The Massachusetts Equal Pay Act (“MEPA”) takes effect on July 1st.  Under the new law, employers may be liable for unpaid wages, double damages, and attorneys’ fees for unlawful gender-based pay disparities.

To prepare for the new law, we recommend that our clients conduct an internal analysis of their pay practices and take steps to eliminate pay disparities.  This internal analysis will both enable employers to remedy any problems before the law takes effect and can be used as an affirmative defense if an employee files a claim for unlawful pay practices.

The Massachusetts Attorney General has recently issued the following guidance for employers on how to conduct such a self-evaluation to satisfy the new law:

1.  Gather relevant pay data.

Pay data should include gender, location, job function, performance, seniority, education and certifications, exempt/non-exempt status, and all elements of compensation, including hourly rate, commissions, bonuses, and other incentive compensation.

2.  Identify comparable jobs.

Job titles alone do not determine comparability.  Employers should consider all aspects of the job, including skill and responsibility required and working conditions, and group similar jobs into categories.

3.  Calculate whether men and women are paid equally.

For small companies with straightforward job categories, this analysis can be a simple comparison of average wages across job groupings.  Larger and more complex organizations may need to consider more advanced statistical analyses.  The Attorney General also recommends that companies conduct one-to-one comparisons between male and female employees within the same job grouping.

4.  Evaluate reasons for pay differences.

Some pay differences are permissible under MEPA.  Employers can pay individuals differently based on (a) seniority; (b) a bona fide merit system; (c) production, sales, or revenue; (d) location; (e) education, training, or experience; and (f) travel requirements.  If you identify any gender-based pay differences, analyze those differences to see if they are caused by one of these permissible factors.

5.  Remedy any unlawful pay differences.

Employers should begin taking steps to remedy any unlawful pay differences as soon as possible.  The statute gives employers a six-month window to fix any problems identified in a self-evaluation.  After this six-month period, an aggrieved employee can use the self-evaluation – and the company’s failure to remedy the problem – as evidence against the employer in court.  In remedying pay differences, employers may adjust compensation upward, but may not reduce any employee’s pay.

6.  Adjust pay practices moving forward.

Employers should examine the reasons underlying any unlawful gender-based pay differentials that they identify – such as differences in starting salary or raises over time – and take steps to implement new processes to avoid these problems in the future.

We recommend that our clients redo this self-evaluation at least every three years.

Additionally, as we have discussed in prior newsletters, effective July 1, Massachusetts employers may no longer ask applicants about their salary history.  Finally, the law echoes the current requirement under federal law that employers may not prohibit their employees from discussing their salaries/pay rates with each other.

Employers with offices outside Massachusetts should be mindful that pay equity laws have recently been passed in other jurisdictions as well.  While more jurisdictions have bills under consideration, laws have been passed in California, Delaware, New York, New York City, Oregon, Puerto Rico, San Francisco, and Philadelphia.

For more information on the upcoming Massachusetts law, please see:

http://law.marshallhalem.com/massachusetts-legislature-approves-pay-equity-bill-july-2016/

http://law.marshallhalem.com/auditing-pay-practices-preparation-massachusetts-pay-equity-law-revised-eeo-1-form-july-2017/

As always, please feel free to contact us if you have any questions or need assistance.  Our attorneys are always available to assist you in conducting self-evaluations and ensuring that your pay practices comply with the new law.