CLIENT ALERT
By Mark J. Ventola
Joining a growing number of states that have recently enacted pay equity legislation, on August 1, 2016, The Massachusetts Legislature approved a new pay equity law (the “PEL”). While it will not take effect until July 1, 2018, the PEL will require employers to pay men and women equally for comparable work. There are a number of other provisions in the PEL with which Massachusetts employers should become familiar.
One of the most significant provisions of the PEL, from an employer’s perspective, is the prohibition from inquiring about the salary or wage history of applicants. Because the vast majority of employers use applications that contain questions about work and salary history, and many inquire about this information during the interview process, this prohibition will require employers to review and change their written and verbal practices. The PEL does allow an employer to seek or confirm salary history only after it makes an offer of employment with compensation specified, but employers would do well to consider whether the information is truly needed at that point in the process. The law does allow for a prospective employee to volunteer past compensation information, without consequence.
While it has long been a little-known provision of Federal law, the PEL confirms that employers in Massachusetts will also no longer be able to prohibit employees from asking about, discussing, or disclosing information about pay to other employees. The sole exception will be for employees whose jobs require or allow access to others’ compensation information. In those situations, an employer can require that written consent first be provided by the employee whose information would be disclosed.
In discussing pay equity, the PEL defines “comparable work” as that which is substantially similar, requires substantially similar skill, effort, and responsibility, and is performed under similar working conditions. The statute specifically notes that a job title or job description cannot, by itself, determine comparability. As a result, employers will need to undertake a comprehensive review of each employee’s position and duties when evaluating whether it is complying with the law.
Notably, the statute explicitly carves out some traditional, non-discriminatory reasons for pay differences among employees. As a result, wage variation among men and women is not prohibited if it based on (a) a system that rewards seniority with the employer, (b) a merit-based system, (c) a commission-based system that measures compensation by quantity or quality of production, sales, or revenue, (d) the geographic location of the position, (e) education, training, or experience, if such factors are reasonably related to the position, and (f) travel, if it is a necessary and regular condition of a position. Employers are cautioned, however, that if they pay their employees different wages based on their seniority with the employer, the law specifically prohibits reducing that employee’s seniority due to time that he or she spends on protected parental, family, or medical leave, or leave due to a pregnancy-related condition.
The PEL also explicitly provides for certain unique defenses for employers faced with pay equity claims. Most notably, if an employer is sued for violating an employee’s pay equity rights under the law, it will have an affirmative defense to liability if it has – within the prior 3 years and before the action was filed – completed a ‘self-evaluation’ of its pay practices in good faith and can demonstrate reasonable progress in reducing pay inequity based on gender. This self-evaluation defense can also be used in response to a pay discrimination claim under, Chapter 151B, the Massachusetts discrimination law. In the event, however, that the employer cannot demonstrate that its self-evaluation was reasonable in detail and scope, it may not be able to assert the affirmative defense, but can nevertheless prevent liability for liquidated damages. The law also limits the admissibility in any proceeding of such a self-evaluation or the employer’s remedial steps. Finally, while it is an advisable practice and preventative measure, an employee cannot use an employer’s failure to perform a self-evaluation to create a negative or adverse inference against the employer.
The PEL does foreclose certain defenses to employers. Employers cannot argue that they entered into an agreement with the employee to work for less than the wage to which he or she is entitled. In addition, employers are prohibited from using an employee’s salary history as a defense.
Employers that violate the law are liable for double damages in an amount equal to twice the employee’s unpaid wages as well as the employee’s reasonable legal costs and attorneys’ fees. The PEL also specifically allows for employees, if eligible, to pursue an action as a class or for the Attorney General to pursue an action on behalf of one or more employees.
While the pay equity law provides for a 3-year period in which to bring a claim, the period resets each and every time an employer pays wages that are a result of an alleged pay equity violation. This would occur even if the employee has previously become aware of his or her employer’s discriminatory pay decision or practice.
Finally, an employer, as with other employment-related statutes, cannot terminate or retaliate against an employee for asserting his or her rights, or complying with any requirement, under the pay equity law.
While the pay equity law’s provisions will not go into effect until July 2018, it is advisable for employers to conduct a full review of their written employment application materials, interview practices and training, and salary practices. In particular, employers should consider instituting a system whereby they engage in self-evaluations of their pay equity practices, as contemplated by the statute, on an annual or biannual basis in order to preserve the availability of this affirmative defense. Finally, employers should be cognizant of any regulations that the Office of the Attorney General issues in the intervening years interpreting or analyzing the law.
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Mark J. Ventola is Co-Chair of the firm’s Labor, Employment and Employee Benefits Group.
This article is intended to serve as a summary of the issues outlined herein. While it may include some general guidance, it is not intended as, nor is it a substitute for, legal advice.
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