August 1, 2016 – Governor Baker signed a new equal pay law entitled “An Act to Establish Pay Equity.” The new equal pay law replaces a less stringent equal pay law that was originally passed in 1945. The new statute prohibits discrimination “in any way on the basis of gender in the payment of wages.” Also, the new equal pay law gives workers the right to bring direct actions against employers for gender-based wage discrimination and restricts the rights of employers to ask job applicants for salary history.
Broad support for new equal pay law
The new equal pay law Governor Baker signed, had passed both the House and Senate unanimously. Major business groups including the Greater Boston Chamber of Commerce, the Massachusetts Business Roundtable and the Associated Industries of Massachusetts also had supported the passage of the law.
The new equal pay law defines comparable work for determining gender-based wages
The new equal pay law replaces the provisions of G.L. c. 149, § 105A. When this statute, originally passed in 1945, Massachusetts became the first State to adopt legislation requiring equal pay for comparable work between the sexes.
However, that statute did not define the operative phrase: “work of like or comparable character or work of like or comparable operations.” This lack of specificity coupled with other procedural restrictions discussed below made the statute a weak enforcement tool to combat gender-based pay discrimination.
The new equal pay law changes the operative language to simply “comparable work” and defines the terms “comparable work,” “working conditions,” and “wages” as follows:
‘Comparable work’, work that is substantially similar in that it requires substantially similar skill, effort and responsibility and is performed under similar working conditions; provided, however, that a job title or job description alone shall not determine comparability.
‘Working conditions’, shall include the environmental and other similar circumstances customarily taken into consideration in setting salary or wages, including, but not limited to, reasonable shift differentials, and the physical surroundings and hazards encountered by employees performing a job.
‘Wages’, shall include all forms of remuneration for employment.
Gender related pay differentials prohibited for comparable work with some exceptions
Based on these definitions, the new equal pay law clearly prohibits and gender-based discrimination in wages for comparable work performed under similar working conditions stating:
No employer shall discriminate in any way on the basis of gender in the payment of wages, or pay any person in its employ a salary or wage rate less than the rates paid to its employees of a different gender for comparable work…
The law does, however, allow variations in wages if based upon:
- a system that rewards seniority with the employer; provided, however, that time spent on leave due to a pregnancy-related condition and protected parental, family and medical leave, shall not reduce seniority;
- a merit system;
- a system which measures earnings by quantity or quality of production, sales, or revenue;
- the geographic location in which a job is performed;
- education, training or experience to the extent such factors are reasonably related to the particular job in question; or
- travel, if the travel is a regular and necessary condition of the particular job.
Right of employees to discuss among themselves wages paid
The new equal pay law also ensures that employees have the right to discover wage disparities through the free and unfettered exchange of information between a firm’s employees. The act prohibits employers from restricting employees from discussing their remuneration.
The new equal pay law states that “It shall be an unlawful practice for an employer to:”
…require, as a condition of employment, that an employee refrain from inquiring about, discussing or disclosing information about either the employee’s own wages, or about any other employee’s wages.
New equal pay law has first in nation prohibition against asking for prior wage history
The new equal pay law has a provision that prohibits employers from requesting in the course of interviewing or evaluating a prospective employee their prior wage history. This provision has been identified as the first time any state has passed such a restriction on an employer evaluating a prospective employee based on that employee’s prior wage history.
The stated aim of the Legislature in inserting this provision was to minimize the disadvantage accruing to qualified women seeking salary advancement in new employment. In many cases, disclosing their salary history put them at a negotiating disadvantage with their new prospective employer who might base their salary offer on past earnings rather than on the objective accomplishments and skills of the applicant.
The provision that implements this restriction states that, “It shall be an unlawful practice for an employer to:”
…seek the wage or salary history of a prospective employee from the prospective employee or a current or former employer or to require that a prospective employee’s prior wage or salary history meet certain criteria…
The law does provide, however, two exceptions. An employer does not violate the law where the employer obtains a prospective employee’s salary history:
- if a prospective employee has voluntarily disclosed such information, a prospective employer may confirm prior wages or salary or permit a prospective employee to confirm prior wages or salary; and
or, a prospective employer may seek or confirm a prospective employee’s wage or salary history:
- …after an offer of employment with compensation has been negotiated and made to the prospective employee;
Unlawful to fire employee for involvement in possible or actual equal pay complaint
The new equal pay law also makes it, “…an unlawful practice” for an employer to discharge or in any other manner retaliate against any employee because the employee:
- opposed any act or practice made unlawful by [the new equal pay law];
- made or indicated an intent to make a complaint or has otherwise caused to be instituted any proceeding under [the new equal pay law];
- testified or is about to testify, assist or participate in any manner in an investigation or proceeding under [the new equal pay law]; or
- disclosed the employee’s wages or has inquired about or discussed the wages of any other employee.
Extended statute of limitations for direct actions
Under the original law that the new equal pay law replaces, an employee seeking to bring an action against an employer for wage discrimination had only one year in which to sue.
This time period was further exacerbated by another court decisions ruling that the failure to pay equal wages did not count as a continuing violation. The one-year statute of limitations began to run from when the employee learned that she was being paid less for comparable work.
The new statute overrules and replaces the prior court interpretations with extremely liberal provisions to benefit employees seeking to prosecute their employers for gender-based pay discrepancies.
No requirement to file complaint for discrimination with the MCAD
One of the major restrictions under the prior equal pay statute related to the requirement imposed the Supreme Judicial Court in interpreting the MCAD’s enabling act, G.L. c. 151B. Under that act all discrimination complaints first have to be filed with the MCAD within three-hundred days of the party discriminated against having knowledge of the pay disparity. See Agency Checklists’ July 18, 2016 article, “Selling EPLI? Five things agents should to know about the Massachusetts Commission Against Discrimination.”
Effectively, this requirement lowered the short one-year statute of limitations to the MCAD’s three-hundred day statute of limitations.
The new equal pay law abolishes the requirement that an employee filing a complaint for gender-based wage discrimination by providing:
…a plaintiff shall not be required to file a charge of discrimination with the Massachusetts commission against discrimination as a prerequisite to bringing an action under this section.
Employees now have three years to file lawsuit directly in court
The statute of limitations for bringing an action against an employer increases from one year under the original statute to three years under the new equal pay law.
The new equal pay law further extends the statute of limitations by providing that for purposes of measuring when the affected employees right to bring an action occurs at the latter of:
- when an employee becomes subject to a discriminatory compensation decision or other practice, or
- when an employee is affected by application of a discriminatory compensation decision or practice, including each time wages are paid, resulting in whole or in part from such a decision or practice. (Emphasis added).
The underlined language designates the payment of wages in violation of the statute as a continuing violation from which the statute of limitations will be measured. In other words, the three‑year statute of limitations is not measured from when the employee first learns of the pay disparity, as under the old law. Instead, the statute of limitations under the new equal pay law will only begin to toll when the employee gets her last pay check through termination of her employment or the employer adjusts the prohibited pay disparity.
At that point, the employee would then have three years to bring an action for damages.
New equal pay statute allows recovery of difference in pay rate, liquidated damages, and attorneys’ fees
An employer who violates the equal pay provision is liable to the employee affected for the employee’s unpaid wages, which is defined as “all forms of remuneration for employment.” In addition, the statute provides that the amount of unpaid wages or remuneration recovered is doubled by the award of liquidated damages equal to that amount that was not paid in remuneration. The statute also provides that the court “shall” add to any judgment awarded to a plaintiff reasonable attorneys’ fees to be paid by the employer.
Also the statute specifically provides that the employee may bring an action “on behalf of other employees similarly situated.”
For a large employer in Massachusetts this provision would mean that one employee bringing an action could seek remedies for other employees who would still be working for the company. The provision for joining additional employees “similarly situated” does not seem to be based upon the traditional class action requirement of “numerosity.” Ordinarily, class actions are not allowed unless the plaintiff alleges and proves that there are sufficient other persons that have the same claim. This statute seems to give a right to bring this action for one or more additional employees similarly situated to the plaintiff.
Act bars contract defense of “we had an agreement” or that the employee accepted the pay scale.
The new equal pay law specifically provides that in any lawsuit brought by a present or former employee that:
any agreement between the employer and any employee that work for less than a wage to which the employee is entitled in this section shall not be a defense to an action.
Based on this provision of the law, an employer that improvidently posited an affirmative defense that there had been an agreement to work for a lesser wage probably would probably establish for the plaintiff her prima facie evidence that there had been a violation of the new equal pay law.
Also, the new equal pay law specifically bars as an affirmative defense to an employee’s lawsuit that the employee’s “previous wage or salary history, evidences an acceptance of the wage or otherwise affects the right of the employee to recover.”
Equal Pay law will lead to employers conducting self-evaluations of gender differences in pay
The new equal pay law does allow a specific statutory defense. If the employer has completed a “self-evaluation” of its pay practices in good faith and can demonstrate that reasonable progress has been made towards eliminating wage differentials based on gender for comparable work, the employee cannot recover.
The statute does not specify, however, what constitutes a self-evaluation of an employer’s pay practices.
Under the new equal pay law, the Attorney General has statutory authority to “issue regulations interpreting and applying” the new equal pay law’s provisions relating to self-evaluations. The statute does contemplate for purposes of self-evaluation that the Attorney General may issue forms or standard templates that employers may utilize for their self-evaluations.
Presently, the statute provides that the employer may use a self-evaluation of “the employer’s own design.” The only requirement is that the self-evaluation be reasonable in detail and scope in light of the size of the employer and consistent with the standard templates or forms if and when issued by the Attorney General.
Employers conducting self-evaluations in anticipation of the effective date of the statute, July 1, 2018.
In order for the self-evaluation to provide a valid defense to an equal pay lawsuit by an employee the self-evaluation must have been completed within 3 years of the commencement of the action and the employer must be able to demonstrate that reasonable progress has been made towards eliminating wage differentials, if any, based on gender for comparable work in accordance with that evaluation.
However, “reasonable progress” cannot entail reducing the pay of higher-paid workers. The statutes states that: “An employer who is paying a wage differential in violation of this [law] shall not reduce the wages of any employee solely in order to comply with [the new equal pay law].”
The Act provides further that if the employer cannot demonstrate that the evaluation was reasonable, in detail and scope,” it shall not be entitled to the affirmative defense but simply by having the self-evaluation on record the statute provides that, the employer “shall not be liable for liquidated damages under this section.”
The self-evaluation also poses no risk to the employer that attempts to conduct such a survey whether successful or not. The statute provides that the evidence of a self-evaluation or remedial steps undertaken as a result “shall not be admissible in any proceeding as evidence of a violation.”
Finally, the employer who does not complete a self-evaluation is left where it would have been without regard to this defense. The law provides that an employer who has not completed a self-evaluations “shall not be subject to any negative or adverse inference as a result of not having completed a self-evaluation.”
The new equal pay law may provide insurance producers a powerful sales took if employment practices liability insurers provide coverage
The new equal pay law which is not effective until July 1, 2018, will require employers in the commonwealth to carefully review their hiring and compensation practices.
However, for insurance producers the new equal pay law will provide a marketing opportunity if insurance carriers respond to the new law by offering employment practice liability insurance (“EPLI”) that will cover the new law’s risks. The right provided by the new equal pay law allowing employees to file lawsuits directly against their employers for themselves and other similarly situated employees should act as a powerful inducement for employers to purchase or augment EPLI coverage.