New Pay Transparency and Reporting Obligations on the Horizon for Massachusetts Employers

Seyfarth Synopsis:  After passing the Massachusetts House and Senate with overwhelming support, the Governor is expected to sign a bill requiring employers with over 25 employees in Massachusetts to disclose salary range information on job postings, and to provide pay range information to current employees, among other requirements. 

Following a recent tidal wave of pay transparency legislation in other states, the Massachusetts House and Senate overwhelmingly supported and passed a bill that will require employers with over 25 employees in the Commonwealth to disclose salary range information on job postings, and to provide pay range information to current employees. Additionally, the legislation requires private employers with over 100 Massachusetts employees to submit aggregated EEO data to the Commonwealth annually. The bill has been referred to a joint committee to align the House and Senate versions. The Governor is expected to sign the legislation, which will go into effect one year from the date it is signed into law.

Salary Range Posting Requirements

Joining a number of other states,  including New York, Colorado, and Hawaii, both houses of the Massachusetts legislature have passed bills requiring private employers to (i) post the “pay range” for a particular position on job postings, (ii) disclose the pay range for a position to employees who are offered a promotion or a transfer to a new position with different job responsibilities, and (iii) provide the pay range for a particular position to an employee holding the position or to an applicant for the position upon request. This requirement will apply to organizations that employ at least 25 employees in the Commonwealth.

The legislation defines pay range as “the salary range or hourly wage range that the covered employer reasonably and in good faith expects to pay” at the time of posting. Notably and unlike several earlier draft proposals of the legislation and laws in some other jurisdictions, the law does not require disclosure of bonuses or other benefits.  The bill also omits some far-reaching provisions seen in other states’ pay transparency laws, including for example the requirement of Colorado’s recently amended law, which requires employers to apprise employees of any promotional opportunity for which they may be qualified. 

Reporting Obligations

The proposed law would also require private employers with 100 or more employees in the Commonwealth to submit an EEO data report that includes workforce demographic and pay data categorized by race, ethnicity, sex, and job category. Employers would be required to submit this data to the Secretary of the Commonwealth as a supplement to their annual corporate filings every year. The Secretary of the Commonwealth will then provide this information to the Massachusetts Department of Labor, which will publish aggregated data on its website.

Employer’s underlying EEO reports will not be considered “public records” subject to disclosure under the Massachusetts Public Records Law (but such records may still be susceptible to discovery in litigation).  This is a significant improvement, from employers’ perspective, over several previous proposed bills and drafts that would have required larger employers to post such information publicly on a state website.

In terms of what data is required, the law requires employers to submit a data report that includes all required components contained in the U.S. Equal Employment Opportunity Commission (EEOC) Employer Information Report, also known as an EEO-1 report. Unions, state and local governments, and elementary and secondary school systems will need to submit similar information every other year.

The utility of the aggregated pay data contemplated by the pending bills is questionable, as it is unclear what inferences the Commonwealth or anyone else with access to aggregated salary data may draw about pay equity or pay transparency, given that critical factors, such as employees’ education, experience, or other qualifications will not be incorporated into such data. 

Enforcement

Fortunately for employers, the law does not include a private right of action on behalf of aggrieved employees or applicants. This is a significant aspect of the bill, as other states that have recently expanded pay transparency requirements, including Washington state, have already seen a swell of private lawsuits invoking the newly expanded requirements,  Instead, the Massachusetts law will be enforced by the Attorney General’s Office, which may seek declaratory or injunctive relief and impose fines for failing to submit EEO reports or failing to provide pay range information as required.

Also fortunately for employers, first violations of the law are subject only to a warning, followed by a fine of not more than $500 for the second offense, and a fine of not more than $1,000 for the third offense. Any fourth or subsequent offense is subject to civil fines of $7,500 to $25,000 per violation, depending on the circumstances. The proposed law specifically states that violations are not subject to treble damages under the Massachusetts Wage Act. 

Next Steps

Seyfarth will continue to monitor the progress of these proposed bills. As noted, the Governor is expected to sign the bill into law once it reaches her desk. Employers should thus begin to develop a compliance strategy for the new requirements this pay transparency legislation will impose and its impacts on the workplace.  This may involve a review of an employers’ current distribution of salaries across employee populations.  Experience with similar legislation in other states has shown that, particularly in a very hot job market, longer-tenured employees’ pay may be lower than the pay range offered to new hires. From an employee relations perspective, employers will want to consider adjustments and develop a communication strategy that addresses these and similar issues. Employers should also begin thinking about how they will comply with the anticipated law’s posting requirements and, if they have employees in other states, whether they need to harmonize an approach to pay transparency across multiple jurisdictions.