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Are You Prepared for the New Massachusetts Equal Pay Act?

In the past few years, many states have enacted, or updated, new laws to ensure pay equity between men and women. Additionally, many states and cities have set strict salary history bans in the hopes of addressing gender bias.

The new Massachusetts Equal Pay Act (MEPA) will go into effect on July 1, 2018 and all employers must comply. 

Preparing your Organization

Under the guidance of Hillary Massey, an Associate in the Labor & Employment practice of law firm Seyfarth Shaw, we’ve put together an overview of some notable parts of the updated Mass Equal Pay Act.

Under MEPA, employers must:

– Not discriminate on the basis of gender in the payment of wages, including all forms of remuneration

– Not pay any person a salary or wage rate less than the rates paid to employees of a different gender for comparable work

– Explain the entire differential as to any employee, based on factors enumerated in the statute

– Remember that wages includes all forms of remuneration

Comparable Work

MEPA defines “comparable work” as:

– “Requiring substantially similar skill, effort and responsibility and is performed under similar working conditions”

– Defines “working conditions” relatively broadly, including “the circumstances customarily taken into consideration in setting salary or wages”

There are several acceptable factors that may be used to defend differentials, including

– Seniority system 

– Merit system

– A system which measures earnings by quantity or quality of production, sales or revenue

– Geographic location or requirement that an employee travels as part of their role

– Education, training or experience “to the extent such factors are reasonably related to the particular job in question”

Penalties and damages

Violations may be more costly under the updated act, and could include:

– Double damages (note, there is no good faith defense except based on an employer’s pay equity assessment)

– A three-year statute of limitations that is reset each time wages that are under violation are paid

– Private right of action “by any one or more employees . . . on their own behalf, or on behalf of employees similarly situated” 

Salary History Ban

Under MEPA, it will be unlawful for an employer, employment agency or agency representative to question a candidate or former employer about the applicant’s salary history, including wages, benefits, bonuses, PTO and other compensation. Also noteworthy:

– Candidates may voluntarily provide salary history at which time a prospective employer may confirm the information

– Hiring agents cannot seek salary information from an applicant’s prior employers before making an offer, but may seek or confirm a prospective employee’s wage or salary history after making an offer that includes compensation

– Requests for salary expectations are permitted as long as an employer does not ask improper follow-up questions such as “what is that expectation based on?”

– An employee’s salary history is not allowed to be a defense in an equal pay action

Geographic Reach

The Massachusetts’ Attorney General’s office has stated that the law, and salary history ban, applies to employees “with a primary place of work in Massachusetts,” regardless of where the employee lives.  The location where an employee does most of his or her work is considered the primary place of work. If an employee spends work hours traveling outside the Commonwealth, but regularly returns to the state, Massachusetts serves as the primary place of work. Similarly, if an employee telecommutes to a Massachusetts worksite, MA is the primary place of work. 

Pay Equity Reviews

According to the Massachusetts’ Attorney General’s office: “MEPA provides a complete defense to a legal claim for any employer that has conducted a good faith, reasonable self-evaluation of its pay practices within the previous three years and before an action is filed against it. To be eligible for this affirmative defense, the self-evaluation must be reasonable in detail and scope and the employer must also show reasonable progress towards eliminating any unlawful gender-based wage differentials that its self-evaluation reveals. The employer bears the burden of proving that it has met these standards.”

Further, the pay equity review may:

– be of the employer’s own design, so long as it is reasonable in detail and scope in light of the size of the employer, or may be consistent with standard templates or tools issued by the Attorney General

Remediation: Key Decision Points

If you discover a pay difference within your organization, consider:

– Which employees should receive an adjustment?

– How “deep” is the remediation?

– Is there a limit to the pay adjustments?

– How will the pay adjustments be calculated?

– When will the adjustments be made?

– A reduction in wages of “any employee” solely to comply with the statute is prohibited

The Massachusetts Pay Equity Act is complex and pay inequities can be difficult to identify and address. If you haven't already changed your process to ask for salary or total compensation expectations instead of salary history, you must do so by July 1, 2018. Not conforming to these laws can result in heavy penalties and compliance could require an investment in both time and dollars. Ensure your legal and HR teams are up-to-date on the changes by utilizing the resources below.

Resources:

Massachusetts Equal Pay Law, Commonwealth of Massachusetts’ Resource page including pay calculation tools for self-auditing

Massachusetts’ Office of the Attorney General, Pay Equity Overview and FAQ

The Mass Pay Equity Law and its Impact on Hiring & Recruitment, WinterWyman & Seyfarth Shaw webinar recording

Seyfarth Shaw's Trends and Developments in Pay Equity Litigation

Seyfarth Shaw's 50 State Pay Equity Desktop Reference

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