In August 2016, the Massachusetts legislature passed the Pay
Equity Act, amending its prior equal pay law. But will the new law
actually achieve its stated purpose of establishing pay equity? Or
is this just a symbolic gesture designed to score political points?
Does the new law create more ambiguities than it resolves? In this
article we'll look at the new Pay Equity Act, how we got here, and
where we are likely to end up.
It's long been illegal for Massachusetts employers to pay women
less than men (or men less than women, for that matter) for
comparable work. In fact, Massachusetts was the first state ever to
implement an equal pay law, with the passage of the Massachusetts
Equal Pay Act in 1945. Congress took a bit longer, passing its
Federal Equal Pay Act in 1963, and of course the following year saw
the passage of Title VII of the Civil Rights Act of 1964, which
prohibits employment discrimination - including discrimination with
regard to pay - on the basis of gender. So why is it that, over 70
years after the state outlawed pay discrimination, women, as a
whole, still do not earn as much as their male counterparts?
There are many different theories about the answer to that
question, but one contributing factor is that, until recently, the
term "comparable work" was defined fairly narrowly under state law.
The preeminent Massachusetts case interpreting the Massachusetts
Equal Pay Act is Jancey v. School Committee of Everett
(Massachusetts Supreme Judicial Court, 1995). In 1989, female
cafeteria workers sued Everett Public Schools under the Equal Pay
Act, alleging that they work they performed for the school was
comparable to the work performed by the school's custodians, and
therefore, the cafeteria workers should receive pay equal to that
of the custodians. At the time the lawsuit was filed, the hourly
rate of the cafeteria workers ranged from $6.44 to $6.85 per hour,
while that of the custodians ranged from $10.76 to $12.73 per hour.
Notably, at the time the lawsuit was filed, Everett Public Schools
had never employed a male cafeteria worker and had never employed a
female custodian.
The trial judge found in favor of the cafeteria workers, finding
that the work performed by the cafeteria workers was, in fact,
comparable to the work performed by the custodians. Specifically,
the positions required no prior experience, training or education;
they both involved exposure to extreme temperatures; both positions
required work with various chemicals/cleaning agents; and the
positions required a similar level of physical and mental exertion.
The Supreme Judicial Court overturned the trial court's decision,
however, and established a new two-part test for demonstrating
"comparable work" that severely limited the applicability of the
state's Equal Pay Act. This new test required employees to prove
that the positions "entail comparable skill, effort,
responsibility, and working conditions" and that the jobs
do not "differ in content." Thus, under this test, employees could
prevail only if they proved they were paid less than a person of
the opposite sex who held the exact same job as they did.
Fast forward to 2016, where the persistent gender pay gap was
front and center in the media, in part due to the presidential
election. Several states passed pay equity legislation last year,
including Massachusetts. Recognizing the limitations imposed by the
SJC on Massachusetts' existing pay equity legislation, the
Massachusetts legislature broadened the scope of the Equal Pay Act,
amending the statute to provide a more expansive definition of
"comparable work." Under the new law, "comparable work" is defined
as "work that is substantially similar in that it requires
substantially similar skill, effort and responsibility and is
performed under similar working conditions; provided, however, that
a job title or job description alone shall not determine
comparability." There is little doubt that had this standard been
in place when Jancey was decided, the result would have
been very different. Still, while the law removes the ambiguity
surrounding whether it applies only to men and women in the exact
same job, it creates new ambiguities, such as what constitutes
"substantially similar" skill, effort and responsibility. Compare a
management-level engineer with a management-level accountant. To
the extent both are tasked primarily with management
responsibilities, versus more hands-on engineering or accounting
work, one could make the argument that the two management positions
require substantially similar skill, effort and responsibility and
are performed under similar working conditions. If employers have
to start comparing salaries across different departments,
compliance with the law may turn into a logistical nightmare.
The law does acknowledge that there may be valid reasons that a
man and a woman may be paid differently for doing the same job, but
they are limited to the following: 1) seniority (but the law
explicitly prohibits taking into account FMLA leave, parental
leave, or leave due to a pregnancy-related condition when
calculating seniority); 2) merit systems (the application of which
raise their own nondiscrimination issues); 3) systems of measuring
earnings by "quantity or quality of production, sales or revenue"
(i.e., piece work or commissions-based compensation); 4) geographic
location of the job; 5) education, training or experience, but only
to the extent those factors are "reasonably related" to the job;
and 6) travel that is a "regular and necessary part of the job.
Another significant provision in the new law prohibits employers
from requiring applicants to reveal their wage or salary history or
to seek wage or salary history from an applicant's current or
former employers. The rationale is that if women are underpaid due,
at least in part, to institutional discrimination, basing starting
pay on what women were earning in their last job will only serve to
perpetuate the discrimination. For example, if a woman and a man
apply for the same position, and the female applicant had been paid
$40,000 per year for that job while the male applicant had been
paid $50,000 per year for that same job, the employer is likely to
offer the female applicant a lower starting salary than the male
applicant. One way to minimize the impact of prior discrimination
on future employment is for employers to base starting pay on what
the job is worth to them, not on what they can convince an employee
to accept.
When I discuss this provision with HR professionals, I am
frequently asked, "But we can still ask what an employee's salary
expectations are, right?" At this point, asking an
applicant about salary expectations does not violate the letter of
the law, but it may violate the spirit of the law. After all, a
person who has been paid less is likely going to have lower salary
expectations than a similarly-qualified person who has been paid
more for doing the same work. But before the law goes into effect
on July 1, 2018, we will likely receive some further guidance from
the Attorney General's office on this point. The AG's office has
the authority to issue regulations interpreting the law, and such
regulations may very well define "seek the wage or salary history"
to include asking questions about an applicant's salary
expectations.
The law also prohibits employers from requiring that employees
refrain from discussing or disclosing information about their own
wages or other employees' wages. The National Labor Relations Act
has long protected employees' right to discuss their own wages with
coworkers, but there previously had been no protection for sharing
the wages of others. In addition, the NLRA only applies to
non-management employees; Massachusetts' Pay Equity law applies to
all employees. The idea is that employees who are free to discuss
their wages will be more likely to know whether their equal pay
rights are being violated and thus better able to assert their
rights under the law.
Employees under the new law will have three years to file any
lawsuit alleging violation of the Pay Equity law (versus the prior
law's one-year statute of limitations), and, unlike in other
complaints of discrimination, employees are not required to file an
administrative charge with the Massachusetts Commission Against
Discrimination before pursuing their claims in civil court. In
addition, the law establishes an affirmative defense for employers
who complete a good-faith self-evaluation of their pay practices
and demonstrate "reasonable progress" toward eliminating any wage
differentials.
With an effective date of July 1, 2018, it will be a while
before we can measure the effect of this new law. Will the law
achieve its purpose? Only time will tell. In the meantime,
employers should begin work now to identify any areas of concern
with respect to pay disparities so that it can work to be in
compliance with the law when it goes into effect next year.