Basic Requirements

Following a wave of pay transparency laws in other states, the Massachusetts recently implemented a law requiring employers with at least 25 employees in the Commonwealth to disclose salary ranges in job postings. The law also requires employers with at least 100 employees in Massachusetts to report aggregate EEO on a yearly basis.

The law defines “pay range” to mean the salary or hourly range that the employer “reasonably and in good faith expects to pay” for the position at the time of the posting. It is worth noting that the laws does not require employers to include other forms of pay such as bonuses or commissions.

With respect to the disclosure obligations, the law requires that pay ranges be provided in three scenarios: (i) when a job is posted externally, (ii) when current employees are offered a promotion or a transfer to the job, and (iii) upon request by an individual already in that job or any applicant.

Regarding EEO disclosures, the law requires employers to provide reports that include workplace “demographic and pay data categorized by race, ethnicity, sex, and job category.” The data will be made available in anonymized and aggregate form only on the website for Massachusetts’ department of labor.

An important and welcome development for employers is that the law does not provide for a private right of action. Instead the Attorney General’s office is the only entity or person allowed to enforce the law. Initial violations are subject only to a warning, second violations may result in penalties of up to $500, third violations in penalties up to $1,000, and subsequent violations in penalties between $7,500 and $25,000.

Recommendations

Employers should determine a reasonable pay range for each position by relying on objective metrics and data. However, beyond hard data, employers should also consider whether, or to what extent, disclosing pay ranges may impact their ability to attract and retain talent. Put differently, it is not enough to look at historical data for a specific role or situate the role within a specific pay hierarchy internal to the company. Employers may wish to look at their competitors or consult market-wide data for comparable roles. Finally, if the potential pay ranges for a specific position are creating hurdles—potentially with current employees—it may be worth rethinking the role to be posted, including changing educational or professional experience prerequisites or modifying central tasks.