Third, the fact that each paycheck can constitute a discriminatory practice may lead to litigation over pay decisions that were made years or even decades ago, but which are discovered only recently.
Finally, the enhanced remedy provides not only additional damages, but also applies to the entire time the employee has been discriminated against. This is a greater protection than available under the federal law, which limits recovery of back wages to two years.
Given the enhanced protection provided under the Iowa Civil Rights Act as compared to federal law, employers can expect claims under this law to be filed in State instead of Federal Court.