Aug 5, 2016

Massachusetts Raises the Bar for Equal Pay

On August 1, 2016, Massachusetts Governor Charlie Baker signed into law significant legislation aimed at achieving equal pay between men and women entitled an Act to Establish Pay Equity (the “Act”).  The Act sets forth several unlawful employment practices and broadens the definition of pay discrimination.

Under the Act, employers are prohibited from paying different wages or salaries to employees of a different gender unless the variation in compensation is based on seniority, merit, geographic location, education, training, experience, or travel.  Further, employers may not ask prospective employees to state their current or former wages or salary as a condition of employment.  The rationale is that, because women have historically earned less than men, an employer not privy to an applicant’s former salary will be more likely to offer a rate of pay unrelated to an applicant’s past, and potentially disparate, earnings.  Thus, a recommended best business practice is for an employer to disclose compensation figures early in the interview process.

Additionally, to encourage transparency, employers may not prohibit employees from discussing or disclosing their own or other employees’ wages.  Also, an employer who discovers it is paying an unlawful wage differential may not decrease the wages of any employee, regardless of gender, in order to comply with the Act.

Further, the Act defines pay discrimination as a difference in salary or wages between employees of a different gender who perform comparable work.  Comparable work means work that is substantially similar and requires similar skill, effort and responsibility under similar working conditions.  In contrast, the federal Equal Pay Act of 1963 prohibits pay discrimination between individuals performing equal work, requiring a plaintiff to identify an identical comparator who earns a higher rate of pay.  In effect, Massachusetts has made it easier for an employee to prove pay discrimination by demonstrating that he or she earns less than an employee of the opposite sex who performs substantially similar, but not identical, work.

The Act goes into effect July 1, 2018, giving Massachusetts employers nearly two years to evaluate and, where necessary, update their hiring and compensation practices.  In addition to upfront disclosure of compensation to applicants, employers should consider the following recommended best practices:

  • Revise job applications that request compensation information to omit such request or note that disclosure is voluntary;
  • Instruct hiring managers not to ask about an applicant’s current or former compensation; and
  • Ensure that company policies, including those contained in employee handbooks, do not prohibit employees from discussing wages.

If you have any questions regarding these issues raised in this client alert, please contact your labor and employment counsel at Smith, Gambrell & Russell, LLP.

This client alert is intended to inform clients and other interested parties about legal matters of current interest and is not intended as legal advice.

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