Don’t Show Me The Money

Massachusetts Pay Equity Law Has Implications for California and New York Employers That Seek or Use Applicant Wage History

By Erica Parks
August 23, 2016

The Massachusetts Equal Pay Act (“MEPA”) has prohibited employers from paying men and women differently for “work of like or comparable character” since 1945, nearly two decades before the federal Equal Pay Act (“EPA”) was passed and before any other state passed pay equity legislation.  This month, Massachusetts Governor, Charlie Baker, signed into law Senate Bill 2119 (“S.2119”), which makes several significant changes to the MEPA, most of which are similar to recent amendments to California and New York equal pay legislation.  Notably, however, S.2119 makes Massachusetts the first in the nation to prohibit employers from requesting or seeking an applicant’s salary history.  S.2119 can be read in full here.

Once S.2119 goes into effect, on July 1, 2018, the previously undefined term “comparable character” will be replaced by “comparable work,” which is defined as “work that is substantially similar in content and requiring substantially similar skill, effort, and responsibility and performed under similar working conditions.”  This new definition mirrors California’s recently expanded Fair Pay Act (“CFPA”), which broadened the scope of claims that can be pursued under the law from claims for jobs that require “equal skill” to claims for “substantially similar work, when viewed as a composite of skill, effort, and responsibility, and performed under similar working conditions.” By comparison, New York Labor Law § 194(1) (“NYLL”) and the federal EPA require equal pay for “equal work.”

The MEPA currently permits variations in pay based on differences in seniority.  Once S.2119 goes into effect, however, employers can defend allegedly disparate pay practices by showing that any such disparity is based on: (i) seniority, provided that pregnancy, parental, family and medical leave does not reduce seniority; (ii) a merit system; (iii) a system which measures earnings by quantity or quality of production; (iv) geography; (v) education, training or experience to the extent such factors are reasonably related to the particular job in question and consistent with business necessity; or (vi) travel that is a necessary condition of the particular job. By comparison, the CFPA and NYLL currently place a different burden on employers to justify wage differentials. For example, geography is not a defense under the CFPA.  Likewise, while pay disparities based on seniority, merit, or earnings measured by quantity/quality are permitted under both the CFPA and NYLL, any other factor must be job-related and consistent with “business necessity.” Similarly, both the CFPA and NYLL provide that an employee can defeat certain employer defenses by showing that an alternative practice exists that would serve the same purpose without causing a pay disparity.

S.2119 also expands the statute of limitations under the MEPA from one to three years (compare with the two year recovery period under the CFPA, which can be lengthened to three years for willful violations). Moreover, under the MEPA, employees no longer will be required to pursue administrative relief before the Massachusetts Commission Against Discrimination before filing suit in court.

S.2119 will also place entirely new burdens on employers, unseen in any other state’s equal pay legislation. Notably, once S.2119 goes into effect, the MEPA will prohibit employers from (i) requesting an applicant’s salary history, (ii) screening applicants based on their salary histories, and (iii) seeking an applicant’s wage history from current or former employers, except to (a) confirm salary history “voluntarily provided” by an applicant or (b) confirm prior wages after an offer of employment with compensation has been negotiated and made.  Although the CFPA and NYLL do not have a similar provision, employees in these and other jurisdictions may attempt to point to the common practice of requesting a salary history to support claims of gender-based wage differentials.

Similar legislation recently introduced in California and New York City may indicate a trend towards restricting employer’s ability to seek or rely on an applicant’s wage history. Specifically, the California Senate is considering Assembly Bill 1676 (“AB-1676”) which, if passed, would amend the CFPA to prohibit employers from relying on an applicant’s salary history as the sole justification for a wage disparity. AB-1676, which can be read in full here, is narrower than prior bills vetoed by Governor Brown that, like S.2119, would have prohibited employers from even seeking wage history.

Likewise, the New York City Council is considering Initiative 1253 (“Int. 1253”), which, if enacted, would amend the New York City Human Rights Law to prohibit employers from seeking an applicant’s salary history, including by searching publicly available records, and from using salary history to determine pay “at any stage in the employment process,” unless the applicant “unprompted, willingly disclosed such salary history” or federal, state, or local law authorized the disclosure or verification of salary history for employment purposes. Int. 1253 can be read in full here.

Ask MSK:

What Does S.2119 Mean For Massachusetts And Multi-State Employers?

Come July 2018, businesses in Massachusetts must take steps to ensure that their hiring practices conform to the new standards established under S.2119. For example, multi-state employers that operate in Massachusetts should review any centralized recruiting systems or multi-state employment applications and hiring materials for any request for salary history and consider revising or even omitting such requests.

What Does This Mean For California and New York Employers?

Although it remains to be seen whether the California or New York City amendments will become law, in the meantime, the MEPA may provide additional grist for employees to challenge their employer’s pay practices under the CFPA and NYLL. Specifically, as Massachusetts employers overhaul their hiring and pay practices to conform to S.2119, their revised pay practices may provide examples of alternative business practices that are less likely to produce wage differentials and may be relied upon by claimants to rebut an employer’s “business necessity” defense.

Please contact MSK if you would like to discuss whether changes to your recruiting or pay practices are advisable for your business.

 

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s