All of us have been on a job interview at one time or another during our careers. One of the hot topics in job searching is salary. The subject of salary and the negotiation process is an important one. There are often many questions related to handling the dreaded money conversation. When is a good time to bring it up? Should the candidate wait for the employer to address it or vice versa? Is the salary requirement typically based of off the employee’s past compensation or the competitive range in the market? How much is typically negotiable? And the questions go on…

Although there might be different salary strategies and effective ways to interview and score the salary you’re looking for, there are laws regarding salary. In fact, there are brand new, updated laws! It’s helpful for both the employee and employer to be aware of these legalities to avoid making mistakes in the process. It’s called The Massachusetts Pay Equity Act and it went into effect on July 1st, 2018. That means all employers, regardless of number of employees, whose employees perform all or the greater part of their work in Massachusetts, are required to comply with the MA Pay Equity Act (MPEA).

The goal is to provide more clarity as to what constitutes unlawful wage discrimination and add protections to ensure greater fairness and equity in the workplace. The state will give significant responsibility to all Massachusetts employers to ensure equal pay for different genders for comparable work. The law broadens the definition of equal work, extends the statute of limitations, strengthens the penalties, and demands greater transparency in pay practices.

Background:

In 1945, Massachusetts became the first state in the country to pass an equal pay law. But even with its attempts, the gender pay gap continued. Also historically, the Massachusetts equal pay statute has not defined “comparable work.”According to Mass.gov, women working full time in Massachusetts earn, on average, about 84.3% of what men earn, and the gap is even larger for women of color. According to the Bureau of Labor Statistics, in 2016, the average female employee earned 80 cents for every dollar a man received during the same period. In the hopes of tackling and resolving this issue, Massachusetts is updating its pay equity law with new provisions.

Basic Provisions:

According to Mass.gov, the updated law requires employers to pay employees the same wage for comparable work. The updated law states that employers may not discriminate on the basis of gender in the payment of wages or pay any person a salary or wage rate less than the rates paid to employees “of a different gender for comparable work.”

To understand what this means, let’s clarify the meanings of “wages” and “comparable work.”Wages refer to all forms of remuneration for work performance – including commissions, bonuses, profit sharing and vacation time, while comparable work refers to all work that requires substantially similar skill, effort and responsibility, and is performed under similar working conditions (without reference to “character” or “characteristics” of a job).

More on Comparable Work:

In the new MEPA, the meaning of “comparable work” is clearly defined in the statute as “work that is substantially similar in that it requires substantially similar skill, effort and responsibility and is performed under similar working conditions.”

Employers are still prohibited from paying employees of different sexes unequally for comparable work. However, job titles and duties will no longer be a determinant factor. Instead, the comparable work analysis will focus much more broadly on similarity of skill, effort, and responsibility, and working conditions required for positions, even where the job titles and duties of those positions are different. This new, “gray” standard will make it a bit challenging for employers to determine which jobs to “compare” without taking a deeper look into pay-equity analysis.

More on Wages:

The law requires that “wages” and “wage rates” be equal.  According to the MEPA, “wages” includes all forms of compensation or benefits received by an employee for work performed. This means not only hourly pay or salary, but also incentive pay such as commissions, bonuses, or profit-sharing; paid time off, vacations, and holidays; expense accounts and allowances; deferred compensation or retirement benefits; and insurance. It includes amounts paid both to an employee directly and to a third party on the employee’s behalf.

The Six Permissible Salary Factors:

According to Mass.gov, MEPA permits differences in pay for comparable work only when based upon:

  1. Seniority System – a system that compensates employees based on length of service and rewards seniority with the employer (provided, however, that time spent on leave due to a pregnancy-related condition and protected parental, family and medical leave, shall not reduce seniority).
  2. Merit system – a system that sets pay on employee performance, based on “legitimate, job-related criteria.”
  3. A system which measures earnings by quantity or quality of production, sales, or revenue.
  4. Geographic location – location in which a job is performed. This may be an acceptable reason for differences in wages when “the locations correspond with different costs of living or differences in the relevant labor market.”
  5. Education, training or experience to the extent such factors are reasonably related to the particular job in question.
  6. Travel, if the travel is a regular and necessary condition of the particular job.

Importantly, MEPA makes clear that employees’ salary histories are not a defense to liability and an intent to discriminate based on gender is not required to establish liability under the law.

Wage Talk Between Employees:

An employer can’t prohibit employees from discussing their own wages or their coworkers’ wages, or “from disclosing wage information to any person or entity.”  On the other hand, employers are not required to publish or otherwise disclose employees’ wages.  Employers can also prohibit human resources employees, supervisors, or other employees whose job gives them access to others’ wage information, from disclosing pay information.

Employers may not seek the salary or wage history of any prospective employee before making an offer of employment that includes compensation, and may not require that a prospective employee’s wage or salary history meet certain criteria.

Wage/Salary Inquires:

The statute makes it clear that employers can’t seek the salary history information of a prospective employee, either from the candidate or from a current or former employer. The only exceptions are where prospective employees voluntarily disclose their wage or salary history, or after an offer of employment, including pay, is made.

Self Evaluations:

The MEPA provides a “safe harbor” for employers who conduct a good faith self-evaluation of pay practices and demonstrate reasonable progress toward eliminating gender-based wage differences.

Here’s a “Basic Guide” to conducting self-evaluations:

  • Step 1: Gather relevant information. Collect data relevant to the issue of pay equity.
  • Step 2: Identify comparable jobs. Create job groupings based on the relevant factors: skill, effort, responsibility, and working conditions.
  • Step 3: Calculate whether men and women are paid equally.
  • Step 4: Assess whether differences in pay are justified under the law. Consider whether any pay disparities can be explained by one of the six permissible factors allowed by the law.
  • Step 5: Remediate any disparities. Employers should work to fix any pay disparities by setting up a remedial plan “as soon as practicable”.
  • Step 6: Adjust pay practices. The Overview states that employers “should attempt to determine the reason(s) for [the] differentials,” and “take steps to prevent them in the future.”

Legal Action:

According to Mass.gov, an employer who violates MEPA is generally liable for twice the amount of the unpaid wages owed to the affected employee(s)—the differential between the employee’s wages and the wages paid to an employee of a different gender performing comparable work—plus reasonable attorneys’ fees and costs. However, the law provides a complete defense for any employer that, within the previous three years and before an action is filed against it, has conducted a good faith, reasonable self-evaluation of its pay practices. To be eligible for this affirmative defense, the self-evaluation must be reasonable in detail and scope and the employer must also show reasonable progress towards eliminating any impermissible gender-based wage differentials that its self-evaluation may reveal.

Employers are not required to conduct self-evaluations and will not be penalized for choosing not to do so.

Employers may not retaliate against any employee who exercises his or her rights under the law. Employees whose rights under MEPA have been violated have three years from the date of an alleged violation to bring an action in court. A violation occurs when a discriminatory compensation decision is made or other practice is adopted, and each time an employee is subject to or affected, including each time wages are paid.

With the help of Small Business Trends, check out a list of some of the interview questions you may and may not ask under new Massachusetts Pay Equity Law. If you’re a potential employee, these questions are a red flag. If you’re an employer, don’t go there.

1.  Don’t Ask: What Are You Earning at Your Current Job?
2. Don’t Ask: What Was the Breakdown Between Your Base Salary and Commission?
3. Don’t Ask: Why Do You Feel This Number Is Appropriate?

As a reminder, the new Massachusetts Pay Equity Law is now in full effect and will be changing the scope of the salary and job interviewing process. Know your rights as an employee and employer. The full Overview is available here. Employers should review it in depth and be sure consult with a lawyer. Please contact Schulze Law today with any questions.

 

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https://www.mass.gov/

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