United States: New Massachusetts Pay Equity Law Has Something For Everyone

On August 1, 2016, Governor Charlie Baker signed into law a bill that significantly revamps Massachusetts Equal Pay Law.  The focus of the new law remains the same: eliminating the persistent pay gap between male and female employees.  However, the new law provides both employees and employers with some powerful new tools.  

The law makes clear that employers must pay the same wages to male and female employees "for comparable work."  Although the old law contained similar language, the new law explicitly defines "comparable work" as "work that is substantially similar in that it requires substantially similar skill, effort and responsibility and is performed under similar working conditions."  Additionally, the law attempts to prevent employers from playing games with titles: "a job title or job description alone shall not determine comparability."

At the same time, in a nod to employers, the new law expands the number of exceptions from one to six. The old law allowed pay variation between sexes based only on seniority.  The new law also allows pay variation when it is based on a merit system, productivity, geography, legitimate educational, training and experience factors, and travel requirements of the job.  While the new law expands the list of exceptions, it also modifies the original seniority exception, preventing employers from using time spent away from the office on maternal, paternal, family and medical leave to reduce seniority. 

In what the bill's supporters characterize as a "first in the nation provision," the law prohibits employers from inquiring as to a prospective employee's wage or salary history. Employers are only allowed to discuss this information after the compensation has been negotiated and an offer made, or if the prospective employee volunteers the information. 

Another one of the new law's provisions that has garnered nation-wide attention is the requirement that employers allow employees to discuss their salaries or wages with fellow employees.  This law adds the Commonwealth to the list of a dozen states that already have similar laws on their books.   

The new law includes a number of provision that are less sensational but will certainly affect the rights of employees and employers.  For example, the new law extends the time an employee can bring a claim from one year to three.  It also makes explicit what many courts had recognized previously: the time to bring a claim starts running from "when an employee is affected by application of a discriminatory compensation decision or practice, including each time wages are paid."  As with the old law, when employees decide to bring claims, they may do so in any court of competent jurisdiction without first having to file with the Massachusetts Commission Against Discrimination.  And also like the old law, the new one allows employees to recover the amount of their unpaid wages, additional liquidated damages and attorneys' fees.

On the employer side, the new law provides a safe harbor for employers worried about a flood of new litigation. Any employer who, within the three year period leading up to a suit for wage discrimination, both completes a "self-evaluation of its pay practices in good faith" and "can demonstrate that reasonable progress has been made towards eliminating wage differentials based on gender for comparable work," has an affirmative defense to the pay discrimination claim under this law,  as well as "any pay discrimination claim" under the Commonwealth's general anti-discrimination law.  As long as the self-evaluation is reasonable in detail and scope in light of the employer's size, or is consistent with anticipated templates to be issued by the Attorney General, the evaluation may be designed by the employer.       

Although the law does not go into effect until July 1, 2018, there are a number of practices that employers can institute now to prevent problems in the future. 

  1. Review hiring procedures to ensure that managers, recruiters and employment advertisements do not request information about prospective hires previous salaries or wages.
  2. Eliminate any existing policies that sanction employees for discussing their salaries or wages with other employees. 
  3. Undertake a diligent and thorough company-wide self-evaluation of pay practices.  Although the law provides little guidance as to what form a self-evaluation may take, the law anticipates that the Attorney General will issue evaluation templates in the future. Keep a look out for these. In the meantime, the US Department of Labor, especially the Women's Bureau, have resources available.    
  4. Once this this evaluation is completed, don't sit on the results.  The safe harbor requires employers to demonstrate "reasonable progress" toward eliminating wage differentials.  It is important, therefore, that companies implement plans and procedures to eliminate any identified pay inequities. As with everything, document these actions. 
  5. Ensure that time used for seniority rankings include time employees were away from the office for family and medical leave. 
  6. Be aware of regulations and interpretations issued by the Attorney General on this new law. Such regulations, for example, will likely further define the exceptions. The Attorney General's regulations often differ greatly from the statute's plain language.

Published in North of Boston Business Magazine (fall 2016)

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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