Massachusetts Nearing Enactment of Sweeping Pay Equity Legislation

by Ogletree, Deakins, Nash, Smoak & Stewart, P.C.

Continuing a trend, Massachusetts is poised to implement major changes to its equal pay laws. Following the lead of California, New York, and Maryland, which each enacted expansive equal pay laws in the last few months, Massachusetts is now nearing issuance of similarly broad legislation that will make litigating such cases significantly less challenging for plaintiffs. As such, Massachusetts employers need to be even more mindful of these new litigation risks and may want to take proactive steps to avoid claims of pay inequity.

On July 23, 2016, the Massachusetts House and Senate both unanimously passed a bill (S.2119) that significantly expands the Massachusetts Equal Pay Act, Mass. General Laws c. 149 section 105A (MEPA), and the bill is now before Governor Charlie Baker, who, according to multiple press reports, has indicated he will sign the bill next week.

MEPA claims are rarely brought under the current version of the law because the statute has been interpreted narrowly. The proposed new law would considerably broaden the existing law. Instead of requiring a plaintiff to show gender-based unequal pay for equal work as the necessary prerequisite for a violation, the bill would establish a violation for pay differentials between men and women for “comparable work.”

The legislation defines “comparable work” as work that is “substantially similar” in terms of skill, effort, and responsibility and is performed in similar working conditions. The new legislation includes defenses comparable to those provided in the federal Equal Pay Act of 1963, such as a bona fide seniority system; a bona fide merit system; a bona fide system that measures the quality and/or quantity of production or sales; the geographic location where the work is performed; travel, when it is a necessary part of the job; and education, training, or experience, but only to the extent reasonably related to the job and consistent with business necessity. However, the legislation does not include other criteria that would impact comparability, such as the value of the employees’ work to the employer. This is a serious expansion of the law as it appears to allow comparison of similar but not equivalent positions, such as that of a female hotel housekeeper who cleans hotel rooms and a male hotel janitor who maintains a hotel lobby.

Another significant change is that the bill eliminates an employee’s previous wage or salary history as a defense. Legislators state that this provision is intended to eliminate perpetuation of past discrimination by prior employers.

The bill also expands remedies available to plaintiffs, including extending the limitations period to three years, up from one year under the existing law. The legislation, if signed into law, would also implement a continuing violation provision similar to that of the federal Lilly Ledbetter Fair Pay Act of 2009. Under this provision, the statute of limitations would be triggered each time an employee was impacted by an allegedly discriminatory compensation decision or practice. The effect of this provision would be to potentially extend the limitations period for years, allowing employees to reach back to pay decisions that impacted them many years ago. Also, the legislation allows the Massachusetts Attorney General to bring individual or class claims.

In another significant change, the legislation prohibits employers from: (i) prohibiting employees from discussing or disclosing their own or other employees’ compensation; (ii) screening applicants based on wage or salary histories, or requiring disclosure of wage or salary history in the application process; and (iii) seeking a prospective employee’s salary history from a prior employer (unless authorized in writing by the employee after an offer has been made).

In an effort to garner business support, the legislation includes a new employer-friendly affirmative defense. That provision provides an affirmative defense to a claim that a pay differential is sex-based when (i) the employer conducted a reasonable self-evaluation of its pay practices; (ii) the evaluation was conducted within three years and prior to commencement of the action; and (iii) the employer has made reasonable progress in eliminating any gender-based pay differentials in accordance with the self-audit. Obviously, this new provision gives employers ample motivation to conduct internal pay equity audits.

Various news outlets have reported that Governor Baker intends to sign the bill next week. If enacted, the law would become effective on January 1, 2018. As such, Massachusetts employers should take heed and consider taking proactive steps to address any potential pay disparities, including conducting a carefully designed pay equity audit to reduce their exposure to future pay equity claims.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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