The Massachusetts state legislature recently approved a new pay equity bill aimed at reducing the gender gap in wages.  Governor Baker has indicated that he intends to sign the bill into law.  This newsletter provides an overview of what employers need to know about the law now to prepare for these changes.

Effective Date

Once signed, the law will take effect on July 1, 2018.

Equal Pay for Comparable Work

The goal of the bill is to reduce pay differentials for men and women doing comparable work.  The new law defines comparable work as “work that is substantially similar in that it requires substantially similar skill, effort and responsibility and is performed under similar working conditions.”  Job title or job description alone do not determine comparable work.

Under the new law, employers cannot pay men and women different wages for performing comparable work.  However, employers may pay employees in similar roles different wages as long as those differences are based on specific merit-based criteria: (1) seniority, provided that parental and pregnancy-related leave do not reduce seniority; (2) a bona fide merit system; (3) quality or quantity of production or sales; (4) geographic location; (5) education, training or experience; and (6) frequency of travel.

Employers may not reduce pay to comply with the new law.

The penalties for violating the law include unpaid wages, benefits and other compensation, and attorneys’ fees.

The statute of limitations is three years, in contrast to the two-year statute of limitations under the federal Equal Pay Act.

Employers Cannot Prohibit Employees From Discussing Their Wages

Under the new law, employers cannot prohibit their employees from discussing their wages with other employees.  Employers cannot require employees to keep their salary or wages confidential, nor can employers retaliate against employees who discuss their wages with one another.  Although the National Labor Relations Act already mandates that employers cannot prohibit their employees from discussing work conditions, including wages, with one another, the Massachusetts law dovetails with federal law by creating a state law private right of action for employees.

Employers Cannot Ask Job Candidates About Current Wages or Salary History

The new law outlaws a common hiring practice: asking job candidates about their current wages or salary history.  Employers cannot screen applicants based on their current or past wages, nor can they ask candidates to disclose their salary during the hiring process.  However, if an employer has extended an offer including compensation to a job candidate, they can ask the candidate to authorize them to speak with the candidate’s prior employers to confirm their past salaries.

Some Protection for Employers: Conducting Internal Reviews of Pay Practices

The bill offers some protection for employers: if an employer conducts a self-evaluation of their pay practices and makes progress towards eliminating gender-based pay differences, the employer can use these steps as an affirmative defense against future claims of gender-based wage discrimination.  To take advantage of this affirmative defense, a self-evaluation should be conducted at least every 3 years.

TO DO

We recommend that our clients take the following steps now to ensure that they are in compliance with the new law when it takes effect in July 2018:

  • Update handbooks and policies to remove any requirements that employees keep their pay information confidential.
  • Remove questions about current or past pay from all employment applications.
  • Instruct employees involved with hiring, recruitment, and interviewing not to ask job candidates about their current or past pay.
  • Consider conducting an internal review of pay rates and examining the reasons for any gender-based pay differentials, and start thinking about steps the company can take to mitigate these differentials. Although the new law does not take effect for two years, if you are already conducting an internal review of duties and pay in anticipation of the new FLSA overtime regulations and increased $47,476 minimum salary requirement, you may be able to save time and effort by conducting the reviews at the same time.

Please do not hesitate to contact us with any questions about the new law or advice on how to ensure that you are in compliance with the law before it takes effect in 2018.