Why it matters

Joining California and New York, Massachusetts has enacted new equal pay legislation. Scheduled to take effect July 1, 2018, An Act to Establish Pay Equity prohibits employers from discriminating on the basis of gender in the payment of wages and other compensation for "comparable" work, with a few exceptions (a merit-based system, for example, or a seniority system, although leave due to pregnancy may not reduce seniority). An employee's previous wage or salary history cannot be used as a defense to a claim made under the law and employers may not ask about a worker's salary history or reduce the wages of an employee to comply with the new law, such as lowering a male worker's salary to match a female employee's. Employers should keep a close eye on the equal pay legislation trend that could be duplicated in other states.

Detailed discussion

The nationwide trend of enacting equal pay legislation—from California to New York—continued on August 1, when Massachusetts Governor Charlie Baker signed An Act to Establish Pay Equity into law.

The new law—set to take effect July 1, 2018—contains major changes. Most fundamentally, employers are prohibited from discriminating on the basis of gender in the payment of wages and other compensation for "comparable" work. The statute defines comparable work as that which is "substantially similar in that it requires substantially similar skill, effort and responsibility and is performed under similar working conditions; provided, however, that a job title or job description alone shall not determine comparability."

Exceptions exist for pay variations, including a merit-based system; a system that measures the quantity or quality of production, sales, or revenue; the geographic location where the job is being performed; education, training, or experience, to the extent these factors are reasonably related to the particular job; a seniority system (although leave for pregnancy as well as parental, family, and medical leaves may not act to reduce seniority); or travel, if it is a regular and necessary part of the job.

Wages may not be reduced for the sole purpose of complying with the law, and an employee's previous wage or salary history may not be used as a defense to a claim made under the law. In fact, the new law prohibits employers from seeking the wage or salary history of an applicant from a current or former employer in an attempt to reduce the effect of potential past salary inequity.

If the applicant voluntarily discloses the information in writing, however, the employer may confirm the wage or salary. Similarly, employers may confirm a wage or salary history after an offer of employment—complete with compensation—has been negotiated and made to the applicant.

The statute protects employees' right to discuss and inquire about wages with their coworkers and prohibits retaliation against workers for engaging in protected conduct including participating in an investigation into unequal pay allegations or opposing gender-based wage differentials.

Employees may pursue a claim of violations of the new law through the state Attorney General or file suit (individually or on a class basis) with the possibility of unpaid wages, liquidated damages, and attorneys' fees.

A three-year statute of limitations—lengthened from the prior one year—is based on the date of the "alleged violation," defined to include when the alleged discriminatory compensation decision and/or practice was adopted; when the employee became subject to the alleged discriminatory compensation decision and/or practice; or when the employee was affected by the application of the alleged discriminatory pay decision and/or practice—including each time wages were paid, restarting the time clock with each paycheck.

The statute does provide employers with the possibility of an affirmative defense. If within the prior three years and before the commencement of the employee's claim the employer has completed a self-evaluation of its pay practices in good faith and can demonstrate that it has made "reasonable progress" toward eliminating gender-based wage differentials, it may present the evaluation (which can be designed by the employer as long as it is reasonable in detail and scope) as an affirmative defense.

Employers may not enter into agreements with employees to avoid compliance with the statute.

To read An Act to Establish Pay Equity, click here.