Massachusetts Becomes First State to Ban Salary Histories in Applications
On July 23, 2016, the Massachusetts legislature unanimously passed a comprehensive pay equality bill aimed at eradicating gender-based pay discrimination. The governor of Massachusetts signed the bill on August 1, 2016, but the law will not go into effect until July 1, 2018.
The law requires that employers pay men and women equally when their work is “comparable,” i.e., when the work is “substantially similar” in skill, effort, responsibility, and working conditions. This is a broader standard than most states’ equal pay acts, which require proof of identical work for equal pay requirements to apply. The law also bans salary secrecy, the practice of preventing employees from discussing their pay or benefits with one another. The rationale is that greater openness among employees regarding their wages will help employees identify pay disparity along gender and other prohibited lines.
To encourage employers to voluntarily remedy past wage disparities, the law incorporates a three-year defense from liability for companies attempting to internally correct gender-based compensation disparities. During those three years, employers must complete a self-evaluation of their pay practices and demonstrate reasonable progress in eliminating pay disparities. If they do so, they are entitled to a rebuttable presumption that they have not engaged in gender discrimination.
One of the most unique features of the law is a first-in-the-nation law ban on employers’ soliciting candidates’ salary histories in the initial steps of the hiring process, a practice that critics claim can perpetuate discrimination against women. The rationale is that women earn less on average than their male counterparts, and their depressed historical earnings can then factor into the wages offered to them by subsequent employers. Postponing a discussion of salary history until after a conditional offer including wages has been extended reduces the risk that past discrimination will be perpetuated. Voluntary disclosure of wage history remains permissible.
Although Massachusetts employers have nearly two years to prepare for the law, they are advised to review their job applications now and prepare to amend them to eliminate mandatory wage history disclosures. Hiring managers should be trained not to solicit this information during the screening or interview process, while human resources professionals should review personnel documents to ensure that company policies do not prohibit employees from discussing their wages and benefits. Finally, Massachusetts employers should take the opportunity to review and remedy pay discrimination during the “rebuttable presumption” window, and ensure that required notices are posted regarding employees’ rights under the new law.