Massachusetts has joined a growing number of states that have enacted pay transparency laws. The Massachusetts law, which Governor Healey signed on July 31, 2024, contains two broad requirements. First, employers will be required to inform employees and applicants about the pay ranges for positions. Second, employers will be required to submit certain federally mandated employee information to the Secretary of the Commonwealth.
The Pay Range Disclosure Requirement
The pay range disclosure requirements will go into effect on July 31, 2025, and will apply to employers with 25 or more employees in Massachusetts. The “pay range” for a position is the annual salary range or hourly wage range that the employer reasonably and in good faith expects to pay for the position. Pay range information is to be: 1) included in all job postings and advertisements; (2) disclosed to an employee who is offered a promotion or transfer to a new position with different responsibilities; and (3) disclosed, upon request, to an employee holding the position or to an applicant for a position. These requirements also apply to agents of covered employers, such as recruiters and placement agencies.
These requirements will be enforced by the Massachusetts Attorney General. Violations will result in a warning for the first offense, a fine of not more than $500 for a second offense, and a fine of not more than $1,000 for a third offense. Additional offenses may be subject to fines ranging from $7,500 to $25,000. An offense includes one or more deficient job postings during a 48-hour period. For the first two years that the law is in effect, employers will be able to avoid fines if they cure the defect within two business days after being notified of a violation. There is also a prohibition against retaliating or discriminating against anyone for asserting their rights under this law.
EEO Report Submission Requirement
The requirement to submit EEO reports will go into effect in early 2025 and will apply to employers with 100 or more full-time employees and who are subject to federal EEO-1, EEO-3, EEO-4, or EEO-5 reporting requirements. Employers will be required to file these federally mandated reports with the Commonwealth. EEO-1 reports are to be filed annually, with the first report due by February 1, 2025; EEO-3 and EEO-5 reports are to be filed by February 1 of each odd-numbered year; EEO-4 reports are to be filed by February 1 of each even-numbered year. The Executive Office of Labor and Workforce Development will assemble the information and publish aggregate wage data reports. The Attorney General has enforcement responsibilities, and violations will result in fines that are comparable to those listed above.
Next Steps
In preparation for the new law going into effect, employers should review their compensation practices and make sure that they have established pay ranges for each position. Employers should ensure that each employee’s compensation is consistent with those ranges. Employers should consider conducting a pay equity audit to make sure that any differences in compensation are due to legitimate nondiscriminatory factors. Employers who operate in multiple states will also need to review the laws of those other states to develop a comprehensive framework for addressing pay transparency. For example, some states, including Colorado, Illinois, and Washington, require the disclosure of employee benefits.
If you have any questions on the pay transparency laws and how they may apply to your business, please reach out to Laurie Rubin, Dan Tarlow, or any member of Prince Lobel’s Employment Law Practice Group.