On July 24, the Massachusetts Legislature passed legislation that will impact many Massachusetts employers in terms of their “pay transparency practices” for current employees and future applicants.

Pay transparency is the practice of openly sharing information about employee compensation within an organization or during the hiring process. Effective one-year after Governor Maura Healy signs the legislation, employers with more than 25 employees in the Commonwealth will be required to disclose salary range information on job postings and to provide pay range information to current employees in certain circumstances. Given Governor Healy’s past efforts to achieve pay equality in the Commonwealth, we expect her to sign the bill.

Employers with 100 or more Massachusetts employees will have the additional requirement of submitting equal employment opportunity (EEO) and pay data annually to the Commonwealth. The first round of EEO reporting for covered employers will be due by February 1, 2025. 

Massachusetts follows other states that have recently passed similar laws, including Hawaii, Illinois, Minnesota, Vermont, and Washington, DC, in addition to states such as California, Colorado, Connecticut, Maryland, Nevada, New York, Rhode Island, and Washington, with pay transparency laws already in place.

What Employers Need to Know

Salary Posting Obligations

Covered employers will be required to:

• Include the pay range for a particular and specific employment position in their job posting. Pay range is defined as the annual salary range or hourly wage range that the covered employer reasonably and in good faith expects to pay for such position at that time.
• Provide the pay range for a particular and specific employment position to an employee who is offered either a promotion, transfer, or a new position with different job responsibilities.
• Provide the pay range for a particular and specific employment position to an employee holding said position, or to an applicant for such position, upon request.

The law does not distinguish between on-site and remote work, suggesting that covered employers should abide by job posting requirements for positions that could be performed within the Commonwealth.

Reporting EEO and Pay Data

Covered employers are required to:

• Submit EEO data and reports to the State Secretary, including workforce demographic and pay data categorized by race, ethnicity, sex, and job category. Employers can submit their federal EEO-1 Employer Information Report to satisfy this requirement.

Union, state, and local government, and elementary-secondary data reports are also subject to this act. This information will be due by February 1 each year.

The State Secretary will submit the wage data reports to the Executive Office of Labor and Workforce Development. The wage data reports held by the state’s Secretary of Labor and Workforce Development are not “public records” as defined in the law. However, aggregate wage and workforce data reports as defined by the Executive Office of Labor and Workforce Development will be considered public records.

No Retaliation Provision

Covered employers are prohibited from discharging, retaliating, or discriminating against any employee or applicant for having taken the following actions:

1. Enforced their rights under the no-retaliation provision.
2. Complained to their employer, their employer’s agent, or the attorney general under this provision.
3. Instituted a proceeding under the law.
4. Testified or is about to testify in any such proceeding.

Risks of Noncompliance

Unlike violations of other wage-related statutes, there is no private right of action under the pay transparency law, which means employees and applicants — either individually or as a class — cannot bring lawsuits against employers for alleged violations. However, the state attorney general can bring an action against a covered employer for a violation of the law, including the power to levy incremental fines for each successive violation.

• A first offense would receive a warning.
• A second offense would receive a fine of no more than $500.
• A third offense would receive a fine of no more than $1000.
• A fourth offense would be subject to civil fines in increasing amounts.

For the purpose of enforcement, an “offense” is considered one or more job postings for positions made by the same employer in a 48-hour period.

Takeaways

These changes are significant, and employers will need to evaluate their job posting policies to ensure compliance with the new salary data posting and reporting obligations. Employers will want to take a comprehensive look at their pay scales and compensation structures to ensure that the posted ranges are not only competitive but consistent among their employee population, looking closely at the salary distribution among varying demographics.

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