Massachusetts Passes Extensive Pay Equity Law

Following a nationwide trend toward closing the wage gap between men and women, Massachusetts recently enacted the Act to Establish Pay Equity which replaces the Massachusetts Equal Pay Act and will become effective on July 1, 2018.

While Title VII of the federal Civil Rights Act, the federal Equal Pay Act and the Massachusetts state discrimination law already require employers to pay men and women equal wages for doing the same job; however this new law requires that employers pay equal wages to all employees doing “comparable work.”   The Act states that comparable work requires “substantially similar skill, effort and responsibility and is performed under similar working conditions.”  This should not be determined based on the job title or job description alone.

Under the new law, employers are allowed to have “variations in wages” based only on the following six criteria: (1) a seniority system; (2) a “merit system”; (3) a system based on “quantity or quality of production, sales, or revenue”; (4) geographic location; (5) education, training or experience of the individual; (6) travel required by the position.

Salary History Inquiries

The new law also prohibits employers from asking job candidates for salary history information on an initial employment application, during the interview process or at any other time.  Employers also will no longer be able to contact a candidate’s current or former employer to inquire about salary history.

The only exception to this is when a candidate voluntarily provides pay information.  In this case, the employer can confirm the voluntarily provided information with a current or previous employer of the candidate only after an “offer of employment with compensation has been negotiated and made to the prospective employee.”

Employers should carefully review their employment applications and their hiring and interviewing practices to ensure they are in compliance.  Additional training may be needed for hiring managers to discuss this change.

“Pay Secrecy” Policies

Policies that ban an employee from discussing their own wages or the wages of other employees are also prohibited under the new law.  Employers can prohibit certain employees who have access to wage information as part of their position, such as supervisors and human resource professionals, from disclosing wage information without authorization.

The Act does explicitly state that employers do not have an obligation to provide an employee’s wage information to another employee or any third party who inquires.

Retaliation

Employers are forbidden from taking any form of retaliation, including disciplinary action and/or termination, against an employee for exercising their rights under the new law.  This includes employees who complain about an alleged violation, those that participate in an investigation regarding an alleged violation, and those employees who disclose their wages or the wages of other employees.

Employee Rights

The Act allows individuals to file a suit on their own behalf and also on the behalf of others in a similar situation which could lead to class action lawsuits against employers. There is no need for a complaint to be filed with the Massachusetts Commission Against Discrimination, the individual can immediately bring their claim in court.

The statute of limitations for an employee to file a suit against an employer has been increased from one to three years.  The statute of limitations begins with the later of one of the following: (1) a policy is adopted that is discriminatory; (2) the employee becomes subject to a discriminatory policy; (3) the employee is affected by the discriminatory policy, including every time the employee is paid.

Successful claimants can win unpaid wages, liquidated damages up to the amount of the unpaid wages and attorney fees and court costs.

Affirmative Employer Defense:

The new law does provide employers with an option to defend against these claims. When an employer performs a “self-evaluation of its pay practice in good faith” and “can demonstrate that reasonable progress has been made towards eliminating wage differentials based on gender for comparable work,” the employer is entitled to an affirmative defense against a claim of pay discrimination.  This defense is applicable for a period of up to three years following the completion of the self evaluation.

At this time there are no guidelines or recommendations as to how the self-evaluation should be performed, however the state Attorney General may provide additional guidance prior to the 2018 effective date.

When doing the self review, if any wage discrepancies are discovered there should be no reductions in pay to rectify the discrepancies, only pay increases are permitted for corrections.

It is important to note that this self evaluation is not a defense for claims of pay discrimination under federal law or claims based on the pay secrecy or salary history provisions of the new law.

Employer Recommendations:

Although the new law does not go into effect until July 1, 2018, it is in Massachusetts employers’ best interest to start preparing now for the changes by thoroughly reviewing their existing hiring, compensation and confidentiality policies and procedures and beginning a self-evaluation of wages.  Employers will also want to be sure that all managers are aware of the new changes coming.

 

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