A gender pay gap exists in almost every congressional district in the country, according to U.S. Census Bureau statistics outlined in AAUW’s latest report.
Despite the federal Equal Pay Act, which requires that men and women be given equal pay for equal work, on average, working women earn only 80 cents on the dollar compared to their male peers.
Although Congress is considering new federal protections to address this reality, some states have already taken action to further secure the basic right to equal pay for women.
The Massachusetts Equal Pay Act
Massachusetts is one such state. It was the first in the U.S. to pass an equal pay law in 1945, but the gender pay gap persists in Massachusetts (and across the U.S.).
On July 1, 2018, updates to Massachusetts’ long standing equal pay law will go into effect. An Act to Establish Pay Equity amends the original Massachusetts Equal Pay Act (MEPA) to provide more clarity on what constitutes unlawful wage discrimination, as well as to prevent employers from asking job candidates about salary history and past compensation. It also establishes a safe harbor for employers who conduct pay audits.
By expanding the definition of "comparable work," requiring more transparency on pay practices, and setting stronger penalties for violations, Massachusetts lawmakers intend for employers to more proactively close their gender pay gap.
The law applies to nearly all employers in Massachusetts — including state and municipal employers — irrespective of size, and also including employers located outside of Massachusetts with a "primary place of work in Massachusetts." It applies to most employees, including full-time, part time, seasonal, per-diem, and temporary employees. However, the law doesn’t apply to the federal government as an employer or its employees.
Here are key provisions of the amended MEPA that you should know about before the law goes into effect.
Equal Pay for "Comparable Work"
According to the most recent data available from the National Partnership for Women and Families, the median annual pay in MA is $51,343 for a woman while the median is $61,761 for a man doing "comparable" work — a difference of over $10,000.
But what exactly is the definition of "comparable" work under MEPA? Every business — including your own — has its own way of approaching job titles, job duties, seniority, and promotions.
The new law specifically defines "comparable work" as work that requires substantially similar skill, effort, and responsibility, and is performed under similar working conditions — even if the jobs have different titles and duties. MEPA’s definition of "comparable work" is intended to be more broad and inclusive than the "equal work" standard under the federal Equal Pay Act.
Determining whether jobs are comparable will require an analysis of the jobs as a whole. Minor differences in skill, effort, or responsibility will not prevent two jobs from being considered comparable under the new law.
What Constitutes "Wages"?
Similarly, "wages" under MEPA is defined broadly to include not only an employee’s hourly rate or base salary, but all forms of remuneration for work performed.
This includes commissions, bonuses, profit sharing, paid personal time off, vacation and holiday pay, expense accounts, car and gas allowances, retirement plans, insurance, and any other benefits, whether they are paid directly to an employee or to a third-party on the employee’s behalf.
Additional guidance on the definitions of “comparable work” and “equal pay” can be found can be found in Section 4 of the Massachusetts Attorney General’s official guidance on the amendment.
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Permissible Variations in Pay
All said, MEPA permits differences in pay for comparable work only when based upon:
A system that rewards seniority with the employer (provided, however, that time spent on leave due to a pregnancy-related condition and protected parental, family, and medical leave shall not reduce seniority);
A merit system;
A system that measures earnings by quantity or quality of production, sales, or revenue;
The geographic location in which a job is performed;
Education, training or experience to the extent such factors are reasonably related to the particular job in question; or
Travel, if the travel is a regular and necessary condition of the particular job.
A full list of the acceptable reasons for differences in pay for comparable work can be found in Section 5 of the Massachusetts Attorney General’s official guidance on the amendment.
Other Key Provisions
MEPA also adds several key protections for employees and job applicants:
Employers may not prohibit employees from disclosing or discussing their wages.
Employers may not seek the salary or wage history of any prospective employee before making an offer of employment that includes compensation, and may not require that a prospective employee’s wage or salary history meet certain criteria.
Employers may not retaliate against any employee who exercises his or her rights under the law.
Liability and Enforcement
The statute of limitations for employees to file a claim under MEPA protections is three years. A violation occurs when a discriminatory compensation decision is made or other practice is adopted, and each time an employee is subject to or affected, including each time wages are paid.
The penalties for non-compliance are steep. Employers found to be in violation of MEPA are generally liable for:
Double the amount by which an employee was underpaid
The affected employee’s reasonable attorneys’ fees and other costs
Someone who believes their rights under MEPA have been violated can file a claim in court on their own behalf, or on behalf of other similarly-situated employees.
They can also file a complaint with the Attorney General’s Office, who will review all complaints and determine whether further action by the office is appropriate. If so, the Attorney General may file a claim in court on behalf of one or more employees or applicants.
Affirmative Defense Protections for Employers
The new law is primarily concerned with preventing future pay inequity, not providing for retroactive punishment of businesses who act in good faith.
Along these lines, MEPA provide a complete defense (affirmative defense) for any employer that, within the previous three years and before an action is filed against it, has conducted a good-faith reasonable self-evaluation of their pay practices.
To be eligible for this affirmative defense, the self-evaluation must be "reasonable in scope and detail," and the employer must also show reasonable progress toward eliminating any unlawful gender-based wage differentials that its self-evaluation reveals (see Section 10 of the Massachusetts Attorney General’s guidance). To be eligible for affirmative defense, the employer bears the burden of proof for its self-evaluation and actions taken towards eliminating any unlawful gender-based pay practices it revealed.
What Actions Should I Take to Prepare?
1. Plan to conduct a comprehensive self-evaluation of pay practices across your organization. Appendix A of the Massachusetts Attorney General’s guidance on MEPA offers a basic guide for employers, which is a great place to start:
Step 1: Gather Relevant Information
Step 2: Identify Comparable Jobs
Step 3: Calculate Whether Men and Women are Paid Equally
Step 4: Assess Whether Differences in Pay Are Justified Under the Law
Step 5: Remediate any Gender-Based Pay Differentials
Step 6: Adjust Pay Practices
2. Review existing policies and practices and update as appropriate (e.g., review the language of your job postings and recruiting framework to ensure that no inquiries into a job candidate’s salary history are made). The sample checklist found in Appendix B of the same guidance provides a sample for conducting such review in preparation for implementation of the the amended MEPA.
This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, legal or tax advice. If you have any legal or tax questions regarding this content or related issues, then you should consult with your professional legal or tax advisor.