Massachusetts Passes Law That Intrudes on Employer Compensation Practices - American Society of Employers - Michael Burns

Massachusetts Passes Law That Intrudes on Employer Compensation Practices

Last week Massachusetts passed a comprehensive pay “equity” law (S. 2119 also called “An Act to Establish Pay Equity). This law moved the state from the free market “equal pay for equal work” side of the ledger to the subjective and controversial “comparable worth” side (called “comparable work” in the MA law). Among other requirements, it prohibits employers from asking a basic question of its employment candidates—“What was your compensation at your previous employer?” But why?

The intended purpose of this law is to curtail the persistence of gender based pay discrimination. The thinking behind this more aggressive anti-discrimination law is that if an employer knows what a female made in her last job, they can offer a salary commensurate with that allegedly discriminatory pay, which would result in a continuation of that pay discrimination. Alternatively, if the employer is not privy to a person’s previous compensation and can only communicate what the salary to be offered is, the discriminatory pay will finally be put to an end.

The Massachusetts pay law, which goes into effect 1/1/2018, also incorporates pay transparency requirements that prohibit employers from adopting policies that restrict any communication of pay and benefits between employees. Having policies that restrict the sharing of compensation information between employees has long been prohibited by the National Labor Relations Act (NLRA). Restricting or prohibiting communication of compensation information is an unfair labor practice under the NLRA. Michigan has had a long standing law barring policies that restrict or discipline employees for talking about compensation with one another.

In addition to requiring pay transparency and restricting the request for up-front pay information, Massachusetts has also implemented comparable worth. This is another pay practice intrusion imposed by anti-discriminatory laws. The Massachusetts law calls it “comparable work” which it defines as:

Comparable work, shall solely mean 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.

This part of the law requires an employer to determine equal pay for jobs which are different from one another. Think nurse and firemen, and determine if these jobs should be of comparable worth and therefore paid equally. This approach to job evaluation attempts to disregard the pay market for those positions. If the positions are deemed comparable but not paid equally, a pay discrimination complaint can be filed against the employer.  The state and the employer would have to defend their pay based upon several criteria:

Variations in wages, including benefits or other compensation shall not be prohibited if based upon:

(i)              A bona fide 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

(ii)             A bona fide merit system

(iii)            A bona fide system which measures earnings by quantity or quality of production or sales

(iv)           The geographic location in which a job is performed

(v)            Education, training or experience to the extent such factors are reasonably related to the particular job in question and consistent with business necessity

(vi)           Travel, if the travel is a regular and necessary condition of the particular job.

As far as new, pro-employee, progressive employment laws go, Massachusetts gives California a run for its money. Just like California, Massachusetts has one of the most comprehensive set of pro-worker employment and labor laws in the country. Last year California passed a similar comparable worth law “requiring employers to be able to prove that they pay workers of both genders equally for ‘substantially similar’ jobs.” An equally tough and subjective criteria to meet.

Comparable worth legislation is percolating in state legislatures across the country. The intent of these laws is to address pay discrimination that cannot seem to be solved with simple “equal pay for equal work” statutes. In reality it imposes legislative oversight upon the free market system of “selling and buying” skills, knowledge and experience between private parties. This system puts courts and bureaucrats in charge of determining a job’s worth instead of the workers and employers.

Michigan has seen its share of pay equity legislation introduced. Currently there are 11 bills in the Michigan House and Senate addressing equal pay. Though not likely to see the light of day with the Republican controlled legislatures, these bills will be re-introduced for future legislature and governors to consider.

ASE supports equal pay for equal work. Pay discrimination is unacceptable. For over a century ASE has provided up to date pay data on hundreds of benchmark positions. ASE’s annual surveys can be used in conjunction with pay disparity analysis to weed out unsupported pay disparity between genders in the workplace. Further, ASE can develop non-discriminatory pay systems that will inhibit any unintentional pay discrimination, creating defensible pay equity allowing the employer flexibility to attract, retain and motivate the best employees.

Though Michigan employers are currently “protected” by a business friendly legislation and executive branch, if Michigan employers do not proactively address allegedly discriminatory pay practices, passive or not, eventually restrictive pay laws like California and Massachusetts could be adopted here. Take control of ensuring equal pay for equal work in your business or the government will.


Sources: New York Times. "Illegal in Massachusetts: Asking Your Salary in a Job Interview" (8/2/2016), CCH HR Answers Now.  "Equal pay law expanded, prohibits employer inquiries on salary history before job offer while protecting employee wage disclosure — MASSACHUSETTS — Equal pay" 8/2/2016

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