Massachusetts Poised To Enact Pay Transparency Law
In recent years, a growing number of states and municipalities have enacted pay transparency statutes, which require employers to disclose expected salary ranges for open positions at some point during the application process. Pay transparency laws are intended to address wage inequities and help narrow gender and racial wage gaps by reducing pay secrecy in salary negotiations.
Massachusetts is expected to become the latest state to enact pay transparency legislation, joining such jurisdictions as New York, California, Washington, Connecticut, Rhode Island, Colorado, and the District of Columbia. The new law would require Massachusetts employers with at least 25 employees to disclose salary ranges in job postings. The new law also would require that employers with over 100 employees submit equal employment opportunity (“EEO”) data annually to the Commonwealth. Governor Maura Healey is expected to sign the legislation, which would take effect one year from the date it is signed into law.
Salary Range Disclosures In Job Postings
Under the proposed Massachusetts statute, covered employers (i.e., those with 25 or more employees) must post the pay range for open positions in external and internal job postings. “Pay range” is defined as “the salary range or hourly range that the covered employer reasonably and in good faith expects to pay” for the position at the time of posting. Notably, and unlike similar laws in other states, the proposed statute does not require disclosure of other anticipated forms of compensation, such as bonuses or commissions.
The proposed law also would require a covered employer to disclose the pay range for the position to an employee offered a promotion or transfer to a new position with different job responsibilities. Additionally, the proposed law would require a covered employer to provide the pay range for a particular position to an employee holding such position, or to an applicant for such position, upon request.
Determining a position’s appropriate pay range will become paramount in complying with the proposed wage transparency law.
Wage Data Reporting
The proposed law also would require Massachusetts employers with 100 or more full-time employees to submit annual, industry-based “aggregate wage data reports” that include workplace “demographic and pay data categorized by race, ethnicity, sex and job category,” as a supplement to their federally required EEO-1 reports. This data would be made available, in aggregate and anonymized form, on the website of the Massachusetts Executive Office of Labor and Workplace Development.
Under the proposed Massachusetts law, the Attorney General would have “exclusive jurisdiction” to enforce the statute. First violations would be subject to a warning, whereas repeat violations would be subject to fines anywhere from $500 for the second offense up to $1,000 to $25,000 for subsequent offenses, depending on the circumstances.
Notably, the proposed law does not include a private right of action for employees against their employers. Accordingly, an employee would have no recourse with the courts to address violations. This stands in stark contrast to pay transparency laws in other states. For example, in Washington, an aggrieved employee can bring an action against his or her employer in court for injunctive relief and damages.
Next Steps For Employers
With this new statute on the horizon, there are a number of steps that we suggest Massachusetts employers take:
• In conjunction with experienced employment counsel, carefully review the proposed pay transparency statute.
• Review job postings for future compliance with the new pay range disclosure requirements.
• Undertake market research to determine appropriate pay ranges for all positions.
• Train human resources personnel to ensure compliance with the expected new recordkeeping and reporting requirements.
• As pay transparency can cause internal conflict if not managed appropriately, consider whether compensation adjustments for long-tenured employees should be made in light of any need to offer and publicize more robust compensation packages to attract new hires.
• Keep a close eye on the latest wage transparency requirements in the state(s) where you do business. Multi-state employers might consider adopting a nationwide policy that complies with the most stringent pay transparency requirements, as the number of states enacting pay transparency laws increases.
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If you have questions about the proposed Massachusetts pay transparency statute or any other aspects of wage-and-hour law, please feel free to reach out to one of our experienced employment attorneys.