Beginning in July, the gender equity of Massachusetts paychecks will be subject to stricter legal scrutiny. That’s when the Massachusetts Equal Pay Act goes into effect.

The law isn’t entirely new. Rather, it’s an update of an existing statute dating back to 1945. The update will “provide more clarity as to what constitutes unlawful wage discrimination” and add “protections to ensure greater fairness and equity in the workplace,” according to the state’s description of the measure. Here are the details.

Ending the Cycle of Inequitable Pay

An important new provision states that employers can’t ask for (or use) job applicants’ salary histories as a basis for compensation offered to successful candidates. The underlying premise is that using pay history condemns women who have suffered pay discrimination in the past to become locked in to a perpetual pattern of inequitable pay.

Under the new law, intent to discriminate based on gender isn’t required to establish liability. All forms of compensation — including commissions and benefits — will be assessed to gauge possible discrimination.

Evaluating Compensation with a Gender Lens

The law requires gender equity for comparable work. But the devil is in the details. The law may allow pay differences for comparable work when pay is based on:

• A system that rewards seniority with the employer. (However, time spent on leave due to a pregnancy-related condition and protected parental, family and medical leave, can’t reduce seniority.)
• A merit system.
• A system which measures earnings by quantity or quality of production, sales or revenue.
• The geographic location in which a job is performed.
• Education, training or experience to the extent such factors are reasonably related to the particular job in question.
• Travel, if the travel is a regular and necessary condition of the job.

Notably absent from this list is job title. Massachusetts employers that haven’t already analyzed their compensation data should begin that process promptly. The law provides a safe harbor from discrimination claims if employers have carried out — within three years prior to any pay discrimination claim — a self-evaluation of pay practices that’s “reasonable in detail and scope.”

Important note: This safe harbor doesn’t expect employers to instantly remedy any potential vestiges of pay discrimination. Rather, they must “show reasonable progress towards eliminating any impermissible gender-based wage differentials that its self-evaluation reveals.”

Salary questions

Starting July 2018:

• It will be illegal for an employer, employment agency or agency representative to question a candidate or former employer about a candidate’s salary history (wage, benefits, equity, bonus, PTO and other compensation)
• It will also be illegal to search publicly available records to uncover past salary information
• Candidates may not be prompted for their current compensation
• If a candidate voluntarily discloses his/her salary history, the employer may rely on it or verify the information (after an offer with compensation is made)

On the other hand, employers can explicitly ask about salary expectations, including benefits. Be sure to change your hiring/interview process to include questions regarding salary/compensation expectations rather than history. If not, you could face hefty penalties.

Fairness Is in the Eye of the Beholder

Contact us for more information on the new-and-improved Massachusetts Equal Pay Act. Our advisory service professionals can work with your attorneys to help evaluate your pay systems for potential gender-based variations and remedy any problem areas.

Check out another recent blog on pay equity, How Plan Sponsors Can Help Bridge the Gender Gap in Retirement Savings.