The Law @ Work

Is it Time to Conduct (Another) Pay Equity Audit?

By Amelia J. Holstrom

Back in 2016, Governor Charlie Baker signed the Massachusetts Equal Pay Act (MEPA) into law. The law imposed new demanding equal pay obligations on employers. Thereafter, in early 2018, the Massachusetts Attorney General released guidance on the new law, which you can read more about here. The law went into effect on July 1, 2018.

Under MEPA, which was aimed at strengthening pay equity for women in the Commonwealth, 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 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.  We wrote about how two seemingly different types of jobs could be considered comparable work under MEPA in a blog post here.

Good Faith Self-Evaluation

MEPA does provide a silver lining for employers. Employers who conduct a good faith self-evaluation of their pay practices within the three-year period before an equal pay lawsuit is filed and demonstrate reasonable progress towards eliminating any wage differentials are entitled to an affirmative defense under the law.

This means that employers who adequately audit their pay practices within the three years before a lawsuit is filed can 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.”  

Many employers conducted these audits in 2018, just before or soon after the law went into effect. Although it probably seems like that was only yesterday, July 1, 2021, will mark the third anniversary of MEPA’s implementation. Employers who conducted self-evaluations in 2018 to avail themselves of the affirmative defense need to conduct another self-evaluation soon or they will lose the ability to rely on that 2018 audit as an affirmative defense soon.

Benefits of Legal Counsel

The Attorney General’s guidance on MEPA includes a step-by-step guide for the self-evaluation process, but it also recommends that employers consult with legal counsel in connection with the pay equity audit to ensure that they are using the most appropriate analysis for their organization. We agree. 

In addition to assisting with the form of the analysis, your employment attorney can provide a legal opinion as to whether particular jobs are comparable under MEPA and whether justifications for pay disparities meet the requirements of the new law. Moreover, having an attorney involved in the self-evaluation means the evaluation will be protected by the attorney-client privilege, in which case an employer would only have to reveal the results of the self-evaluation if it wanted to. Without this protection, an employer risks having its self-evaluation used as evidence against it if an employee files a claim.  

If you would like to discuss MEPA or conducting a self-evaluation of your pay practices with one of our attorneys, please reach out to our office. You may also click here for more information about our compensation audit services.

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