Nearly two years ago, Governor Baker signed a bill amending the Commonwealth’s Equal Pay Act (MEPA). On Sunday, July 1, 2018, this new law—which, among other things, imposes more stringent equal pay requirements, bars salary history inquiries, and protects employees’ ability to discuss wages—will take effect. This alert highlights some of the critical components of the act and recommends a few best practices for employers covered by the law.

Scope

This law applies to all workers with a primary place of work in Massachusetts, regardless of where the employee lives, and irrespective of the size and location of the employer. According to the Attorney General’s guidance, remote employees who report to a Massachusetts worksite and traveling employees whose base of operations is in Massachusetts will be covered by the law.

Salary History Prohibition

Under MEPA, employers are prohibited from requesting salary history information from prospective employees prior to extending a written offer of employment. Although an employer is permitted to ask applicants about their salary expectations, it cannot ask the basis for such expectations or any other such questions designed to elicit candidates’ salary history. Once an offer has been extended, an employer is permitted to ask about salary history.

This prohibition does not apply to current employees (for example, employees applying for an internal promotion). Additionally, there is no liability for employers that obtain such information through an unrequested voluntary disclosure by prospective employees; but an employer must then proceed with extreme caution in using that information (as discussed below).

If they have not done so already, employers should immediately revise their job application forms and interviewing practices to ensure that they are not directly or indirectly (including through recruiters) soliciting salary history information.

Equal Pay for Comparable Work

The salary history component of MEPA is just one aspect of a broader law designed to promote pay equity for Massachusetts workers. Employers in Massachusetts will be prohibited not only from directly or indirectly asking for salary history information, but also from using that information (even if voluntarily disclosed) to justify a wage disparity between employees performing comparable work. Notably, the statute’s standard of comparable work is broader than the “equal work” standard under federal law: comparable work is defined as “work that requires substantially similar skill, effort, and responsibility, and is performed under similar working conditions.” As of July 1, there will only be a limited number of factors (seniority, employee performance, revenue-based incentives, experience/education/training, and travel) that can justify a wage disparity in Massachusetts for employees performing comparable work. Rather than using a candidate’s current or previous salary as a starting point for a job offer (or promotion), employers will be expected to approach salary decisions in a more consistent manner, focusing on the position itself and where the candidate should be within a particular employer’s pay structure, based only on the permissible factors.

Affirmative Defense for Employers

The law provides an incentive for employers to conduct good-faith evaluations of their pay practices and to make progress toward eliminating any gender-based wage differentials. If an employer conducts such an audit and shows that it made “reasonable progress” toward eliminating any such pay disparities, then the employer can use its audit as an affirmative defense against the harsh penalties under Massachusetts state law (double damages plus attorneys’ fees). Evidence of a pay equity audit, and any remedial steps taken in connection with such an audit, will not be admissible as evidence of a MEPA violation. This safe harbor does not apply, however, to claims under other laws, including the federal Equal Pay Act, so employers should proceed carefully. At WilmerHale, our attorneys and HR Services team members have already begun working with clients to consider and undertake suitable pay audits.

Employees’ Ability to Discuss Wages

Previously, restrictions on discussion of wages had been a matter of federal law—either for non-supervisory employees (under the National Labor Relations Act) or for federal contractors (under the Office of Federal Contract Compliance Program’s pay transparency rule). Effective July 1, 2018, Massachusetts law prohibits an employer from placing any restrictions on employees’ freedom to discuss or disclose their own wages or the wages of their co-workers (except where such information is obtained by an individual whose job responsibilities require or allow access to other employees’ compensation information, such as an HR representative or a supervisor). As a result, employers that currently restrict such discussions will need to revise their practices and their offer letters, employment agreements, policies, and other agreements (including non-disclosure or confidentiality agreements) to remove any such restrictions on wage discussions.