Massachusetts Joins The Pay Transparency Trend

As we reported in early 2023 and more recently in January 2024 and June 2024, states continue to pass pay transparency laws that require pay disclosures in job postings. Washington, D.C., joined the trend in January 2024, with Vermont following close behind in June 2024. Now, Massachusetts has become the latest in a growing list of states with pay transparency laws.

Massachusetts' New Law

On July 31, 2024, Governor Healey signed House Bill 4890, which requires certain transparency from employers in disclosing salary ranges. The requirements take effect July 31, 2025.

Who Is Covered?

As to pay disclosure, public and private employers with 25 or more employees in Massachusetts are covered.

As to wage data reports (which are similar to EEO-1 reports), employers with 100 or more employees in Massachusetts at any time during the prior calendar year and who are subject to EEO-1 report filing requirements are covered.

Notably, the coverage requirements only include employees who are in the Commonwealth, excluding any employees employed elsewhere.

What Are the Key Provisions?

1. Disclose Certain Pay Details
   1. Employers with 25 or more employees in Massachusetts must disclose the pay range (defined as the annual salary range or hourly wage that the employer reasonably and in good faith expects to pay for that position) in the following circumstances:
      • In a job posting — a job posting includes any internal or external job postings published by the employer as well as any postings published by a third party, like a recruiter.
      • To any employee who is offered a promotion, transfer, or new position with different job responsibilities.
      • To any employee or applicant upon request (but only as to the position they hold or are applying for).
   5. As opposed to some other pay transparency laws, the law does not require disclosure of benefits information or other forms of compensation.
2. Wage Data Reports
   1. By February 1 each year, employers with 100 or more employees in Massachusetts at any time during the prior calendar year and who are subject to EEO-1 report filing requirements must submit workforce and demographic pay data categorized by race, ethnicity, sex, and job category to the Massachusetts state secretary.
   2. The law also requires employers with unions, public employers, and elementary and secondary school systems with 100 or more employees to submit their respective EEO reporting to the Massachusetts state secretary (done on a biannual basis).
   3. Wage data reports submitted to the Massachusetts state secretary are not considered public records; however, the aggregate reports put together by the Office of Labor and Workforce Development will be considered public records and will be published by industry on the Office's website.
3. Penalties –There are penalties (up to $1,000 for a third offense) that may be assessed for violations of the law.
4. AG Has Exclusive Jurisdiction – The law does not provide for a private cause of action but instead provides the attorney general with exclusive jurisdiction.
5. Ability to Cure for First Two Years – For the first two years after the effective date, employers have two business days after being issued a notice of violation to cure said defect before any fine is imposed.

What Steps Should Employers Take?

The law does not go into effect until July 31, 2025. However, we recommend taking these steps to ensure timely compliance.

1. Pay Audit – Though not required by the law, we recommend that employers conduct internal pay audits to ascertain and fix any pay discrepancies.
2. Implement New Disclosures – Employers should decide how to implement pay disclosure requirements in internal and external job postings as well as communicating such requirements to third party vendors.

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.