Insights

On August 1, Massachusetts Gov. Charlie Baker signed into law the Act to Establish Pay Equity (the Act). The Act passed both the House and Senate unanimously and is aimed at eliminating wage gaps between men and women who perform comparable work. It also contains provisions that protect employees' rights to discuss wages and prohibit employers from requesting salary history from prospective employees. The Act takes effect July 1, 2018.

Wage Differentials and Employee Protections

The Act, which replaces the current Massachusetts Equal Pay Act, provides that employers may not pay any person wages that are less than the wages paid to a person of a different gender for comparable work. Comparable work is defined as work that is substantially similar in that it requires similar skills, effort and responsibility and is performed under similar working conditions. Wages, for purposes of the Act, include all forms of remuneration paid to the employee. The Act does permit variations in wages between employees based on: (1) a system that rewards seniority, as long as the employer does not reduce the employee's seniority because of leave due to a pregnancy-related condition or parental, family or medical leave; (2) a merit system; (3) a system that measures earnings by quantity or quality of production, sales or revenue; (4) the geographic location where the job is performed; (5) education, training or experience that are reasonably related to the job; or (6) travel, if travel is a regular and necessary job condition.

In addition, the Act prohibits employers from:

• Preventing employees from inquiring about, discussing or disclosing information about their own or other employees' wages (although an employer may prohibit human resource professionals, supervisors and similar employees with access to compensation data from disclosing such information without authorization).
• Asking prospective employees for wage or salary history or seeking such information from prospective employees' current or former employers. An employer may confirm prior wages if the prospective employee has voluntarily disclosed that information, and may seek or confirm the prospective employee's wage history after an offer has been made.
• Discharging or retaliating against employees because those employees opposed an alleged violation of the Act, complained about an alleged violation of the Act, testified or participated in an investigation regarding an alleged violation of the Act, or disclosed their wages or the wages of other employees.

Private Right of Action

The Act permits employees to file a complaint in court on their own behalf and on behalf of similarly situated employees without the need to first file a charge of discrimination with the Massachusetts Commission Against Discrimination. The attorney general may similarly pursue claims on behalf of aggrieved individuals. Employers found to have violated the Act may be liable for unpaid wages, plus an additional equal amount of liquidated damages, attorneys' fees and costs.

Statute of Limitations

Any action alleging violation of the Act must be brought within three years of the alleged violation. A violation occurs when (1) a discriminatory compensation decision or practice is adopted; (2) an employee becomes subject to such a decision or practice; or (3) an employee is affected by application of the decision or practice, including each time wages are paid.

Affirmative Defense

Of note, the Act provides an affirmative defense to liability for wage differential claims for employers who have, within three years preceding a lawsuit, completed a self-evaluation of their pay practices and have made reasonable progress toward eliminating compensation differentials based on gender for comparable work. The Act also provides that employers who have completed a self-evaluation in good faith and have made progress in eliminating wage differentials, but who "cannot demonstrate that the evaluation was reasonable in detail and scope," cannot take advantage of the affirmative defense but can avoid the liquidated damages penalty. The Act does not provide any guidance on what constitutes a compliant self-evaluation or how "reasonable progress" toward eliminating pay differentials will be measured, although the Act does provide that the attorney general may issue regulations interpreting the affirmative defense. Presumably any such regulations will provide some guidance as to what constitutes a defensible self-evaluation program.

Actions to Take Now

Pending guidance from the attorney general, employers should begin to plan for the implementation of these requirements long before the July 1, 2018 effective date. Among other things, we encourage employers to contact their employment counsel to consider how best to conduct pay equity audits to assess any wage disparities and identify possible remedial actions, if warranted, and to begin considering where changes may be necessary to hiring and compensation practices.