Massachusetts Significantly Boosts Pay Equity Laws and Requires Transgender Accommodations

Governor Charlie Baker recently signed two bills that will significantly impact employer responsibilities: The Act to Establish Pay Equity, which boosts practices intended to close the gender wage gap, and the transgender public accommodations bill, which prohibits discriminatory advertising on the basis of gender identity and discrimination against transgender individuals in places of public accommodation.

The Act to Establish Pay Equity

Massachusetts joins California and Maryland in promoting tough new state-level legislation designed to promote fair pay practices. Effective July 1, 2018, The Act to Establish Pay Equity (“the Act”) includes the below key provisions:

1. Equal Pay for Comparable Work:

   Employers must pay men and women the same for doing “comparable work,” which is defined as “substantially similar” in terms of skill, responsibility, and working conditions. Employers should conduct an audit of the duties actually performed by their employees in order to determine if any wage disparities exist, and should take care to avoid relying solely on title or job description alone. Variations of wages may be permissible based on a few exemptions

• A seniority system, so long as time spent on leave for a pregnancy-related condition or protected parental, family and medical leave does not affect seniority;
• A merit system;
• A system that measures earnings by quantity or quality of production, sales, or revenue;
• The geographic location of the job;
• Education, training, or experience reasonably related to the job; or
• Travel that is a regular and necessary condition of the job.

Employers are specifically prohibited from reducing the pay of any employee in order to eliminate wage disparities.

2. Employee’s Right to Discuss Wages:

   Employers cannot prohibit or retaliate against employees who disclose their own wages or discuss or inquire into other employees’ wages. Although, an employer cannot prohibit employees from asking about others’ wages, neither the employer nor employees are obligated to disclose wage information to a third party.

3. Ban on Salary History Inquiries:

   Massachusetts becomes the first state to prohibit employers from inquiring into an applicant’s salary history from either the applicant or their current or previous employer. Employers can still seek information about compensation from publicly available sources. Employers are also allowed to confirm salary history with a former employer, on the conditions that (A) the applicant voluntarily disclosed their salary history, and (B) an offer of employment, with compensation, has already been extended to the applicant.

4. Employer Protections:

   An affirmative defense against wage disparity claims will be granted to employers who (1) complete a “self-evaluation of its pay practices in good faith,” and (2) “demonstrate that reasonable progress has been made towards eliminating wage differentials based on gender for comparable work.” This affirmative defense will be available for three years following completion of the self-evaluation and applies only to claims of wage disparity.The Act does not provide specific guidelines of what the self-evaluation must consist of, only that it be “reasonable in detail and scope in light of the size of employer” or “consistent with standard templates of forms issued by the attorney general.”

5. Posting Requirement:

   All employers must conspicuously display a notice in the workplace notifying employees of their rights.

Failure to comply with the Act can result in significant penalties. Successful claimants may be entitled to unpaid wages, liquidated damages for 100% of the amount of the unpaid wages, and attorneys’ fees and costs. The Act also provides for aggrieved employees to bring lawsuits directly in court, with an extended three year statute of limitation.

Importantly, the Act also establishes that, for the purposes of the statute of limitations, a violation occurs each time wages that result from a discriminatory compensation decision or practice are paid. Even if the original compensation decision/practice that results in an unlawful wage disparity was made more than three years ago, each paycheck renews the statute of limitations.

Transgender Public Accommodations Bill

In addition to prohibiting discriminatory advertising, S2407 allows transgender individuals to use restrooms, changing rooms, and locker rooms consistent with their gender identity in places of public accommodation. Massachusetts follows California and D.C. in providing such protections.

The new law is effective October 1, 2016, except for the regulations prohibiting discriminatory advertising, which are effective immediately.

Massachusetts’ current anti-discrimination laws already prohibit discrimination against individuals based on gender identity in matters of housing, employment, public education, and credit. With the addition of these protections, transgender persons are allowed to use workplace or public accommodations (such as restrooms, changing rooms, or locker rooms) consistent with their gender identity.

Employers are permitted to address employees who use a gender-specific room that does not correspond with the gender indicated on their human resources paperwork. However, if that employee indicates that they are in the process of transitioning, the employer must allow the employee to use the gender-specific facility of their choice.

Similar to California and D.C., Massachusetts employers should be prepared to engage in an interactive process with employees who have, or plan to, transition genders. Employers can assist with the transitioning process by discussing how to communicate a transition to co-workers, if an employee plans to change his or her name, what pronouns he or she feels comfortable using, etc. However, employers should always be cautious of an employee’s right to privacy, and should refrain from asking questions about the employee’s medical or surgical history.