Prepared for the MA Equal Pay Act? 3 Things SMBs Can Do Today

By now, you have likely received ample reminders that the amendment to the Massachusetts Equal Pay Act (“MEPA”) is effective July 1, 2018. Why is this important to small and midsize businesses? Because, unlike many other Massachusetts employment laws, it applies to all Massachusetts employers, regardless of size. As such, employers with only a few employees may have lurking gender-based discrimination claims that could have been addressed through by a basic analysis and simple remedies.

Why is this all coming about now? Massachusetts law has prohibited gender-based compensation decisions since 1945. But, given considerable continuing gender pay disparities, in 2016 An Act to Establish Pay Equity amended the existing law. The law is now written to incentivize employers to perform their due diligence and take actions to fix gender-based differences in compensation.

MEPA is a big deal because it provides additional legal requirements for employers, and exposes them to double damages and attorneys’ fees for violations. Intent is not a factor in finding an employer liable for violations. Therefore, a significant focus will be placed on compensation data and related factors. However, handled correctly, you can ensure that your employees are being paid without regard to gender and create some protections from legal liability if you do find a disparity during your analysis.

MEPA Basics

  • Employers cannot discriminate against employees on the basis of gender with regard to pay for “comparable work.”
  • “Comparable work” is defined as work that requires “substantially similar” skill, effort, and responsibility, and is performed under similar working conditions. This is broader than the traditional “equal work for equal pay.”
  • “Substantially similar” does not require that the skill, effort and responsibility are identical. Even minor differences may make two jobs similar.
  • MEPA permits differences in pay under limited circumstances, including seniority, under a merit system or quality/quantity of production system, geographic location, education/training/experience, and travel.
  • Salary history is not a defense. In other words, you can’t use or even ask for a job candidate’s salary history during the hiring process to establish a compensation level. This is because it has been found that an employee’s salary history may perpetuate previous gender-based pay discrimination.
  • The statute of limitations is now three years, meaning an employer can be liable for each violation looking back over a three-year period.

Three Things You Can Do Today

Ok, so what does this all mean for your small or midsize company? MEPA is novel (compared to other states), complicated, nuanced and technical, with legal traps for the unwary. But fear not! You can take some initial steps today to comply and manage your liability risk exposure.

  1. Update your job application and educate recruiters/hiring managers.

This is a quick fix you can do today! Change your employment application so it does not request applicants’ salary history. You can ask candidates about their salary requirements, but this question is fraught with peril. It can easily lead to prohibited discussions about their salary history. You are only allowed to obtain salary information to confirm information shared voluntarily by the candidate or after the offer of employment has been made. Be sure to train any hiring managers and confirm with third-party recruiters that they have made changes to their application process and forms.

(And while you’re at it, have your entire application reviewed for compliance with applicable laws.)

  1. Start a pay audit and fix pay disparities

A Safe Harbor from liability can be established by conducting an self-audit of your company’s pay practices, and then by remedying any pay inequities. This sounds scary and it could be if not done right. But if you are a small or midsize employer, it doesn’t have to be. It means that you need to carefully analyze your workforce’s pay history and practices to ensure pay differences between people of different genders have not evolved, either intentionally or unintentionally.

BUT this is where it is a good idea to retain experienced counsel who can help protect aspects of the self-audit under the employee-client privilege, including any communications around the self-audit. In addition, an experienced attorney can help you navigate federal laws (which don’t provide a safe harbor) and ensure that any corrections are made properly, with the right timing and approach to avoid encouraging potential claims.

A self-audit can serve as a “complete defense” to MEPA claims and an “affirmative defense” to gender discrimination claims under M.G.L. c. 151B.  However, it can also be used in some litigation discovery and as the basis for federal wage and hour claims. So, how you handle the information and make changes will be critical in avoiding the “no good deed goes unpunished” scenario.

  1. Document compensation decisions

When you ultimately make a compensation decision for a new hire or existing employee, be sure to document the reasons, if any, as to why there may be different pay for a similar position. Include one or more of the permissable reasons in the written justification for any compensation offer or change. Going forward, be sure you are using objective performance and other factors to differentiate all employees to reflect any compensation adjustments. And, be transparent and include the documents in employees’ confidential personnel records.

There is likely more to be done after you have completed the three initial steps above. In addition, the application of MEPA and federal gender discrimination laws will continue to evolve in years to come. However, take care of the above, and you’re well on your way to compliance with MEPA and managing the risk of potential gender-based employment claims and liability associated with compensation.

Previously: Do Your Disability and Leave Policies Support Employees With Mental Illness?

This blog is for educational and informational purposes only, and is not, nor is it intended to be, legal advice. Any use of this blog’s content, including but not limited to by contacting us by any method, does not create an attorney-client relationship. You should consult an attorney for advice regarding your individual situation. Every legal matter, case or issue is different, and any prior results described in this blog does not guarantee a similar outcome in future matters, cases or issues. 

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