Massachusetts has joined a growing list of states and other localities to implement pay transparency legislation.
On July 31, 2024, Massachusetts Governor Maura Healy signed into law Bill H.4890. The Bill contains new pay transparency and wage reporting requirements applicable to certain employers with employees in Massachusetts.
New Pay Transparency Requirements
The pay transparency provisions of the new legislation require that a public or private employer with 25 or more employees in Massachusetts (or such employer's agent) must –
- Disclose the pay range of an employment position in a posting of such position (including through an outside recruiter);
- Provide the pay range of an employment position to an employee who is offered a promotion or transfer to a new position with different job responsibilities; and
- Provide a pay range for an employment position to a person who holds that position or an applicant for such position on the person's request.
The pay range means the annual salary or hourly wage range that the employer reasonably and in good faith expects to pay for such position at that time. A “posting” includes “any advertisement or job posting intended to recruit job applicants for a particular and specific employment position, including, but not limited to, recruitment done directly by a covered employer or indirectly through a third party.”
In addition, the pay transparency provisions prohibit an employer from firing or otherwise retaliating or discriminating against an employee or job applicant if such person seeks to enforce their rights under the legislation, makes a complaint to their employer, their employer's agent or the Massachusetts attorney general regarding an alleged violation of this law, institutes (or causes to be instituted) a proceeding under this law or testifies or is about to testify in any such proceeding.
In recent years, several states and localities have implemented similar pay transparency legislation. These include Connecticut, Rhode Island and Vermont. These laws vary in certain respects, including (i) which employers are covered (e.g., how many employees, if any, must be employed by the employer in the applicable state for the law to apply), (ii) what compensation information must be disclosed (e.g. bonus and commission information in addition to base salary and wage ranges), (iii) when and where the information must be disclosed (e.g., if only upon request or in job postings, employment offers or internal employment transfers) and (iv) whether an employee or applicant can pursue a private right of action to enforce the law.
New Wage Reporting Requirements
The legislation additionally includes a provision that employers with at least 100 employees in Massachusetts at any time during the prior calendar year and that are subject to federal wage data report filing requirements must also submit such reports to the Massachusetts secretary of state. These data reports include workforce demographic and pay data categorized by race, ethnicity, sex and job category.
Specifically:
- Copies of EEO-1 data reports (Employer Information Reports) for the prior year must be submitted annually to the extent the employer is subject to EEO-1 data reporting requirements.
- Copies of EEO-3 (i.e. a local union's Local Union Reports) or (EEO-5 Elementary-Secondary Staff Information Reports) data reports for the most recent filing period must be submitted every odd year to the extent the employer is subject to EEO-3 or EEO-5 data reporting requirements.
- Copies of EEO-4 data reports (i.e. State and Local Governmental Information Reports) for the most recent filing period must be submitted every even year to the extent the employer is subject to EEO-4 data reporting requirements.
The deadline for all such submissions is February 1 of the applicable year.
Each year by April 1, the state secretary will submit these wage data reports to the executive office of labor and workforce development, which will later publish on its web site aggregate wage data reports. The individual employer reports will not be considered public records, but any aggregate wage and workforce data reports published by this office on its web site will be considered public records.
Enforcement Actions and Penalties
Neither the pay transparency requirements nor the wage reporting requirements include a private right of action. The Massachusetts attorney general has exclusive jurisdiction to enforce both requirements and may obtain injunctive or declaratory relief in such enforcement. Employers who violate this law will be given a warning for the first offense, will be charged a fine of up to $500 for the second offense, and will be charged a fine of up to $1,000 for the third offense. Subsequent offenses will be subject to civil fines of between $7,500 and $25,000 per violation depending on the circumstances. For the first two years after the legislation takes effect, an employer will have two business days after notice of the violation to cure the violation before a fine is imposed. Violations are not subject to treble damages under the Massachusetts Wage Act.
With respect to the pay transparency requirements, an offense includes one or more job postings for positions made by the same employer during a 48-hour period. This means that each posting that is made during a 48-hour period will not be deemed a separate offense. This is helpful for employers who make multiple job postings at once.
Next Steps for Employers
Now that Governor Healy has signed the law, (i) the pay transparency requirements will take effect one year after her signature, which is on July 31, 2025, (ii) the first EEO-1, EEO-3 and EEO-5 data report requirements must be submitted to the state secretary by February 1, 2025 and (iii) the first EEO-4 reports must be submitted to the state secretary by February 1, 2026.
Employers should assess whether the law currently (or may) apply to them based on how many employees they have in Massachusetts. If the law may apply, employers should implement procedures for when pay transparency disclosure must be made, and should assess all job postings – whether made directly by the employer or indirectly through a third-party – to ensure the postings include the required information. In addition, employers should consider if there are any gaps in pay that should be remediated.
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.