54: Massachusetts Act to Establish Pay Equity

Massachusetts Act to Establish Pay Equity
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We simply can’t have free people negotiating their own voluntary relationships.

Just when I think it’s time to move off this subject and on to the next, Massachusetts Governor signed a newly passed pay equality law this past Monday, August 1, 2016. Even if you don’t have employees in Massachusetts you need to understand their law because it’s a sign of what’s coming soon to a state near you; and quite possibly, the nation as a whole. There are a lot of similarities between the new Massachusetts law and the proposed federal Pay Check Fairness Act.

So despite the already existing federal laws and Massachusetts own general laws, chapter 151B, the Overlords of the Commonwealth feel it necessary to force employers to do even more. We simply can’t have free people left to negotiate their own voluntary relationships. It’s just not a fair playing field and that’s un-American.

To understand Massachusetts new obligations under The Act to Establish Pay Equity we need to compare it to the Federal Equal Pay Act.

The Massachusetts Act to Establish Pay Equity says that:

(b) No employer shall discriminate in any way on the basis of gender in the payment of wages, including benefits or other compensation, or pay any person a salary or wage rate less than the rates paid to employees of a different gender for comparable work;

Let’s break this down:

This law includes benefits and “other” compensation in addition to wages, as part of the analysis.

“Comparable work”, means 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.

So then we have to look at the definition of working conditions.

“Working conditions”, includes the circumstances customarily taken into consideration in setting salary or wages, including, but not limited to, reasonable shift differentials, physical surroundings and hazards encountered by employees performing a job.

So let’s read that again. No employer shall discriminate in any way on the basis of gender in the payment of wages, INCLUDING  benefits or other compensation, or pay any person a salary or wage rate less than the rates paid to employees of a different gender for COMPARABLE work, which is work that is SUBSTANTIALLY SIMILAR (which isn’t defined) in that it requires SIMILAR skill, effort and responsibility, not the SAME skill, effort and responsibility, and is performed under similar WORKING CONDITIONS which includes the same things you’d normally consider when setting a wage like shift differentials, physical surroundings and hazards of the job.

But if the WORKING CONDITIONS are different, that may serve as the basis for a differential, as long as the differential, including benefits or other compensation, is based upon:

  1. A bona fide system that rewards seniority with the employer where pregnancy, protected parental, family and medical leave, shall not reduce seniority.
  2. A bona fide merit system.
  3. A bona fide system which measures earnings by quantity or quality of production or sales.
  4. The geographic location in which a job is performed.
  5. Education, training or experience to the extent such factors are reasonably related to the particular job and consistent with business necessity.
  6. Travel, if a regular and necessary condition of the particular job.

The Federal Equal Pay Act of 1963 says that:

(1) No employer having employees subject to any provisions of this section shall discriminate, within any establishment in which such employees are employed, between employees on the basis of sex by paying wages to employees in such establishment at a rate less than the rate at which he pays wages to employees of the opposite sex in such establishment for equal work on jobs the performance of which requires equal skill, effort, and responsibility, and which are performed under similar working conditions, except where such payment is made pursuant to (i) a seniority system; (ii) a merit system; (iii) a system which measures earnings by quantity or quality of production; or (iv) a differential based on any other factor other than sex:

Compare the terms and definitions:

Under federal law we have EQUAL WORK and the Massachusetts law says COMPARABLE WORK. So you can see it significantly expands the definition.

Equal work is defined as “work which requires equal skill, effort, and responsibility.

And the Massachusetts law defines comparable work as: work that is substantially similar in; skill, effort, and responsibility and is performed under similar working conditions.

So again, much broader.

Under federal law working conditions is undefined – so where the Equal Pay Act says ….”which are performed under similar working conditions”, it doesn’t define it although case law certainly has. Federal law does not include benefits and other compensation as part of what constitutes pay whereas Massachusetts includes it.

And then we have the exceptions. The things a differential can be based on: Federal law says:

  1. A seniority system.
  2. A merit system.
  3. A system which measures earrings by quantity or quality of production; and,
  4. A differential based on any other factor other than sex.

Whereas the Massachusetts law says:

  1. A bona fide system that rewards seniority with the employer, except that time missed due to pregnancy, protected parental, family and medical leave, shall not reduce seniority.
  2. A bona fide merit system.
  3. A bona fide system which measures earnings by quantity or quality of production or sales.
  4. The geographic location in which a job is performed.
  5. Education, training or experience to the extent such factors are reasonably related to the particular job and consistent with business necessity.
  6. Travel, if a regular and necessary condition of the particular job.

That ends our comparison – as you can see the Massachusetts law is considerably more extensive

We aren’t done yet though… there is more to the Massachusetts law that is important to understand so we’ll get to it in the next episode and we’ll also talk about California’s equal pay laws which have been on the books since 1949, as well as The California Fair Pay Act which was signed into law on October 6, 2015, by Governor Brown.

Conclusion:

The Massachusetts Act to Establish Pay Equity takes effect on January 1, 2018 so you have 18 months to self-audit and get into compliance.

As compared to the Federal Equal Pay Act of 1963, the Massachusetts Act expands the definition of the work covered from equal to comparable. It further expands the definition of work by saying “work that is substantially similar” instead of  “work which requires equal”.  It adds benefits and other compensation to the analysis and it significantly restricts what qualifies as an exception.

About the author, Thomas

I have 20 of years insurance industry experience in C-level management, focusing on all aspects of workers compensation, risk management, loss control, employee benefits, HR, payroll and professional employer organization (“PEO”) operations. Currently, I am the owner and CEO of Humanly HR, and founder and host of SmallBiz Brainiac; a podcast providing employer intelligence to small business owners.

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