On August 1, 2016, Governor Baker signed into law An Act to Establish Pay Equity (the “Act”). The Act does not go into effect, until July 1, 2018, and it is too early to tell how it will affect Massachusetts employers. In this article we present a general overview of the Act and what it could mean for employers. We will provide updated analysis of the Act, and any regulations issued by the Attorney General’s office, when the effective date is closer.

The Act prohibits discrimination in payment of wages on the basis of gender. More specifically, the act prohibits paying a lower wage to employees of different genders when the employees perform comparable work. The Act uses a broad definition of “wages”, but fails to define the term “comparable work”, which could lead to a number of lawsuits soon after the Act goes into effect.

The Act also provides a set of six (6) permissible reasons allowing employers to pay disparage wages to employees doing comparable work. Among the permissible reasons are the use of a merit system to determine employee pay, the geographic location in which the job is performed, whether travel is a necessary part of the job, and an employee’s seniority with that employer (but not for overall seniority in a certain profession). Factors that are not specifically enumerated in the Act (even good-faith reasons which are not related to gender) will not prevent employer liability. This is a significant difference from other existing state and federal pay equality laws, which often include a general “catch-all” provision allowing pay disparity to exist for any non-gender related factor.

In addition to the pay disparity prohibition, the Act also restricts employers from preventing employees from discussing wages, or retaliating against employees who exercise their rights under the Act. Employers who currently restrict employees from discussing pay should revise those policies in the near future. Importantly, the Act also prevents employers from asking about a prospective employee’s prior wage history before making an employment offer. Employers may consider prior pay history if the candidate provides it voluntarily.

The statute of limitation for lawsuits filed on this basis will be three (3) years after the date of an alleged violation. There is no requirement to file a claim with the Massachusetts Commission Against Discrimination (MCAD) prior to filing. Employers who violate the Act could be liable for wages equal to the amount of the pay disparity, as well as costs and attorney’s fees.

Employers can protect themselves against potential violations of the Act by completing self-evaluations of their employee pay within the three (3) years prior to a lawsuit being filed. The self-evaluation must be completed in good faith and must be “reasonable” in scope and detail. Again, there are no details or guidance about what would constitute a reasonable self-evaluation.