On August 1, Massachusetts added significant teeth to the state’s current equal pay law. The new law, “An Act to Establish Pay Equity,” not only targets compensation decisions, it also affects hiring practices. As of July 1, 2018, when the new law takes effect, employers cannot ask an applicant to provide his or her prior salary history until after the candidate has successfully negotiated a job offer and compensation package. This measure is intended to stop the perpetuation of gender pay disparities from one employer to the next. In addition, employers cannot use an employee’s prior salary history as a legitimate basis to pay a man more than a woman for comparable work.
The definition of comparable work is broad: “work that is substantially similar in that it requires substantially similar skill, effort and responsibility and is performed under similar working conditions: provided, however, that a job title or job description alone shall not determine comparability.”
Under the new law, employees can openly discuss their wages without fear of retaliation. As a result, non-disclosure provisions in handbooks and employment agreements will need to be modified.
Also, while the law recognizes seniority is a legitimate reason for a pay disparity, it prohibits the employer from reducing credit for seniority based on time off due to a pregnancy-related condition or protected parental, family and medical leave. Therefore, policies that take leaves of absence into account when determining pay will need to be adjusted. As in California’s Fair Pay Act, an employer cannot reduce the wages of other Massachusetts employees to rectify any wage disparities. Also, having an employee contract away any rights under the new law will not be a valid defense to an equal pay claim.
The new law also lowers barriers to litigation. The statute of limitations to file an equal pay claim under the new law is extended to three years from the one year limitations period under the current statute. Also, employees can now sue employers in court without having to first file a claim with the Massachusetts Commission Against Discrimination – which is required under the existing statute.
The law does encourage employers to self-audit in order to address pay disparities; the new law provides an affirmative defense to an employer that has completed a self-evaluation of its pay practices and can demonstrate that reasonable progress has been made towards eliminating wage differentials within the three years prior to the commencement of any lawsuit. In addition, claimants are barred from using evidence of a recent audit and remedial steps to prove their equal pay claims.
As far as next steps for the state, the Massachusetts Attorney General will issue regulations interpreting and applying the new law. The law also provides that a special commission will investigate, analyze and study causes of gender-based pay disparity as well as other protected characteristics, including race, color, religious creed, national origin, gender identity, sexual orientation, genetic information, ancestry, disability and military status. This commission must submit its initial findings to the Massachusetts legislature by January 1, 2019.