Closing the Gap: Massachusetts Pioneers Equal Pay Legislation

Massachusetts took an innovative approach to closing the wage gap between men and women with first-of-its-kind legislation barring employers from asking job applicants about their salary history. Bill S.2119, or An Act to to Establish Pay Equity, was signed into law by Gov. Charlie Baker on Aug. 1 and will go into effect July 1, 2018.

“I am pleased to sign bipartisan legislation to create a more level playing field in the Commonwealth and ensure that everyone has the opportunity to earn a competitive salary for comparable work,” said Baker in a news release. “I thank the Legislature for unanimously passing this bill and working closely with the business community to support women and families across the state.”

Under the law, employers can only take certain attributes of an applicant into account when determining variation in pay, such as work experience, education, job training, and measurements of production, sales and revenue.

The law is intended to prevent pay discrimination for comparable work based on gender. In the U.S., the ratio of the median pay for women is 79 cents to the dollar of the median pay for men, according to the U.S. Census Bureau. About half of the gap in pay can be attributed to the types of careers women choose, but a pay gap persists that can’t be explained by career choice, union status, experience or educational attainment. In fact, the gender pay gap tends to rise with education, with the biggest gaps among workers with advanced degrees. The pay gap among women and men with professional degrees is 67 cents to the dollar.

Federal law forbids gender-based pay discrimination, but it hasn’t been able to close the gap, in part due to the fact that it is difficult to prove wrongdoing.
Prohibiting companies from asking job applicants about their salary history is meant to stop the cycle of the wage gap, which often starts with women’s first jobs, by preventing any wage discrimination in previous positions from affecting wages in future jobs. The pay gap tends to grow over the course of workers’ careers as employers use previous salaries to determine job offers.

“This has been a key factor in cementing wage gap,” said Rodney Alvarez, who serves on the Society for Human Resource Management’s HR Disciplines Panel. “If you start off with the wrong salary, it doesn’t get corrected.”

Alvarez, who is also vice president of talent management for the Boston-based company Celtra, said the new law “forces us to look at market pay for the position and create a budget to be able to offer that pay.”

It is common practice for employers to offer prospective employees 10-12 percent above their current salary, rather than the market value of the position, said Alvarez.  

“That is the most common way to set up the offer,” he said. “Increase it just enough to get the employee to come on board.” 

Although Massachusetts’ law is unique, other states recently have been taking steps to address the gender wage gap. In 2015, California passed a law requiring employers to prove they pay men and women equally for substantially similar jobs. In May 2016, Maryland passed a law that requires equal pay for comparable work.

Equal pay for women would reduce poverty rates in all 50 states, according to the Institute for Women’s Policy Research. The institute also found that the total increase in women’s earnings with pay equity represents more than 14 times what federal and state governments spent in fiscal year 2012 on Temporary Assistance to Needy Families.

Massachusetts’ new law also allows employees to discuss their salaries with coworkers and gives employers an affirmative defense to liability in pay discrimination claims if they have undertaken a self-evaluation of their pay practices and can show they have taken steps to reduce their gender pay gap.

Alvarez said his company is doing an audit of practices to ensure they are in compliance with the new law.

“We started two months ago creating salary grades with flexibility to go up and down based on experience to make it very transparent,” said Alvarez. “(Employees) will know where their position belongs (on the scale).”