Does Massachusetts’s Pay Equity Law Change the Game?

On July 1, 2018, Massachusetts Pay Equity law takes effect requiring all employers to pay men and women equally for comparable work—a phrase that is different from many similar statutes that have gone into effect over the course of the last few years. What are the key points that employers need to understand about the new law:

• Don’t Ask About Applicant’s Salary and Wage History: If you use an application that requests the past pay or salary history of applicants, make sure that it is changed prior to July 1. The new law prohibits employers from asking applicants questions concerning wage and salary information concerning past employers—either orally or in writing. Employers can seek to confirm past pay practices after an offer of employment (that includes specified compensation) has been made, but ponder the usefulness of that data once the offer has been made. Employees can volunteer past compensation information, but employers should in no way pressure applicants to provide this information.
• Don’t Restrict Discussions of Pay or Wage Information: Employers generally should not be prohibiting employees from discussing their wages or other compensation, as such prohibition may violate an employee’s rights under the National Labor Relations Act. Attempting to institute such restrictions now, however, will result in violation of Massachusetts’s Pay Equity law as well.
• Understanding Comparable Work: It is work that requires substantially similar skill, responsibility, and effort and that is performed under similar working conditions.
• What Affects Differences In Comparable Work: The statute permits differences in pay for comparable work if such pay difference is based on one of the following six factors: (i) a 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 merit system; (iii) a system which measures earnings by quantity or quality of production, sales, or revenue; (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; or (vi) travel, if the travel is a regular and necessary condition of the particular job.
• The Affirmative Defense: Employers who violate the statute are liable for twice the amount of unpaid wages determined to be owed to the employee plus reasonable attorneys’ fees and costs. The statute, however, provides a complete affirmative defense for employers who in the past three years and before a suit is filed, have conducted a good faith, reasonable self-evaluation of pay practices that is reasonable in detail and scope and upon which the employer has shown reasonable progress towards eliminating any identified impermissible differentials revealed by the self-evaluation.
• Do I Have to Audit My Practices? No. There is no affirmative duty to audit practices or conduct a self-evaluation and employers will not be penalized for not performing a self-evaluation.

What are some of the things a Company can do as a result of these changes:

• Create a structure for determining compensation changes and determinations so that the organization takes into account the pay and compensation of comparable individuals when making compensation decisions.
• Train employees who are part of the hiring team as to appropriate and inappropriate questions related to past work experience and compensation.
• Review internal policies and documents to make sure that applications do not seek protected information concerning past compensation and remove policies and practices that limit an employee’s ability to discuss pay and compensation.

Contact a member of Verrill Dana’s Labor and Employment Practice Group to further discuss best practices that your Company can institute to comply with the Massachusetts Pay Equity statute.