Massachusetts' Pay Equity Legislation

Overview.  Massachusetts is the latest state to pass expansive pay equity legislation to combat the gender wage gap, and is the first state ever to ban employers from requesting salary history as part of the pre-offer hiring process, and first ever to require posting of employee rights under its Equal Pay Act.

Effective Date. The legislation will take effect on January 1, 2018.

Details.  Massachusetts’ new law will require “equal pay for comparable work.” The law prohibits discrimination by paying a different wage, including “benefits or other compensation,” to members of the opposite sex who are performing comparable work, which means work that is (1) “substantially similar in that it requires substantially similar skill, effort and responsibility” and (2) “is performed under similar working conditions.” The legislation defines “working conditions” as “circumstances customarily taken into consideration in setting salary or wages, including, but not limited to, reasonable shift differentials, physical surroundings and hazards encountered by employees performing a job.” This definition broadens the standard for pay equity by including more positions when comparing compensation.

A wage variation will be allowed only if based on one or more of the following factors:

i.              A bona fide system that rewards seniority with the employer; provided, however, that time spent on leave due to a pregnancy-related condition and protected parental, family and medical leave, shall not reduce seniority;

ii.              A bona fide merit system;

iii.            A bona fide system which measures earnings by quantity or quality of production or sales;

iv.            The geographic location in which a job is performed;

v.             Education, training or experience, to the extent such factors are reasonably related to the particular job in question and consistent with business necessity; or

vi.            Travel, if the travel is regular and necessary condition of the particular job.

The Massachusetts law is also unique in that it requires that pregnancy-related conditions and protected parental, family, and medical leaves not reduce employee seniority.

Pay Transparency
The law provides that employers in Massachusetts cannot prohibit employees from inquiring about, discussing, or disclosing information about their compensation. Employers are, however, allowed to prohibit human resource employees, or other employees whose job responsibilities require them to have access to other employee’s compensation information, from disclosing information about another employee without consent.

Ban on Salary History
The law also bans employers from seeking salary history as part of the interview or employment application process, until “after any offer of employment with compensation has been made to the prospective employee.”  Also, when screening job applicants, employers cannot require that their prior salary satisfy a minimum or maximum criteria. Several other states – among them, California and Colorado – have similar legislation pending.

Self-Evaluation Affirmative Defense
Although the law extends the statute of limitations to file a pay discrimination claim from one year to three years, the law also provides a significant affirmative defense for employers that proactively seek to eradicate compensation differentials by self-auditing their pay practices. The law provides employers an affirmative defense to liability if, “within the previous three (3) years and prior to the commencement of an action,” the employer “completed a self-evaluation of its pay practices in good faith and can demonstrate that reasonable progress has been made towards eliminating compensation differentials based on gender for comparable work in accordance with that evaluation.” The law allows employers to design their own self-evaluation as long as it is “reasonable in detail and scope in light of the size of the employer.” The affirmative defense will allow employers to be proactive in their efforts to eliminate wage variations without fear of reprisal from employees since it cannot be used as evidence of a violation of the law.

Posting Requirement
The new law requires employers to “post a notice in their workplaces notifying employees of their rights under section 105A of chapter 149.” The notice needs to be posted in one conspicuous location where employees congregate. This requirement, like so many others, is unique to Massachusetts and is not a requirement under New York or California’s Pay Equity legislation.