On July 1, 2018, An Act to Establish Pay Equity (the “Act”) goes into effect. The Act prohibits discrimination in payment of wages on the basis of gender. Below is the fifth article in our series concerning the Act.
Employers can protect themselves against potential lawsuits alleging violations of the Act by completing good-faith, reasonable self-evaluations of their employee pay practices within the three (3) years prior to a lawsuit being filed. The Attorney General’s guidelines (the “Guidelines”), a link to which can be found here: https://www.mass.gov/files/documents/2018/03/01/AGO%20Equal%20Pay%20Act%20Guidance.pdf
describe a good-faith self-evaluation as an employer’s attempt to review its payment practices and identify any potential unlawful pay disparities among its employees performing comparable work.
The Guidelines suggests that in many cases an employer may not know why some employees earn more than other employees performing comparable work. The self-evaluation process will hopefully allow employers to identify situations where that has occurred. If an employer finds wage disparity for comparable work, the employer can then determine whether there is lawful justification to do so (see our article on permissible reasons for disparity, here), or make “reasonable progress” in eliminating such pay disparities.
Notably, if an employer can prove that they have undergone a reasonable, good-faith self-evaluation within the three-year period prior to a claim, the employer will be shielded from liability for violation of the Act. For an employer to take advantage of this defense to claims under the Act, the self-evaluation must be done in good faith (meaning that it cannot be done to obtain a pre-determined result) and the evaluation must be reasonable in detail and scope. Whether a self-evaluation is reasonably detailed will be dependent upon many facts, including the size and complexity of an employer’s workforce and business operations.
If the self-evaluation uncovers pay disparities for comparable work, the employer will also have to show that it has made “reasonable progress” in eliminating the disparity. Again, whether the progress is “reasonable” will depend on all the facts, including the length of time that has passed since the disparity was uncovered, the size of the pay disparities, and whether it has an action plan to continue making progress to eliminate the disparity. Appendix “A” to the Attorney General’s Guidelines (link here: https://www.mass.gov/files/documents/2018/03/01/AGO%20Equal%20Pay%20Act%20Guidance.pdf): provides a sample Self-Evaluation that employers can use to start the process.