3.9.18

In August 2016, Massachusetts Governor Charlie Baker (R) signed into law amendments to the Massachusetts Equal Pay Act, M.G.L. c. 149, s. 105A, which were passed in April 2016 by unanimous votes in the state House and Senate. Although Massachusetts has long required employers to pay men and women equally for “work of comparable character or work of like or comparable operations,” the new amendments were expected to make assertion of pay equity claims easier.

The amendments to the MEPA are scheduled to take effect on July 1, 2018.

Last week, the state Attorney General published Guidance on the new law, which is summarized below.

The Guidance may not be in its final form. Although it was within the Attorney General’s power to issue regulations under the new law, she chose to offer Guidance instead so that she could make revisions without providing notice and an opportunity for comment. Thus, the Guidance will not be entitled to deference, though it will be considered persuasive authority by the courts.

DefinitionsThe FAQs are quoted directly from the Guidance.

What is “comparable work” under the Massachusetts Equal Pay Act (MEPA)?

MEPA defines “comparable work” as work that requires substantially similar skill, effort, and responsibility, and is performed under similar working conditions. “Comparable work” is broader and more inclusive than the “equal work” standard of the federal Equal Pay Act. Determining whether jobs are comparable will require an analysis of the jobs as a whole. It is unlawful under MEPA to pay employees of different genders unequal wages for comparable work, unless a statutory exception applies—which requires a separate analysis.

This definition of “comparable work” eliminates the two-part test of comparability set forth in the state Supreme Court’s 1995 and 1998 decisions in Jancey v. School Committee of Everett.

What does “substantially similar” mean?

“Substantially similar” means that each of the factors being considered—in this case: skill, effort, and responsibility—are alike to a great or significant extent, but are not necessarily identical or alike in all respects. Minor differences in skill, effort, or responsibility will not prevent two jobs from being considered comparable.

What does “skill, effort, and responsibility” mean?

For purposes of comparing jobs, “skill” includes such factors as experience, training, education, and ability required to perform the jobs. It must be measured in terms of the performance requirements of a job, not in terms of the skills that an employee happens to have. Skills not necessary to perform a particular job are not relevant to determining whether jobs are substantially similar. . . .

Effort” refers to the amount of physical or mental exertion needed to perform a job. Job factors which cause mental fatigue and stress, as well as those which alleviate fatigue, should be taken into account. “Effort” encompasses the requirements of a job as a whole. . . .

Responsibility” encompasses the degree of discretion or accountability involved in performing the essential functions of a job, as well as the duties regularly required to be performed for the job. It includes such factors as the amount of supervision the employee receives or whether the employee supervises others, and the degree to which the employee is involved in decision-making such as determining policy or procedures, purchases, investments or other such activities. Minor or occasional differences in responsibilities will not prevent jobs from being comparable. . . .

Massachusetts practitioners believe that there will be many questions as to how these factors will play out in the real world. Employers will now be required to analyze where the different skills, effort and responsibilities lie. The Guidance provides, “While an employer may not rely on job descriptions alone, job descriptions that accurately reflect the skill, effort and responsibility required to perform jobs may be helpful in identifying which jobs are comparable.”

“Wages”

In discussing the meaning of “wages” for purposes of the MEPA, the Guidance notes that employers may not pay employees a bonus or other benefits to offset a gender-based pay differential.

Permissible and impermissible variations in pay

Section 5 of the Guidance provides detail about variations in pay that would be permitted under the MEPA:

  • 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.

A pay difference will be permissible under MEPA if the entire difference is justified by one of these factors, or by a combination of these factors. MEPA does not recognize any other valid reasons for variations in pay between men and women performing comparable work.

The Guidance then provides detailed explanations of each of these exceptions with accompanying examples. The following will NOT justify a gender-based pay differential:

  • Wage or salary history
  • Changes in the labor market
  • Lack of intent to discriminate based on gender

Employee discussions about pay

Employers generally cannot prohibit employees from discussing their wages or their coworkers’ wages, or from disclosing wage information to any person or entity. However, unless the information is a matter of public record, an employer can lawfully prohibit discussion or disclosure of employee wages by human resources employees, supervisors, or other employees whose job responsibilities give them access to other employees’ compensation.

Salary history

Under the MEPA, employers generally may not seek the salary or wage history of any prospective employee. The only exceptions are to confirm wage or salary history information that was voluntarily shared by the prospective employee, or after an offer of employment with compensation has already been extended.

The Guidance notes,

Nothing in MEPA prohibits an employer from asking a prospective employee about his or her compensation needs or expectations. However, employers should proceed with caution when asking such questions and ensure that such questions are not framed or posed in a way that is intended to elicit information from the prospective employee about his or her salary or wage history.

The Guidance clarifies that the prohibition on salary history questions does not apply to current employees who are applying for internal transfers or promotions. Employers may also ask about a prospective employee’s prior work performance.

Liability and enforcement

The statute of limitations for a claim under the MEPA is three years from the date of the alleged violation. A violation occurs when 1) a discriminatory compensation decision is made, 2) when an employee becomes subject to a discriminatory compensation decision, or 3) when an employee is affected by the discriminatory compensation decision, including the issuance of each paycheck. Employees or applicants can go directly to court without first making an internal complaint to the employer or filing any administrative complaint with the Massachusetts Commission Against Discrimination or the Attorney General’s Office.

A prevailing employee or applicant can recover back pay with that same amount as liquidated damages, plus attorneys’ fees and court costs.

As an alternative to a lawsuit, the employee or applicant can file a complaint with the state Attorney General’s Office, which can pursue court action against the employer. Filing a complaint with the AG’s office does not extend the three-year statute of limitations applicable to a private court action.

Affirmative defense for employer self-evaluations

Section 2(d) of the MEPA provides a defense for an employer who “has both 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 self-evaluation must have been conducted within the three-year period before the MEPA action commenced, and it must have been performed before the action was commenced.

The employer may design the evaluation, but it must be “reasonable in detail and scope in light of the size of the employer, or may be consistent with standard templates or forms issued by the attorney general.” If the self-evaluation is not “reasonable,” then it will not be a defense to liability, but it will be a defense to liquidated damages.

Although failure to conduct a self-evaluation will mean that the employer cannot assert the affirmative defense, there will be no negative inference in determining MEPA liability based on the employer’s failure to conduct an evaluation.

In the Guidance, the Attorney General addressed how this affirmative defense would work:

Whether or not an employer is eligible for an affirmative defense does not necessarily turn on whether a court ultimately agrees with the employer’s analysis of whether jobs are comparable or whether pay differentials are justified under the law, but rather turns on whether the self-evaluation was conducted in good faith and was reasonable in detail and scope . . ..

The guidance then defines each of those terms:

A good faith self-evaluation is one that an employer conducts in a genuine attempt to identify any unlawful pay disparities among employees performing comparable work. This good faith requirement applies to both an employer’s analysis of which jobs are comparable and to its analysis of pay differentials. A self-evaluation that is conducted so as to achieve certain pre-determined results (i.e., to find no disparities) or to justify known disparities likely will not qualify as good faith. Employers that do not necessarily know why certain compensation decisions were made (e.g., because those decisions were made years ago) may still take advantage of the affirmative defense if: (1) a good faith self-evaluation demonstrates that any pay disparities then existing between employees performing comparable work are justified by one of the six factors discussed in Section 5 of this guidance; or (2) the self-evaluation identifies unlawful pay disparities and the employer makes reasonable progress toward eliminating those disparities.

Whether a self-evaluation is reasonable in detail and scope will depend on the size and complexity of an employer’s workforce. Relevant factors include whether the evaluation includes a reasonable number of jobs and employees; whether the evaluation takes into account all reasonably relevant and available information; and whether the evaluation is reasonably sophisticated in its analysis of potentially comparable jobs, employee compensation, and the application of the six permissible reasons for pay disparities discussed in Section 5 of this guidance. In addition, in order to qualify for an affirmative defense to a legal claim alleging a violation of MEPA or Chapter 151B, the self evaluation must have included the employee(s) or job(s) at issue.

Whether or not an employer has made sufficiently reasonable progress toward eliminating disparities will depend on how much time has passed, the nature and degree of its progress as compared to the scope of the disparities identified, and the size and resources of the employer. In order to show that it has made reasonable progress, an employer will have to demonstrate that the steps it is taking will eliminate the disparities in a reasonable amount of time.

A Basic Guide for Employers

Attached to the Guidance as Appendix A is a six-step basic guide for employers to use in undertaking self-evaluations. According to the Appendix, employers should

1) gather relevant information
2) identify comparable jobs
3) calculate whether men and women are paid equally
4) assess whether differences in pay are justified under the law
5) remediate any gender-based pay differentials, and
6) adjust pay practices.

As the Appendix notes, “The complexity of the analysis required will vary significantly depending on the size, make-up, and resources of each employer. The steps outlined are intended only as general guidelines.”

Protecting your self-evaluation: CAUTION!

When an employer conducts any self-evaluation of its employment practices, issues of attorney-client privilege become important. Employers who are considering self-evaluations so that they can assert the affirmative defense under the MEPA should consult with employment counsel at the outset to determine whether the self-evaluation should be privileged and, if so, how best to accomplish that goal. These privilege assessments can be complex, particularly when the employer wants to shield its self-evaluation from disclosure but also wants to use the self-evaluation as an affirmative defense.

Be on the lookout for our webinar

Cara Crotty, chair of our firm’s Affirmative Action and OFCCP Compliance Practice Group, and I will be conducting a webinar in April on the MEPA and how employers can conduct pay equity self-assessments to take full advantage of the affirmative defense. More specific information will be issued in the near future.

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