You’ve probably heard about the new amendment to employer labor laws that will be effective in Massachusetts beginning July 1, 2018. This new law, the Massachusetts Equal Pay Act, enacted to prohibit pay discrimination based on gender, has got many employers scrambling to make sense of how they can remain compliant.
Many employers I work with assume that they don’t have a problem with a gender pay gap. However, when we go in and analyze job functions and compensation, there are often large discrepancies that need to be addressed. Remaining compliant can be laborious and expensive, but it’s now necessary in the Commonwealth.
I’ve worked with many companies to help them understand the implications, and in celebration of National Equal Pay Day (April 10th, 2018), I’m sharing some information and five actions you can take to get ahead of the Massachusetts Equal Pay Act.
Why the Massachusetts Equal Pay Act?
The Massachusetts pay equity law was enacted to ameliorate this gap on the state level, demanding that Massachusetts-based companies take stock of employee salaries and their corresponding job functions, and then correct for any discrepancies.
Under this new law enforced by the Massachusetts Attorney General, companies will no longer be allowed to pay employees lower wages based on gender when they perform “comparable work” as a means to close the gender gap.
What the Massachusetts Equal Pay Act Prohibits
New laws like these can be intimidating, especially if you’re concerned about compliance. We’ve found that the easiest way to educate the companies we work with is to help them understand what the new act prohibits. Starting on July, 1, 2018:
- Employers can’t ask for salary history of potential employees
- Employers can’t inquire about salary history from former employers
- Employers can’t lower men’s salaries to abide with this new law
- Employers can’t use an employee’s wage history to defend against the law
- Organizations can’t stop employees from sharing their salary information with other employees
- Employers are not allowed to penalize employees for initiating an action against their employer
According to the Equal Pay Act, there are a few instances where wage differences are considered acceptable:
- There is a difference in the amount of time spent at the organization
- Wages are based on merit, utilizing a formal pay-for-performance system
- Wages are based on metrics such as sales, revenue, production, and quality
- Employees work at different locations and there are geographic pay differentials
- There is a difference in training, education or experience that aligns with duties performed
- An employee travels more than others in a similar role
Five Actions You Can Take to Remain Compliant
These prohibitions – including the exceptions – are a difficult pill to swallow, as many HR teams and hiring managers have used salary history to help gauge what a role is worth, financially. However, there are actions you can take to remain compliant, and move forward towards closing the pay gap within your company:
1. Update job descriptions and salary ranges
The first step you need to take is to update job descriptions and salary ranges. Each job you have should have a matching salary range. These ranges should be dictated by what the job is worth to your company, not by what candidate prospects demand or share about their past salary histories.
2. Classify jobs correctly so that employees are in comparable jobs
One of the biggest tasks is to classify all of your job functions correctly. This can be challenging, as it can be difficult to take stock of each and every role – especially if you have thousands of employees. However, correctly classifying jobs is necessary in order to remain compliant.
3. Perform an Equal Pay Analysis to protect the organization from legal action
An Equal Pay Analysis will help you know where your organization stands when it comes to gender pay equityso that you can make corrections to protect yourself from legal action. By performing an analysis and comparing female vs. male waves in comparable jobs, you can better pinpoint where exactly to make changes.
4. If gender pay gaps exist, take action to show reasonable progress has been made
Rome wasn’t built in a day, so if you do have a gender pay gap (and it’s likely you will), refrain from putting pressure on yourself to fix it tomorrow. Instead, you’ll need to take immediate action to prove reasonable progress has been made, and be able to present a plan to your leadership teamfor when the gap will be closed.
5. Show potential candidates the hiring salary range so that salary history is not required
The number one thing I recommend to employers is to show prospective employees salary ranges during the recruiting process. Rather than going back and forth, employers should be straightforward about the range, then make employees their best offer. If the employee is not within that range, then it’s best to find someone who is.
Remaining Compliant is the Right Thing to Do
As a leader at your organization, I know you care about paying employees fairly as much as making sure you remain compliant with the law. In order to accomplish both, it’s necessary that you educate your team on the Massachusetts Equal Pay Act. In this case, remaining compliant is not just a legal protection – it also gives you the opportunity to directly impact the gender gap. It’s the right thing to do.