Basic Requirements

Following a wave of pay transparency laws in other states, the Massachusetts House and Senate each passed their respective versions of a bill that would require employers with at least 25 employees in the Commonwealth to disclose salary ranges in job postings. Employers with at least 100 employees in Massachusetts would also be required to submit EEO data on a yearly basis.

Both versions define “pay range” to mean the salary or hourly wage range that the employer “reasonably and in good faith expects to pay” for the position at the time of the posting. It is worth noting that neither seek to require employers to include other forms of pay such as bonuses or commissions.

With respect to the disclosure obligations, covered employers would be required to provide pay ranges in three scenarios: (i) when a job is posted externally, (ii) when current employees are offered a promotion or a transfer to a new position with different job responsibilities, and (iii) upon request by an individual already in that job or any applicant.

Regarding EEO disclosures, both bill versions require covered employers to provide reports that include workplace “demographic and pay data categorized by race, ethnicity, sex, and job category.” The data would be made available in anonymized and aggregate form only on the website for Massachusetts’ department of labor.

An important and welcome development for employers is that the proposed law does not provide for a private right of action. Instead the Attorney General’s office is the only entity or person allowed to enforce the statute. Initial violations are subject only to a warning, second violations may result in penalties of up to $500, third violations in penalties up to $1,000, and subsequent violations in penalties between $7,500 and $25,000.

Despite their being relatively minor differences between the current versions of the bills, they were not reconciled before the first year of the current legislative session concluded. Most still expect Governor Healy to sign the bill once it hits her desk, but for now, eyes remain on the legislature to get it to the finish line. If approved as drafted, the legislation would take effect one year from the date it is signed.

Recommendations

In the meantime, employers should determine a reasonable pay range for each position by relying on objective metrics and data. Beyond hard data, employers should also consider whether, or to what extent, disclosing pay ranges may impact their ability to attract and retain talent. Put differently, it is not enough to look at historical data for a specific role or situate the role within a specific pay hierarchy internal to the company. Employers may wish to look at their competitors or consult market-wide data for comparable roles. Finally, if the potential pay ranges for a specific position are creating hurdles—potentially with current employees—it may be worth rethinking the role to be posted, including changing educational or professional experience prerequisites or modifying central tasks.