Massachusetts Enacts Wage Equity Legislation: What Leaders Need to Know

On July 31, 2024, Massachusetts Governor Maura Healey signed into law the Act Relative to Salary Transparency, aiming to close wage gaps and ensure equal pay for equal work. This legislation expands the 2018 Massachusetts Equal Pay Act and aligns Massachusetts with 11 other states with similar pay transparency laws. The law takes effect in 2025.

Key Provisions

1. Pay Range Disclosure (This applies to companies with 25 or more employees)

• Job Postings:? Ensure all job postings include the salary range for the position. Includes direct and third-party job postings; the applicability to remote job postings is unclear.
• Promotions and Transfers:? Communicate the salary range to employees who are being offered a promotion or transfer.
• Upon Request: Be prepared to provide current employees or job applicants with the salary range for their positions upon request.

2. Reporting Requirements (This applies to companies with 100 or more employees)

• Wage Data Reports: Compile and submit wage data reports to the state.

1. Aggregate Reporting: The state will publish aggregated wage data to analyze and address wage disparities.
2. Timing: Private employers should submit this annually, and unions, state and local governments, and school systems should submit it biennially.

3. Antiretaliation Provision:

• Employers cannot retaliate against employees who file complaints or seek to enforce their rights. There is a limited private right of action for allegations of discrimination or retaliation.

4. Enforcement and Penalties

• Authority: The Massachusetts Attorney General has exclusive jurisdiction.
• Penalties:
• -First offense: Warning.
• -Second offense: Fine up to $500.
• -Third offense: Fine up to $1,000.
• -Fourth and subsequent offenses: Fines ranging from $7,500 to $25,000 per offense, depending on circumstances.

?Strategic Implications

1. Talent Acquisition and Retention:

• Competitive Edge: Transparency in salary ranges can make your company more attractive to top talent, helping you build a diverse and skilled workforce.
• Employee Trust and Morale: Clear and honest communication about pay can improve employee trust and morale, leading to higher retention rates.

2. Compliance and Legal Risk Management:

• Policy Review:? Review and update your company’s hiring, promotion, and salary disclosure policies to comply with the new requirements.
• Training and Education: Train HR teams and managers on the new laws to ensure they understand and can implement the requirements.
• Monitoring and Reporting: Establish systems for accurate wage data collection and reporting to avoid penalties.

3. Corporate Social Responsibility (CSR):

• Reputation Management:? Demonstrating commitment to wage equity can enhance your company’s reputation as a fair and equitable employer.
• Stakeholder Engagement: Communicate your efforts and compliance with the new law with stakeholders, including employees, investors, and the community.

Steps to Mitigate Risk

1. Ensure Compliance:

• Conduct regular audits to ensure that all job postings include the required salary ranges.
• Implement processes to provide salary range information during promotions and transfers.

2. Training and Education:

• Train HR personnel and managers on the requirements of the legislation and the importance of compliance. Educate employees about their rights under the new law to foster a culture of transparency and fairness.

3. Legal Review:

• Have legal counsel review the company’s policies and practices to ensure they align with the new requirements and to prepare for any potential enforcement actions.

4. Proactive Communication:

• Communicate proactively with employees about the company’s commitment to wage equity and the steps being taken to comply with the new law. Maintain open lines of communication with the Attorney General’s Office to stay informed about compliance expectations and potential changes to enforcement practices.

?

?Action Plan for Organizations

1. Immediate Actions:

• Review the full text of the legislation to understand all requirements.
• Conduct an internal audit of current salary ranges and disclosure practices.
• Update job posting templates to include salary ranges.
• Consult Legal Counsel: Employers should seek advice from experienced legal counsel to ensure compliance with the new requirements.

2. Short-term Goals:

• Train HR and management teams on compliance requirements.
• Ensure that HR systems are capable of managing and disclosing salary ranges effectively.
• Establish a process for employees to request salary range information during promotions and transfers.
• Develop a communication plan to inform employees about the new law and their rights.
• Prepare for annual or biennial wage data reporting if applicable.?

3. Long-term Strategies:

• Integrate wage transparency into your company’s broader diversity, equity, and inclusion (DEI) initiatives.
• Continuously monitor and analyze wage data to identify and address any ongoing disparities.
• Engage with industry peers and advocacy groups to stay informed about best practices and evolving standards in wage equity.

?