Employers Should Keep Some Questions to Themselves (And Take Other Steps) When the Massachusetts Equal Pay Act Takes Effect on July 1

Nearly all Massachusetts employers, as well as out-of-state employers with employees whose primary place of work is in Massachusetts, will be covered by the new Massachusetts Equal Pay Act (MEPA) beginning July 1, 2018. By passing this law, Massachusetts joins several other states and localities, including California, Delaware, Oregon, Vermont, New York City and San Francisco, that have passed laws prohibiting private employers from requesting pay history information from applicants. In addition, Massachusetts joins several states and localities that have passed laws requiring equal pay for comparable work and protecting employee rights to discuss and disclose their wages.

The Massachusetts Equal Pay Act like other state and local equal pay laws, poses new hurdles for multistate employers undertaking national employment searches. For example, if it is possible that a prospective employee will be chosen or assigned to work primarily in Massachusetts, then employers must be careful not to ask questions or seek information that would violate MEPA, such as wage or salary history. The fact that an employer was initially unsure where an employee would be located is not a valid defense under MEPA. In addition, the continued expansion of state and local laws, including those addressing equal pay issues like MEPA, makes it more complicated for multistate employers to develop certain national policies or practices.

MEPA’s Purpose

MEPA’s overall purpose is to prevent employers from discriminating in the payment of wages based on gender. To accomplish this purpose, MEPA addresses three topics:

• Prohibits employers from discriminating in any way on the basis of gender in the payment of wages or from paying any person a salary or wage rate less than the rates paid to its employees of a different gender for comparable work
• Prohibits employers from seeking the salary or wage history of any prospective employee before making an employment offer, and from requiring a prospective employee’s wage or salary history meet certain criteria
• Prohibits employers from preventing employees from disclosing or discussing their wages, and from retaliating against employees who exercise rights under MEPA

Equal Pay for Comparable Work

“Wages” is defined broadly under MEPA; it includes “all forms of remuneration for employment.”

“Comparable Work” requires substantially similar skill, effort and responsibility, and is performed under similar working conditions. Minor differences in skill, effort or responsibility mean the work is comparable.

• “Skill” means required experience, training, education and ability
• “Effort” means amount of physical or mental exertion necessary to perform the job
• “Responsibility” means degree of discretion or accountability involved in performing the essential job functions, and duties regularly required to perform the job
• “Working conditions” include the environmental and other similar circumstances customarily taken into consideration in setting of salary or wages, including, but not limited to, reasonable shift differentials, and the physical surroundings and hazards encountered by employees performing a job

If two employees perform comparable work, then they must be paid equally, subject to certain limited exceptions. Specifically, MEPA permits differences in pay for comparable work only if based on:

• Seniority system (protected leave periods may not reduce seniority)
• Merit system
• A system that measures earnings by quantity or quality of production, sales or revenue
• Geographic location
• Travel, if regular and necessary for the job
• Education, training or experience reasonably related to the job

Prohibitions Related to Applicants

Under MEPA, Massachusetts employers are subject to the following restrictions when recruiting prospective employees:

• Cannot seek the wage or salary history of a prospective employee from the prospective employee or from his or her current or former employer
• Cannot require a prospective employee’s salary history to meet certain criteria
• If a prospective employee has voluntary disclosed his or her wage or salary history, then the prospective employer may confirm prior wages or salary or permit the prospective employee to confirm his or her wage or salary history
• A prospective employer may seek to confirm a prospective employee’s wage or salary history after an offer of employment with compensation has been negotiated and made to the prospective employee

MEPA also doesn’t prohibit asking applicants questions about their previous performance objectives or performance against those objectives, or from gathering salary or wage history information from public sources, but Massachusetts employers should be cautious when asking such questions or gathering publicly available information and using that information when making hiring and compensation decisions.

MEPA does not prohibit asking an applicant about his or her compensation needs or expectations, but employers must be careful to not ask questions that are likely to elicit a response disclosing the applicant’s wage or salary history. For example, asking a prospective employee to disclose their desired compensation should be an acceptable question, but asking a follow-up question such as “what basis do you have for seeking that compensation” may violate MEPA because it is viewed as seeking wage or salary information from the applicant. MEPA also doesn’t prohibit asking applicants questions about their previous performance objectives or performance against those objectives, or from gathering salary or wage history information from public sources, but Massachusetts employers should be cautious when asking such questions or gathering publicly available information and using that information when making hiring and compensation decisions.

Prohibitions Related to Employees

MEPA also includes the following employer restrictions related to employees:

• Cannot require an employee to refrain “from inquiring about, discussing or disclosing information about either the employee’s own wages, or about any other employee’s wages”
  • The law includes a limited exception allowing an employer to prohibit human resources employees, supervisors or other employees with access to another employee’s compensation information from disclosing such information without the employee’s consent
• Opposed any act or practice unlawful under MEPA
• Made or indicated an intent to make a complaint or other proceeding under MEPA
• Testified, assisted or participated in any investigation or proceeding under MEPA
• Disclosed the employee’s wages or has inquired about or discussed the wages of another employee

Based on these restrictions, Massachusetts employers should not include language in an offer letter, employment agreement, confidentiality agreement, employee handbook or any policy requiring an employee to keep his or her wages (or another employee’s wages) confidential. In addition, Massachusetts employers should not take any adverse action against any employee who engages in any activities protected under MEPA.  

Violations

MEPA includes a three-year statute of limitation, with the limitations period beginning to run: (1) when the discriminatory decision or practice is adopted, or (2) when an employee is subject to or affected by a discriminatory decision or practice, including each time wages are paid.

If an employer violates MEPA, then employees can recover the amount of their unpaid wages plus an additional equal amount of liquidated damages (i.e., double damages) and reasonable attorneys’ fees and costs. MEPA permits employees to bring representative actions on behalf of other employees, and the Massachusetts Attorney General may bring action on behalf of employees.

Next Steps

Employers with employees in Massachusetts who have not yet taken the following steps should do so as soon as possible:

• Remove salary history questions from employment applications.
• Review interview processes to follow MEPA’s compensation inquiry limitations.
• Train recruiters, managers and human resources staff to understand and follow MEPA’s compensation inquiry limitations.
• Review employee handbooks, policies and form agreements that may include language that violates MEPA’s prohibitions on preventing employees from discussing or disclosing their wages, and update these documents as necessary.
• Consider conducting a legitimate pay audit, but consult with counsel before starting any such audit and be prepared to take appropriate action based on the audit findings. MEPA provides a safe harbor opportunity for employers that conduct a good faith, reasonable self-evaluation of their pay practices within the three previous years and before an action is filed against them. To be eligible for this affirmative defense, the self-evaluation must not only be reasonable in scope, but also show reasonable progress toward eliminating any impermissible gender-based wage differences the self-evaluation reveals. The Massachusetts Attorney General’s office offers a guide and checklist, pay calculator, and instructions. These should be used with great care to ensure adequate attorney-client privilege.