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Employment Law Alert

Massachusetts Pay Equity Law Imposes New Restrictions on Employer Pay and Hiring Practices

August 11, 2016

On August 1, 2016, Massachusetts Governor Charlie Baker signed “An Act to Establish Pay Equity (the Act)” into law. The Act, which does not become effective until July 1, 2018, will require Massachusetts employers to pay men and women equally for comparable work. It also forbids employers from asking prospective employees about salary history or restricting employee discussion of pay. The Act imposes significant consequences for violations of the law.

What will the Act Forbid?

Employers May Not Pay Unequal Wages

The Act will make it unlawful for employers to pay unequal wages to employees of different genders who perform comparable work. The Act broadly defines wages to include “all forms of remuneration for employment.”

Massachusetts employers are already forbidden from pay discrimination on the basis of gender under the existing federal Equal Pay Act, Title VII of the Civil Rights Act, the Massachusetts Equal Pay Act, and Massachusetts’ state discrimination law, M.G.L. c. 151B. However, those existing laws generally relate to men and women doing the same job, while the new Act will provide additional protections for employees, as it relates to men and women doing different but “comparable work.” “Comparable work” is defined as work that is “substantially similar” in terms of skill, effort, and responsibility and is performed in similar working conditions. Under the Act, employees’ job titles or job descriptions will not be determinative of whether work is deemed to be comparable. Rather, a careful analysis of the duties and work performed will be necessary to determine whether employees are engaged in “comparable work.” The Act does, however, allow for “variations in wages” based on:

  • “a system that rewards seniority with the employer” (with the exception that time spent on a pregnancy, parental or family leave of absence cannot reduce seniority);
  • a “merit system;”
  • a system which measures earnings “by quantity or quality of production, sales, or revenue;”
  • the geographic location in which a job is performed;
  • education, training, or experience, to the extent such factors are “reasonably related” to the job; or
  • travel that is “a regular and necessary condition” of the job.

Importantly, under the new law, employers will be forbidden from lowering more highly paid employees’ salaries “solely” in order to comply with the law.

Employers May Not Inquire into Applicants’ Pay History

The Act will forbid employers from seeking a prospective employee’s salary history from the prospective employee or a former employer unless the prospective employee voluntarily discloses it. Once an offer including pay has been negotiated and made, however, an employer may seek or confirm the prospective employee’s wage or salary history.

Employers May Not Restrict Employees from Discussing Wages

The Act further prohibits employers from restricting employees from “inquiring about, discussing or disclosing information about either the employee’s own wages or about any other employee’s wages.” The federal National Labor Relations Act already protects employees’ rights to discuss their compensation; the New Act will provide employees with a right of action under State Law. However, employers will not be required to disclose wage information to any third party and employers can prohibit employees whose job responsibilities require or allow access to compensation information from disclosing their co-workers’ compensation information to a third party without prior written consent from the employee.

Employers May Not Retaliate

Retaliation against an employee or applicant who has “opposed any act or practice made unlawful” under the Act or who has disclosed their own compensation or discussed the compensation of others is forbidden.

What will be the Consequences for Failure to Comply with the Act?

The Act imposes significant liability for violations. Damages authorized under the Act include unpaid wages resulting from unequal compensation practices, liquidated damages in the same amount as the unpaid wages, and reasonable attorneys’ fees and costs.

In addition to giving the Massachusetts Attorney General the right to sue, the Act grants employees a private right of action, and permits employees to bring claims either individually or as a class action. Unlike with other discrimination-based compensation claims, employees will be able to bring claims under the Act directly to court, without having to exhaust administrative remedies by filing a charge with the Equal Employment Opportunities Commission or the Massachusetts Commission Against Discrimination.

Are there Any Defenses to the Act?

The Act grants employers who have completed a “self-evaluation of its pay practices in good faith” and “can demonstrate that reasonable progress has been made towards eliminating wage differentials based on gender for comparable work” an affirmative defense against a claim for pay discrimination under the Act. The affirmative defense is available to an employer only for a period of three years following the completion of the self-evaluation. While there are no guidelines for completing self-evaluation, it must be “reasonable in detail and scope in light of the size of the employer” or “consistent with standard templates or forms issued by the attorney general.”

What Steps Should Employers Take?

Employers should consult with employment counsel about how to best undertake a review of their pay and hiring practices to ensure compliance with the new law. Specifically, employers should consult with counsel about completing a “self-evaluation” of their pay practices and how to take steps to remedy any discrepancies found. (Employers should also plan to revisit their self-evaluation at least every three years in order to take advantage of the Act’s affirmative defense).

Employers should also review and revise offer letters, policies and applications to ensure that they do not request prior compensation information or forbid the disclosure of wage information.

Please contact a member of the Employment Law Group to discuss a reviewing pay practices, revising offer letters, policies and employment applications in light of the Act.

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