On Monday, August 1, 2016, Governor Baker signed “An Act to Establish Pay Equity” (the “Act”), which greatly expands upon current pay discrimination legislation. The bill, which goes into effect on July 1, 2018, requires all employers to provide equal pay, regardless of gender, to employees performing comparable work.

WHAT’S CHANGING?

The bill defines comparable work as “substantially similar in that it requires substantially similar skill, effort and responsibility and is performed under similar working conditions.” Further, working conditions “include the environmental and other similar circumstances taken into consideration in setting salary or wages, including, but not limited to, reasonable shift differentials, and the physical surroundings and hazards encountered by employees performing a job.”

Under the Act, variations in wages and benefits are permitted only as a result of:

        (i) 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;

      (ii) a merit system;
      (iii) a system which measures quantity or quality of production, sales, or revenue;
      (iv) the geographic location in which a job is performed;
      (v) education, training or experience to the extent such factors are reasonably related to the particular job in question; or
              (vi) travel, if the travel is a regular and necessary condition of the particular job.

It is important that employers do not lower an employee’s compensation solely to comply with the Act.

Salary Inquiries
This bill follows recent legislation in states like California and New York designed to close the gender wage gap. However, Massachusetts is the first state in the nation to make it illegal for employers to ask about salary history before making a job offer that includes compensation. The Act does allow an employer to verify previous salary history prior to making a job offer if a prospective employee “has voluntarily disclosed such information.” The bill also allows employees to discuss salaries without fear of employer retribution, but prevents employers from disclosing an employee’s wage to another employee or third party.

Penalties and Affirmative Defenses
Employers who make discriminatory compensation decisions, have discriminatory pay practices, or retaliate against employees who make claims under the Act, may face penalties including unpaid wages, attorney fees, and liquidated damages. The Act does, however, provide an affirmative defense for employers that conduct a “self-evaluation of its pay practices

[within three years prior to the commencement of a civil action] in good faith and can demonstrate that reasonable progress has been made toward eliminating compensation differentials.” A complainant bring a claim under the Act is limited in introducing evidence of a self-evaluation or remedial steps as proof of a violation.

Enforcement
Under the new law, both employees and the Massachusetts Attorney General have the right to sue an employer.  An employer found in violation of the Act is responsible for paying all costs and attorney’s fees. Additionally, the Attorney General is authorized to paid equallypromulgate regulations that interpret the language of the new Act and its application.

Employers are encouraged to review their hiring and compensation practices before the law goes into effect. They will also be required to post notices advising employees of their rights under the Act.