Equal Pay Certificate FAQ

Governor Dayton recently approved a package of bills titled the Women’s Economic Security Act to enhance conditions for women in the workplace. A portion of the new law requires businesses in certain situations to apply for and provide an “equal pay certificate.” Below are anticipated frequently asked questions to help guide businesses as they are familiarizing themselves with the law. You can find a full text of the Act here.

What is an Equal Pay Certificate?

A certificate periodically submitted to the Minnesota Department of Human Rights which confirms a business is in compliance with equal pay laws. This certificate is in addition the already existing requirements of certificates of compliance necessary to prove that a contracting business has filed an affirmative action plan and other related reports.

When is an Equal Pay Certificate Necessary?

When a business with 40 or more full-time employees in Minnesota or in the state where the business has its primary place of business, on a single day during the prior 12 months, enters into a contract in excess of $500,000 with the State of Minnesota or other metropolitan agency.

How Do I Get an Equal Pay Certificate?

Pay a $150 filing fee and submit an equal pay compliance statement.

What is an Equal Pay Compliance Statement?

A statement signed by the chairperson of the board or CEO of the business that avers the following:

  1. The business is in compliance with Title VII of the Civil Rights Act of 1964, Equal Pay Act of 1963, Minnesota Human Rights Act, and the Minnesota Equal Pay for Equal Work Law;
  2. The average compensation for its female employees is not consistently below the average compensation for its male employees within each of the major categories in the EEO-1 employee information report for which an employee is expected to perform under the contract. The contractor is, however, able to take into account factors such as length of service, requirements of specific jobs, experience, skill, effort, responsibility, working conditions of the job, or other mitigating factors [note that the term “consistently below” is not defined in the statute];
  3. The business does not restrict employees of one sex to certain job classifications and makes retention and promotion decisions without regard to sex;
  4. Wage and benefit disparities are corrected when identified; and
  5. How often wages and benefits are evaluated to ensure compliance with the laws cited in number 1 and number 2, above.
  6. Lastly, the equal pay compliance statement should also indicated whether the business, in setting compensation and benefits, utilizes: a) a market pricing approach, b) state prevailing wage or union contract requirements; c) a performance pay system; d) an internal analysis; or 5) an alternative approach to determine what level of wages and benefits to pay its employees. A description of an alternative approach is required.

What Happens After an Equal Pay Compliance Statement is Submitted to the Commissioner?

The commissioner must issue an equal pay certificate or a statement of why the application was rejected within 15 days of the application.

How Long is an Equal Pay Certificate Valid For?

A certificate is valid for 4 years.

Are There Exemptions to Providing an Equal Pay Certificate?

Yes. If the commissioner decides that compliance with this requirement would cause undue hardship. Also, the equal pay certificate requirement does not apply to contracts for goods and services to individuals under the following Minnesota Statute Chapters: state personnel management (43A), accident and health insurance (62A), non-profit service plan corporations (62C), health maintenance organization (62D), comprehensive health insurance (62E), medical assistance for needy persons (256B), group residential housing (256I), Minnesotacare (256L), or vocational rehabilitation (268A). Basically, the requirement does not extend to contracts with the state involving insurance or health care. Also, the requirement does not apply to contracts the State Board of Investment enters for investment options.

Can an Equal Pay Certificate Ever be Revoked?

Yes. An equal pay certificate for a business may be suspended or revoked by the commissioner when the business fails to make a good-faith effort to comply with Title VII of the Civil Rights Act of 1964, Equal Pay Act of 1963, Minnesota Human Rights Act, and the Minnesota Equal Pay for Equal Work Law, fails to make a good faith effort to comply with the equal pay certificate requirements or has multiple violations of either the equal pay certificate requirements or Title VII of the Civil Rights Act of 1964, Equal Pay Act of 1963, Minnesota Human Rights Act, or the Minnesota Equal Pay for Equal Work Law.

Can a Contract That Was Awarded to a Business be Revoked if That Business Does Not Comply with the Equal Pay Certificate Requirements?

Yes. If a contract is awarded to a business that does not have an equal pay certificate or is not in compliance with the with Title VII of the Civil Rights Act of 1964, Equal Pay Act of 1963, Minnesota Human Rights Act, and the Minnesota Equal Pay for Equal Work Law (or the other requirements of 363A.44, subdivision 2, paragraph (a)), the commissioner may void the contract. However, the commissioner must notify the parties to the agreement of the commissioner’s intention to void the contract prior to any action. If the contractor who is awarded the contract takes no action after notice from the commissioner, the entity who awarded the contract may then terminate the contract.

Is There Any Recourse if My Business is Notified that the Commissioner Intends to Either Revoke a Contract for Non-Compliance with the Equal Pay Certificate Requirements or Revoke Our Equal Pay Certificate Completely?

Yes. A business may obtain an administrative hearing before the commissioner’s revocation of either the equal pay certificate or an awarded contract. The request for the hearing must be in writing within 20 days after service of the notice by the commissioner.

Can a Business be Audited to Confirm Compliance?

Yes. The commissioner may audit the business’s compliance with the equal pay certificate requirements.

Does the Equal Pay Certificate Require Businesses to Implement “Comparative Worth” or “Pay Equity” Policies?

No. The Commissioner of the Department of Human Rights issued a letter on May 7, 2014 stating that “the proposed language in the bill only to ensure contractors comply with equal pay laws.” He dispelled any rumors that to be in compliance with the bill a business contractor would have to adopt comparative worth policies.

When Does the Equal Pay Certificate Requirements Go into Effect?

August 1, 2014 and applies to any solicitation made on or after that date.