Massachusetts Passes the Pay Equity Act
This past week the Massachusetts State Legislature unanimously passed, and Governor Baker signed into law the Pay Equity Act, making Massachusetts the first state in the nation to have legislation that prohibits employers from asking candidates about their salary history at their current or prior jobs. Instead, the hiring manager needs to offer the candidate a wage based upon the value of the work being performed rather than being based on the candidate’s current earnings.
The new law, which takes effect on August 1, 2017, seeks to strengthen protections provided under federal equal pay laws. The provisions of the Massachusetts law are that employers may not discriminate on the basis of gender as it relates to wages for “comparable work.” The law also prohibits employers from restricting employee’s right to discuss wages with co-workers. This provision echoes other federal laws that protect some employees when discussing wages. The intent is that wage transparency will help reduce pay disparities amongst those in similar jobs.
The Massachusetts law encourages employers to perform wage analyses for positions within their organizations. Further, if disparities are found, employers may be able to mitigate potential damages by showing that the assessment was performed and that they took steps to eliminate any disparities. Also, the law prevents employers from lowering wages when disparities are discovered, requiring the lower wage to be adjusted. Lastly, the new legislation provides a more detailed definition of “comparable work” which has been somewhat vague in similar legislation and is not clearly defined in the Federal Equal Pay Act. Of note, the law does allow wage variations based upon seniority, a bona fide merit based system, or education that is reasonably related to the job function.
Nationally, the Equal Pay Act which was passed in 1963 already provides protections against pay disparities between women and men. However, national statistics show that women still earn 79 cents for every dollar earned by a male in the same or comparable position. Nearly every state in the country with the exception of Mississippi and Alabama have state legislation regarding equal pay and fewer states with provisions that provide for wage transparency. With this new legislation, Massachusetts is certainly raising the bar for employers and it is likely that other states or federal legislation will follow.
The significance of the Massachusetts law is that it prohibits inquiries into past wage earnings. It is common for employers to inquire about prior work history on an employment application or during the hiring process. Those inquiries almost always include questions about current or past wages. Many hiring managers use this as the basis for determining what wage they will offer the candidate even if their scale for the position was above that amount. Starting August 1, 2016, Massachusetts employers will be prohibited from inquiring about current or past wages prior to making a job offer that includes a pay rate. This will reduce the likelihood that the future employer will perpetuate any possible prior earning disparities.
The new law does not become effective until August 1, 2017, giving employers plenty of time to prepare. Employers who have not already done so, should begin analyzing the different positions within their organizations in an effort to identify possible wage disparities. The AAA has resources available to any member who is seeking to understand their obligations under this, or any other, state or federal law.