Pay equity is currently in the news. Although pay equity laws have been on the books for decades, there is a persistent and significant wage gap between men and women. To address this issue, the federal Equal Employment Opportunity Commission (EEOC) is currently seeking to expand the information that it collects from employers to include salary information. In addition, President Obama has been pushing for Congress to enact the Paycheck Fairness Act, which would address some deficiencies in the current federal pay equity law. In her acceptance speech to the Democratic convention on July 28, 2016, Democratic presidential nominee Hillary Clinton expressly included pay inequality as a concern. Massachusetts has now joined this chorus. On August 1, 2016, Governor Baker signed into law pay equity legislation, which substantially revamps the protections in the Massachusetts Equal Pay Act. These changes will go into effect in July 2018.
What does this mean for Massachusetts employers?
The revamped Massachusetts pay equity law eliminates one key and common defense — specifically, an applicant’s or employee’s prior earnings. The law prohibits employers from asking applicants about prior earnings or using prior earnings as a benchmark in setting compensation. The law allows employers to ask about salary information, including contacting an applicant’s former employers seeking salary information, only after an offer of employment with compensation has been negotiated and made to the applicant.
The law makes clear that an employer cannot stop employees from asking about other employees’ wages, or disclosing their own wages, although there is no obligation of an employer to disclose other employees’ wages, and certain personnel (human resources employees and supervisors) may be prohibited from disclosing employees’ salaries without their consent.
Following the lead of the federal Equal Pay Act, the law makes clear that pay differentials are not unlawful when justified by merit, seniority and other specified factors. The newly-enacted amendment makes clear that an employer may not take into account leave time taken for pregnancy-related conditions or for protected parental, family and medical leave in computing seniority.
The revamped law also creates an affirmative defense, allowing employers to escape liability under state law where they have undertaken, in good faith, a pay disparity analysis and have taken reasonable steps to address pay equity issues. To qualify for this defense, the pay disparity study must meet certain criteria, and the statute directs the Attorney General to issue templates or forms that employers may use.
The revised statute increases the statute of limitation for bringing claims from one year to three years, and also makes clear that aggrieved employees do not need to file a claim with the Massachusetts Commission Against Discrimination (as they must with other claims of discrimination) but can go directly to court. The statute expressly allows for class action litigation, stating that employees may proceed on behalf of themselves and other “similarly situated” employees. As before, violation of the statute allows an aggrieved employee to receive the amount of underpayment, plus an additional amount in liquidated damages, and reasonable attorneys’ fees and costs.
To prepare for these changes, employers should take the following steps:
On a federal level, employers should also be aware of the following: