Massachusetts Enacts Equal Pay Law, Bars Requests for Salary Histories

Massachusetts Enacts Equal Pay Law, Bars Requests for Salary Histories

Although the Massachusetts state legislature was unable to agree on a bill to restrict the use of non-compete clauses in employment contracts, another bill with major consequences for employers and employees passed both houses unanimously and was signed into law by Governor Charlie Baker on Monday. The new law updates the state’s 1945 equal pay law to introduce new protections meant to help close the gender pay gap, Shira Schoenberg reports for MassLive:

The new law will prohibit employers from requesting salary history during a job interview — although a job applicant can voluntarily disclose that information. It says businesses cannot forbid workers from discussing their salaries with each other. It provides a clearer definition for what criteria employers can use to determine what is “comparable work.” It extends the statute of limitations for bringing an equal pay claim from one year to three years.

The bill also includes provisions sought by businesses. For example, if an employer does a self-evaluation to determine whether there are compensation differences then takes steps to eliminate them, the employer will be protected from equal pay lawsuits for three years.

The law doesn’t go into effect until January 1, 2018, giving employers ample time to prepare for it. The decision to ban requests for salary histories and pay secrecy reflect a growing understanding that these practices exacerbate pay gaps by ensuring that employees who are underpaid early on in their careers (specifically, women) have a much harder time catching up to their peers or finding out what they deserve to be paid for the work they’re doing. The equal pay law Maryland adopted in May also bars employers from prohibiting discussion of salaries. California’s law, enacted last year, was considered the strongest in the country at the time, but Massachusetts may eclipse it, as neither California nor Maryland managed to include a ban on salary history queries in their law.

The strength of California’s law came from the fact that it was the first to mandate equal pay for “substantially similar”—as opposed to identical—work, which is also a feature of the Massachusetts law. ThinkProgress’s Bryce Covert explains why advocates of pay equity believe that distinction will make a difference:

Massachusetts’s new law also mandates that employers pay men and women the same not just when they do the exact same work, but when their work is “comparable.” Most laws only require men and women in the exact same job to be paid equally. The state defines comparable work as being “substantially similar” in skill, effort, responsibility, and working conditions — not just based on job titles or descriptions. It does, however, allow for differing pay scales based on seniority — so long as a lack of seniority for a female employee isn’t related to pregnancy or family leave — merit, production, geography, education, experience, or training. …

There was a movement in the 1970s and 80s among state governments to ensure comparable pay equity in their own workforces. They ended up spending $527 million to adjust women’s pay to make it equal with men who had essentially the same job duties, eliminating about 20 percent of women’s wage gap. A paper at the time found that a national pay equity law, one that looks like Massachusetts’s, would eliminate more than a quarter of the overall gender wage gap.

At Forbes, Liz Ryan, a longstanding critic of salary histories, cheers the new law and hopes it spells the beginning of the end for this practice:

For years talent-aware employers have based their new-hire salary offers on the role to be performed rather than the new hire’s previous salary. Have they left money on the table by paying newcomers more than those new employers may have required to take on the position? They may well have, but by paying for the job and not the new hire’s past roles these employers have also kept current with market pay rates for the jobs their employees perform. That’s a lot more important than saving a few bucks by underpaying someone relative to the market because he or she was underpaid in the past and didn’t know it.

When an employer is underpaid, the gap between his or her wages and the prevailing market wage represents an opportunity for another employer to grab that employee simply by paying him or her the market rate. It’s not good business to give your competitors opportunities to steal your talent!