Signaling a new era in employee pay equity, "The Act to Establish Pay Equity" will require Massachusetts employers to make sweeping changes in their pay and hiring practices. Among the most significant changes, the Act bars employers from asking about an employee’s pay history, a question on virtually every employment application in the United States. The goal of this provision is to prevent historically lower wages and salaries paid to women and minorities from following them job to job.

Employers have roughly one year to comply or face stiff penalties including unpaid wages, liquidated damages, and attorneys' fees and costs. In addition, the Act's provisions allowing employees to address violations on behalf of "similarly situated" employees means that employers must be prepared to deal with costly class action litigation for alleged violations. 

The Act becomes effective January 1, 2018, giving employers a critical—and much-needed—window of opportunity to evaluate pay practices, conduct self-evaluations, and work toward compliance. Meanwhile, other states may pass similar legislation as the movement toward pay equity at the state legislative level continues.

Employers are already required to provide employees with equal pay for equal work under the Equal Pay Act and Title VII of the Civil Rights Act. This new law—signed by Massachusetts Governor Charlie Baker on August 1, 2016,—goes far beyond those obligations. The new law:

• Requires employers to pay men and women the same for "comparable work"—that which requires similar skills, effort, and responsibilities. Job duties—not job descriptions—govern. Salary variations are permitted if they are based on bona fide seniority systems, merit, geography, job-related education or training, or required travel.
• Prevents employers from inquiring about an employee's salary history or seeking the salary history of a prospective employee from a former employer without prior written authorization from the applicant (and then only after an offer of employment with compensation has been made).
• Prohibits pay secrecy. Employers can no longer require an employee to "refrain from inquiring about, discussing or disclosing information" about his or her own wages or the wages of another employee.
• Prohibits an employer from discharging or retaliating in any manner against an employee because he or she has opposed a practice made unlawful by the Act or has made a complaint pursuant to its provisions.
• Makes it easier for employees to file complaints in court. Unlike comparable federal laws, employees need not exhaust administrative remedies by filing with the Equal Employment Opportunity Commission or the Massachusetts Commission Against Discrimination before proceeding to court.
• Allows both individual employees and the attorney general to file claims under the Act.
• Extends the statute of limitations for alleged violations to three years—versus 300 days under similar federal laws.

Employers will have an affirmative defense to liability under the Act if they complete a "self-evaluation of . . . pay practices in good faith" and "can demonstrate that reasonable progress has been made toward eliminating wage differentials based on gender for comparable work." This affirmative defense is effective against claims for three years.

Given the amount of work and time necessary to comply with this sweeping new law—and the penalties for non-compliance—employers are advised to assess their hiring practices and policies sooner rather than later.