On July 31, 2024, Massachusetts became the latest state to take a stand on pay transparency by enacting a new law requiring employers to disclose salary ranges in job postings. This marks a significant move in the ongoing push for wage equity across the United States. The law, signed by Governor Maura Healey, will take effect on July 31, 2025, with notable implications for companies operating in the state.
Who Is Affected by the New Law?
The law will impact both public and private employers in Massachusetts with 25 or more employees. Employers with 100 or more employees who are required to file EEO-1 reports during the previous calendar year will also be obligated to submit annual wage data reports. It’s important to note that employees working outside of Massachusetts are not included in this requirement.
As wage disparities continue to be spotlighted in various sectors, the data will help to address inequities based on race, sex, and job category. This initiative aims to create a more equitable workforce environment, an objective that aligns with the wider trends observed across the nation.
Key Provisions of the Massachusetts Pay Transparency Law
The newly enacted law includes several key provisions:
- Mandatory Disclosure of Pay Ranges Employers must disclose the pay range for a position defined as the annual salary or hourly wage they expect to pay. This requirement applies during job postings, when employees are offered promotions or new roles, and upon request by employees or applicants. However, the law does not mandate the disclosure of benefits or other compensation components.
- Annual Wage Data Reports Employers meeting the threshold must submit wage data categorized by race, ethnicity, sex, and job category to the Massachusetts state secretary by February 1 each year. Unlike other state requirements, the wage reports will remain confidential, but aggregate data will be published, allowing for public accountability.
- Penalties for Non-Compliance Employers who do not comply could face penalties up to $1,000 after multiple violations. The enforcement will be managed exclusively by the Massachusetts Attorney General, who has the exclusive jurisdiction over the law’s enforcement.
- Grace Period for Compliance To ease the transition for businesses, the law offers a "cure period," allowing employers a two-business-day window to rectify any reported violations before incurring fines during the first two years of enforcement.
Preparing for Pay Transparency
While the law does not take effect until July 2025, Massachusetts employers are encouraged to take proactive steps to ensure compliance. Here are a few recommendations
- Conduct Pay Audits: Companies should consider conducting internal audits to identify and address any wage discrepancies that may exist within their workforce. This proactive approach not only mitigates potential risks but also fosters a culture of equality and transparency.
- Revise Job Posting Strategies: Employers will need to evaluate and adjust how they present job openings to include required pay disclosures. This entails updating internal policies as well as external communication strategies, especially concerning relationships with recruiting partners
The Broader Context of Pay Transparency
The move by Massachusetts comes amid a growing national trend towards pay transparency. States like California, New York, and Washington, D.C., have already adopted similar laws aimed at reducing wage gaps and fostering a more equitable labor market. According to a report from the Economic Policy Institute, median wages for women and people of color still lag significantly behind their white male counterparts, highlighting the urgent need for such legislative measures.
As companies brace for these forthcoming regulations, they find themselves increasingly under pressure to demonstrate fairness in their employment practices. The focus on pay transparency not only helps to close wage gaps but also enhances employee trust and satisfaction, factors crucial for retaining talent in competitive labor markets.
By preparing for these changes now, Massachusetts employers can position themselves as leaders in the movement towards fair pay practices, ultimately benefiting both their workforce and their bottom line.
For employers seeking to navigate this new landscape, consulting legal experts and considering best practices in pay equity will be key.