Massachusetts Attorney General Provides Guidance On New Pay Equity Law
The Massachusetts Attorney General's Office ("AGO") recently released a formal guidance document ("Guidance") intended to assist employers in understanding and complying with their obligations under the new Massachusetts pay equity law, which goes into effect on July 1, 2018.
Although the Guidance is not binding on courts, it provides important insight into how the AGO plans to interpret and enforce the new pay equity law. Thus, Massachusetts employers should carefully review the Guidance and consider how their current compensation practices may need to be amended.
Summary Of The New Pay Equity Law
The new pay equity law amends the existing Massachusetts equal pay statute in a manner that significantly expands equal pay requirements in the Commonwealth. In particular, the law dramatically broadens the definition of "comparable" work for which men and women must be paid equally.
Under the new law, jobs are considered comparable if they require substantially similar skill, effort, and responsibility and are performed under similar working conditions. A disparity in compensation paid to male and female employees for comparable work will be deemed unlawful unless the employer can show that the disparity stems from one of six specified factors, namely (i) a compensation system based on seniority, (ii) a merit-based compensation system, (iii) a compensation system based on productivity, (iv) differences in job-related education, experience, or training, (v) geographic location, or (vi) travel requirements.
Additionally, the statute prohibits employers from asking job applicants about their salary history before a job offer has been extended.
Under the new law, an employee claiming to have been paid less than a member of the opposite sex for comparable work can sue his or her employer for twice the amount of the difference in compensation, in addition to attorneys' fees and costs. Importantly, however, the new law enables employers to protect themselves proactively from potential equal pay claims, by conducting self-audits of their pay practices and working to remedy any unlawful disparities.
Highlights Of AGO's Guidance
While this article does not cover every aspect of the AGO's Guidance, some of its most significant provisions are summarized below:
- The new pay equity law does not specify which employers are covered. According to the Guidance, however, the statute covers virtually all employers in Massachusetts, irrespective of size, including state and municipal employers. Likewise, in the AGO's view, the statute applies to employers located outside of the Commonwealth if they have employees with a primary place of work in Massachusetts. (However, the statute does not apply to employees of the federal government.)
- The statute applies to employees who work primarily in Massachusetts, regardless of their status (e.g., full-time, part-time, seasonal, per diem, or temporary) or where they live. An employee whose home base of operations is inside the Commonwealth is covered under the law, even if the employee regularly travels outside Massachusetts for work. Similarly, if an employee telecommutes to a Massachusetts worksite, Massachusetts is the employee's primary place of work, even if the employee does not physically spend those working hours in Massachusetts.
- Generally, employees within the same geographic area in Massachusetts should be compared to each other in determining whether compensation disparities exist. However, the AGO takes the position that in some situations, an employer may need to consider out-of-state employees - e.g., when the only employees performing work comparable to that of a Massachusetts employee are located out of state.
Criteria For Comparing Jobs.
The Guidance adds some detail to the new law's references to the skill, effort, responsibility, and working conditions entailed by different jobs. In particular:
- "Skill" looks to the job's inherent performance requirements, irrespective of employees' individual skills. Skill is measured by factors such as the experience, training, education, and ability required to perform a particular job. For example, in a school setting, both janitor and food service positions generally require little or no previous experience or specialized training. Thus, even though the two positions are substantively different, they may require comparable skill.
- "Effort" takes into consideration the physical or mental exertion required by a particular position. For example, a job that requires standing or other physical exertion all day long is probably not comparable in this respect to a quiet desk job.
- "Responsibility" takes into account factors such as discretion, decision-making, accountability, supervision, and managerial responsibility.
- The "working conditions" involved in different jobs may include the days or times when the work is performed (e.g., daytime versus overnight shifts).
- Differences in education, training, or experience can be a valid reason for paying employees differently for comparable work, so long as such factors are related to an employee's ability to perform a job more efficiently or effectively. For example, a bookkeeper with an accounting degree might be more valuable than a bookkeeper without such a degree, because accounting skills are relevant and useful in performing a bookkeeper's duties, even if an accounting degree is not required for the job.
- In calculating whether employees are receiving equivalent compensation, an employer may include the value of benefits that an employee chooses not to take advantage of, such as health or life insurance, retirement contributions or tuition reimbursement.
- According to the Guidance, if an employer improperly pays men and women at differing wage rates for comparable work, the employer may not make up the difference by providing special bonuses or other benefits to the underpaid employees. (The AGO's position on this point, however, seems debatable and could be challenged in future litigation under the new law.)
- Part-time and full-time employees may be paid at different hourly rates, or offered different benefits, provided that employees within each category who perform comparable work are offered the same pay rate and benefits.
- While inquiring about applicants' salary history at the pre-offer stage is prohibited under the new law, nothing prohibits an employer from asking a prospective employee about his or her desired compensation.
- Additionally, an employer may ask about an applicant's previous sales objectives and success in meeting those objectives, so long as the employer does not pose such questions in a manner intended to prompt disclosure of compensation history.
- Whether a self-evaluation is sufficient in detail and scope to provide an affirmative defense depends on various factors, such as whether the evaluation includes a reasonable number of jobs and employees, and whether the evaluation is "reasonably sophisticated" in its analysis of potentially comparable jobs, wages, and the permissible reasons for pay disparities.
- An employer can show "reasonable progress" toward eliminating unlawful pay disparities if it can demonstrate that it has taken meaningful steps to do so after a self-evaluation. "Reasonable progress" takes into consideration factors such as how much time has passed since the evaluation, the nature and degree of the progress in relation to the scope of the pay disparities, and the employer's size and resources. In addition, an employer must be able to show that pay disparities can be eliminated altogether within a reasonable amount of time.
Recommendations For Employers
Massachusetts employers should carefully review the AGO's Guidance and consider conducting a self-evaluation to identify and remediate any unlawful pay disparities. We recommend that any self-evaluation be carried out with the assistance of legal counsel, both to ensure compliance with the new law and to shield the evaluation under the attorney-client privilege to the greatest extent possible.
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If you would like our assistance in conducting a self-evaluation for your organization, or if you have any other questions relating to the new pay equity law, please feel free to contact one of our experienced employment attorneys.