Governor Baker Signs Pay Equity Bill into Law

Yesterday, Massachusetts Governor Charlie Baker signed a new law aimed at strengthening pay equity for women in the Commonwealth. The new law amends the state’s Equal Pay Act by imposing rigorous equal pay obligations and prohibiting certain pay-related conduct. The new law goes into effect on July 1, 2018, but employers should immediately start planning for necessary compliance obligations.

According to the new law, pay differences between persons performing comparable work are only acceptable if based upon: (1) a seniority system; (2) a merit system; (3) a per unit or sales compensation scheme; (4) geographic location of the job; (5) education, training and experience, or; (6) the amount of travel required. The new law defines “comparable work” as work that requires “substantially similar skill, effort and responsibility” and is performed under “similar working conditions.” This “substantially similar” language is broader than the “equal pay” language used under federal law, so it will likely lead to more favorable results for plaintiffs who file under the state law.

In addition to defining comparable work, the new law prohibits employers from engaging in several common pay-related practices. For example, employers may not prohibit employees from talking about their salaries nor may employers screen job applicants on the basis of salary or wage history. The law also penalizes employers who require applicants to provide wage and salary history as a prerequisite of being interviewed or considered for a position. Employers similarly cannot seek an applicant’s pay history information from a current or prior employer.

The new law also extends the statute of limitations for bringing an equal pay lawsuit from one year to three years. Employers should note that each issuance of a paycheck under a “discriminatory compensation decision or practice” will be deemed a separate violation, with its own statute of limitations period attached. A successful employee is entitled to recover unpaid wages, an amount equal to unpaid wages as liquidated damages, and attorney’s fees.

Employers may not reduce the salary of an employee in order to comply with the new law. Employers who have unexcused pay differentials will need to “level up” and bring the pay of the lower earners up to the pay of the highest earner doing “comparable work.”

There is one silver lining for employers. The statute provides an affirmative defense to employers who complete a “good faith” self-evaluation of their pay practices and demonstrate “reasonable progress” toward eliminating any wage differentials. This means that employers who adequately audit their pay practices may avoid liability under the new law, but only if the employer’s self-evaluation is “reasonable in detail and scope in light of the size of the employer.” We recommend that employers consider formally auditing their pay practices to ensure compliance with the new law.

Skoler Abbott will be partnering with Employers Association of the NorthEast (EANE) on Tuesday, August 30, 2016, to present a webinar on the new pay equity law. The webinar hosts will discuss tips and strategies for compliance, including audit suggestions and the benefits of using validated compensation programs (such as Point Factor). We will provide more details on the webinar when they are available.

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