Posted June 22nd, 2026 in Uncategorized
Massachusetts Appeals Court Ruling Highlights Power of Equal Pay Safe Harbor Defenses
A recent decision by the Massachusetts Appeals Court underscores the importance for employers—in states whose equal pay laws include a “safe harbor” defense—of conducting periodic pay equity audits to limit their liability under those laws.
In that case, Woodward v. Board of Registration in Nursing, the court affirmed summary judgment for an employer based solely on its completion of a good-faith pay equity self-evaluation under the Massachusetts Equal Pay Act (MEPA)’s safe harbor provision. The plaintiff, a compliance officer employed by the Commonwealth’s Board of Registration in Nursing, alleged she was paid less than her male colleagues in comparable positions in violation of MEPA. Prior to the lawsuit, the agency had conducted a self-evaluation to identify gender-based pay disparities. Seven female employees were identified as having disparities, and their salaries were adjusted upward. The self-evaluation did not identify pay disparity between Woodward and male peers. In affirming summary judgment for the Board, the Appeals Court held that the Board satisfied all elements of the affirmative defense because, within three years prior to the commencement of the action, it had (1) completed a self-evaluation of its pay practices in good faith and (2) could demonstrate that reasonable progress had been made toward eliminating any gender-based wage disparities identified in that evaluation.
The court rejected the plaintiff’s arguments that the self-evaluation was untimely, was not conducted in good faith, and did not show reasonable progress toward eliminating pay disparities.
On the question of good faith, the court cited guidance from the Massachusetts Attorney General, which explains that a good-faith self-evaluation is one conducted in a “genuine attempt to identify any unlawful pay disparities among employees performing comparable work.” The court found the defendant’s self-evaluation easily met this standard. The court also observed there was “abundant evidence” that the employer made reasonable progress toward eliminating gender-based wage differentials, including by adjusting salaries for seven employees.
As suggested above, a few other states have safe harbor provisions in their pay equity laws. They are Oregon and Colorado. Unlike MEPA, those states’ laws do not create an affirmative defense to liability, but they do allow for meaningful limitations on damages. The Oregon Equal Pay Act offers a safe harbor for employers who have completed an “equal-pay analysis” within the previous three years, eliminated the pay differential for the plaintiff, and made “substantial progress toward eliminating wage differentials for the protected class asserted by the plaintiff.” The requirement to eliminate the pay differential for the plaintiff makes passage into OEPA’s safe harbor very narrow, as does the “substantial progress” requirement. As noted, OEPA’s safe harbor is not a defense to liability or to recovery of economic damages or attorneys’ fees. But it can provide shelter from compensatory and punitive damages.
Like the OEPA, Colorado’s Equal Pay for Equal Work Act offers a narrow safe harbor. Under that Act, a court may not award liquidated damages if an employer “demonstrates that the act or omission giving rise to the violation was in good faith” and “had reasonable grounds” to believe it did not violate the Act. In determining whether an employer’s violation was in good faith, “the fact finder may consider evidence that within two years prior [to the complaint] . . . the employer completed a thorough and comprehensive pay audit of its workforce, with the specific goal of identifying and remedying unlawful pay disparities.” Similar to the Oregon law, this good-faith defense may save an employer from liquidated damages, but it is not a defense to liability, and does not limit recovery of economic losses or attorneys’ fees.
Safe harbor audits are not without risk. For example, an audit that exposes a pay disparity may provide a defense if the employer then makes “reasonable progress” toward eliminating that gap, but guidance from the Massachusetts Attorney General explains that if a self-audit exposes a disparity and the employer does not respond quickly enough, its findings could actually be used against the employer.
Despite such risks, the potential benefits are significant. For employers with employees in Massachusetts (and Colorado and Oregon), the court’s holding illustrates the power of pay equity audits to block liability entirely or, even under narrower safe harbors, limit damages. We recommend they:
- Conduct pay equity audits for employees in those three states at least every two or three years (depending on the state).
- Consider a two-phase approach to the audit. First, conduct an attorney-client privileged audit to identify areas of legal risk. Second, engage a separate safe harbor audit for the areas that flagged for risk, with the expectation that the audit results and related materials could become public if needed for the safe harbor defense.
- When conducting safe harbor audits, analyze potential sources of pay gaps, develop a plan to close them, and ensure buy-in from the business to act quickly on the audit’s findings. Otherwise, the employer risks its safe harbor audit being used against it. Generally, acting on findings within six months of the audit is likely to be viewed as reasonable.
- Document the completion of the safe harbor audit as well as any pay adjustments or other remediation measures.