While we were celebrating our country’s independence, taking time off to be with friends and family and to get some much-needed R&R, a new law that aims to reduce the pay gap between men and women in Massachusetts took effect.
What does this mean?
An Act to Establish Pay Equity, which was signed into law on Aug. 1, 2016 and took effect on July 1, 2018, amends the Massachusetts Equal Pay Act (MEPA) and provides significant changes to the definition of “comparable work,” employer defenses, and statutes of limitations, and prohibit employer practices, such as salary history inquiries.
Its purpose is to prevent pay discrimination for comparable work based on gender primarily by prohibiting employers from asking about salary history on job applications or during the interview process before a formal offer is made. This means that businesses will have to pay what the job is worth and will have to stop taking advantage of the known fact that women are underpaid comparative to men for the equivalent work. Wait, there’s more. Under the statute, pay doesn't just mean salary. It includes benefits, bonuses, overtime, stock options, EVERYTHING. Companies should note that the statute of limitations has been expanded on claims from one to three years, which can add to liability.
What are the benefits?
One of the long-term goals of equitable worth is to increase financial growth for women. These opportunities will create more self-reliant wage earners for the broader economy. For many single-income households, women are the primary wage earners. With the equal pay act, women can better support their families.
This will also contribute to recruiting and retention efforts at your organizations. Candidates will be more attracted to organizations that offer career advancement and economic growth based on work ethics and effort, regardless of their gender. And, current staff will stay with companies that compensate equitably, and those that they trust. In turn, organizations should experience an increase in productivity that comes from higher morale and employee commitment. With the fight for talent at an all time high, it’s essential that companies do everything they can do attract and retain diverse workers of all backgrounds and genders. Also, pay transparency will support your reputation that your compensation is impartial and non-discriminatory.
Are you prepared?
As one would imagine, equal pay claims are complex, costly and time-consuming. Why take the chance of ruining work relationships, causing low morale, diminishing your reputation, paying substantial legal fees and fines?
Conducting an internal audit of your pay practices can help minimize your risks and is a good thing to do regardless. Basically, an audit gives you the opportunity to examine the compensation for roles with similar duties and determine whether there are any troubling pay disparities. If such disparities exist, you should determine whether they can be explained by a legitimate factor other than gender, such as a seniority system or education level. If not, the employer should take steps to adjust the pay disparity. And, as you can probably figure out on your own, it’s important to keep in mind that you cannot reduce compensation of a male employee to achieve pay equity.
The Commonwealth of Massachusetts suggests “employers should also review compensation policies and practices and develop programs to ensure compliance with federal and state pay equity legislation. This includes revising employment applications, eliminating interview questions concerning salary history, and training management-level employees who make compensation decisions.”
Bottomline
Yes, these measures can be costly, but failure to deal with pay disparity can cost even more. You run the risks of potential litigation, federal/state violations, a PR nightmare, or more. Better to make the investment now rather than paying later.
Equal pay should be embedded into your culture, values and growth strategy. I want to hear from you on how you’re getting ahead of this and ensuring pay equity at your company. What are in your toolkits for those who recruit, set salaries and give promotions? Share your thoughts!
To learn more, check out the following resources:
- Commonwealth of Massachusetts Overview of the Massachusetts Equal Pay Law
- Massachusetts Attorney General Maura Healey Issues Guidance for Employers on Equal Pay Law
- My April 2018 Blog on Gender Pay Inequity is Real