Changes to Massachusetts Equal Pay Law Coming in July 2018April 30, 2018
Updates to the Massachusetts Pay Equity Act
In an effort to remedy perceived pay inequities based on gender, the Massachusetts legislature recently passed An Act to Establish Pay Equity, which amended the Massachusetts Equal Pay Act (“MEPA”). MEPA prohibits gender discrimination in the payment of “wages.” The changes to MEPA will take effect on July 1, 2018. Last month, the Massachusetts Attorney General published guidelines to help employers as they prepare to comply with the changes. This Advisory summarizes the most significant changes to MEPA and provides recommendations for employers.
The amendments broaden the definition of “comparable work”
MEPA provides: “No employer shall discriminate in any way on the basis of gender in the payment of wages, or pay any person in its employ a salary or wage rate less than the rates paid to its employees of a different gender for comparable work.” The amendments to MEPA broaden equal pay protections by expanding the definition of “comparable work” to mean “work that requires substantially similar skills, effort, and responsibility that is performed under similar working conditions.” The definition does not require jobs to be identical.
The guidance provides examples of comparable positions. For instance, in an elementary school setting, “janitorial and food service jobs generally do not require previous experience in the field or specialized training, and therefore may require comparable skills, even though the substance of the two jobs is different.” Whether or not two positions are comparable involves a consideration of the skill, effort, and responsibility required and the physical surroundings and hazards of each position.
MEPA does permit variations in pay for comparable work if the disparity is attributable to one of six exceptions (or a combination of them): (1) a system that rewards seniority (provided that time spent on leave due to a pregnancy-related condition and protected parental, family, and medical leave shall not reduce seniority); (2) a merit system; (3) a system which measures earnings by quantity or quality of production, sales, or revenue; (4) the geographic location; (5) education, training, or experience to the extent that such factors are reasonably related to the particular job; and (6) travel, if the travel is a regular and necessary condition of the job. For example, an advanced accounting degree is not required for a bookkeeping position but an employee with such a degree may be compensated at a higher level because (under the fifth exception) the accounting skills are relevant to the bookkeeping position.
Employers may not ask about salary history, directly or indirectly
MEPA now forbids employers from seeking wage or salary history information of a prospective employee before making an offer of employment. MEPA also forbids employers from requiring a prospective employee’s wage or salary history to meet certain levels as a qualification of employment. A prospective employee is still free to voluntarily share prior wage or salary information with an employer, and MEPA permits the employer to confirm that information.
Because of the broad definition of “wages,” employers should refrain not only from seeking information regarding a prospective employee’s previous salary, but also information regarding other forms of compensation, such as commissions or benefits.
Employers may not prohibit employees from discussing their compensation
MEPA expressly prohibits employers from restricting employees from discussing wages with one another. Employers may, however, require confidentiality of certain personnel, such as human resources employees, who have access to the pay information of other employees. MEPA also forbids retaliation against employees who attempt to exercise their rights, formally or informally.
Enforcement and liability for MEPA violations
MEPA allows employees to bring pay equity claims within three years from the date of the alleged violation, which can be the date when a discriminatory compensation decision or practice is made, when an employee becomes subject to such decision or practice, or when an employee is affected by the discriminatory compensation decision or practice. An employee may file a complaint with the Attorney General’s Office or opt to file a claim in court; there is no longer any requirement that the employee file first with the Attorney General’s Office.
Violations of MEPA can be quite costly. An employer can be liable for: (1) the amount of the affected employee’s unpaid wages; (2) an equal amount of unpaid wages (i.e., double damages); and (3) the affected employee’s reasonable attorneys’ fees and other costs if he or she is awarded judgment in his or her favor. Note that, as with Wage Act violations, an employer’s intent is irrelevant. Even unintentional violations may result in double damages.
Affirmative defense for employers: self-audits
MEPA provides an affirmative defense for employers that conduct good faith self-evaluations of their compensation practices within the prior three years, and before an action is filed. This safe harbor provision of MEPA allows a full defense or partial defense depending on the self-evaluation.
In order to be eligible for a complete defense, an employer must have conducted a self-evaluation that is “reasonable in detail and scope,” and the employer must show reasonable progress towards eliminating any gender-based compensation disparities identified in the self-evaluation.
A partial defense may be available to an employer if its self-evaluation lacked sufficient detail or scope but was conducted in good faith and the employer has made reasonable progress towards eliminating identified pay disparities. This partial defense forgives the double damages portion of the reward and only requires an employer to pay the affected employee’s unpaid wages and attorneys’ fees and costs.
Evidence of an employer’s self-evaluation and subsequent remedial measures is not admissible in court to demonstrate the existence of a violation of MEPA if the alleged violation occurred before or within six months of the completion of the self-evaluation or within two years of the completion of the self-evaluation, if the employer demonstrates that it has developed and begun implementing a plan in good faith to address gender-based compensation disparities revealed in the self-evaluation.
The guidance provides the basic framework for self-evaluations that are reasonable in detail and scope to assist employers as they conduct self-evaluations in preparation for the July 1, 2018 effective date of the amended provisions of MEPA.
Here are steps an employer can take in the coming months to reduce risks under MEPA:
- Update job applications, interview checklists, and other hiring documents to eliminate any questions regarding previous wage or salary history and eliminate salary criteria in any job descriptions.
- Conduct training for management, human resources, and any other employees who will be interviewing prospective employees to prevent direct or indirect inquiries into wage or salary history.
- Consider conducting a self-evaluation, being particularly mindful that the “comparable work” definition examines the similarity of the actual skill, effort, responsibility, and environment of positions (it does not limit the comparison to the written job descriptions).
- After identifying any gender-based pay differences during the self-evaluation, take reasonable steps to eliminate the disparities.
MEPA has long been a source of claims for Massachusetts employers. However, the new amendments, which broaden the law, and the resulting publicity, will be sure to reinvigorate the use of MEPA as a source of claims and litigation by plaintiffs’ counsel. The broadened definition of “comparable work,” whether working conditions are “similar,” and whether a self-audit conducted by an employer was reasonable in detail and scope may result in more claims and make the defense of those claims more expensive. Employers should look carefully at their pay practices and plan self-audits to take full advantage of MEPA’s safe harbor provision.