NEW GUIDANCE ON THE MA EQUAL PAY ACT Some Answers, and a lot of - - PowerPoint PPT Presentation

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NEW GUIDANCE ON THE MA EQUAL PAY ACT

Some Answers, and a lot of Questions

Presented by: Cheryl Pinarchick and Monica Snyder Phone: (617) 722-0044 cpinarchick@fisherphillips.com mpsnyder@fisherphillips.com

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Our Goals

• Review the Massachusetts Pay Equity Law
• Parse the recent guidance released by the MA

Attorney General’s Office

• Discuss steps you can take to achieve pay equity

and mitigate your legal risk

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Massachusetts Pay Equity Law (MEPA)

“No employer shall discriminate in any way on the basis

• f gender in the payment of wages, or pay any person

in its employ a salary or wage rate less than the rates paid to its employees of a different gender for comparable work…”

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Massachusetts Pay Equity Law (MEPA)

• Effective July 1, 2018
• Effort to try to eliminate the “pay gap”
• Generally, requires men and women to be paid the same for

comparable work – not as simple as it sounds

• Strict liability – no showing of intent necessary
• Expressly permits class action lawsuits
• Employers can be liable for double damages and attorneys’ fees
• Extends 1 year statute of limitations to 3 years

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The Guidance

• Issued March 1, 2018 by the Attorney General’s Office
• Overview of the law, answers to Frequently Asked Questions and tools to

assist employers with conducting a self-evaluation/self-audit

• Not regulations and do not carry the force of the law (meaning a court

could interpret MEPA differently)

• The Attorney General is charged with enforcing MEPA and authorized to

bring suit on behalf of employees whose employers fail to comply with the law

• The guidance describes how the Attorney General’s Office is interpreting

the law for enforcement purposes.

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Who is covered?

• All employers in Massachusetts (except the federal

government)

• Any employer outside Massachusetts with employees whose

“primary place of work” is in Massachusetts

• Any employee with a “primary place of work” in

Massachusetts, even if the employee lives outside Massachusetts

• Includes full-time, part-time, seasonal, per-diem and temporary

employees

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Who is covered?

• “Primary place of work” for “most” employees is defined as the

“location where they do most of their work for the employer.”

• Employee who spends work hours traveling outside Massachusetts

but regularly returns to Massachusetts “base of operations” before resuming a new travel schedule

• Employee who telecommutes to a “Massachusetts worksite”
• Employee who permanently relocates to Massachusetts
• Not necessary for an employee to spend 50% of the

employee’s working time in Massachusetts for it to be the “primary place of work”

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What is “Comparable Work”?

• Work that requires substantially similar:
• Skill, effort and responsibility
• And is performed under similar working conditions
• “Substantially similar” means all of these factors must be

“alike to great or significant extent, but are not necessarily identical or alike in all respects”

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What is “Comparable Work”?

• Employers cannot rely on job titles or descriptions alone
• Job descriptions that take into account skill, responsibility, effort and

physical conditions may be helpful in determining which jobs are comparable

• Examples strongly suggest employees working in different

departments or business units could be performing comparable work, even if they have different job titles

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Skill

• Includes factors such as experience, training, education and

ability to perform the job in question

• Measured in terms of the requirements of the job, not the skills

an employee happens to have

• Skills not necessary to perform a particular job are not

relevant

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Effort

• Amount of physical or mental exertion needed to perform a job
• Job factors which cause mental fatigue and stress and those which

“alleviate fatigue” should be taken into account

• Encompasses the requirements of the job as a whole

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Responsibility

• Encompasses the degree of discretion or accountability

involved in performing the essential functions of the job and the duties regularly required to be performed for the job

• Includes the amount of supervision the employee receives,

whether the employee supervises others, and the degree to which the employee is involved in decision-making, such as determining policies or procedures, purchases, investments, etc.

• Minor or occasional differences in responsibilities will not

prevent certain jobs from being comparable

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Working conditions

• Environmental and “other similar circumstances customarily

taken into consideration in setting salary or wages”

• Includes the physical surroundings such as temperature and noise
• Includes hazards encountered by employees performing the job,

such as exposure to chemicals or fumes, electricity, heights, dangerous equipment

• Intensity, frequency and risk of injury
• Includes meaningful shift differentials (i.e., overnight shifts

versus day shifts)

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What is included in “wages”?

• Broadly defined
• Includes all forms of remuneration - commissions, bonuses,

profit sharing, deferred compensation, paid time off, expense accounts, car and gas allowances, retirement plans, insurance, and other benefits

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What is included in “wages”?

• The following are excluded from calculating wages using the

Attorney General’s Pay Calculation Tool:

• Commissions, but the Instructions to the Tool provide that

employers who pay commissions should ensure that they calculate commissions based on the same formula for all employees performing comparable work

• Benefits plans, but employers should ensure that all employees

performing comparable work have the same opportunity to participate on the same terms

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What are lawful justifications for pay disparities?

• System rewarding seniority, provided seniority is not reduced

due to pregnancy or protected parental, family, or medical leave;

• Merit system;
• System measuring earnings by quantity or quality of production,

sales, or revenue;

• Education, training, or experience, to the extent reasonably

related to the position;

• Geographic location in which a job is performed; or
• Travel, if regular and necessary for the business.

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What is a “system”?

• Plan, policy or practice that is:
• Predetermined or predefined;
• Used by managers or others to make compensation decisions;

AND

• Applied in good faith without regard to gender.

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Seniority system

• System that compensates employees based on length of

service

• Time off for “parental, family and medical leave” must still be

included for seniority purposes.

• Only “leave protected by statute” counts as “parental, family and

medical leave”

• Examples: FMLA, Small Necessities Leave Act, Pregnant Workers Fairness

Act, and Domestic Violence Leave Act

• Question: whether this includes leave taken as a reasonable

accommodation under disability discrimination laws or earned sick time?

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Merit system

• System that provides for variations in pay based upon

employee performance as measured through legitimate, job- related criteria

• Guidance suggests that a merit system should:
• Be written
• Measure performance on a set scale
• Be taken into account in setting a portion of the employee’s

compensation the next year

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System which measures earnings by quantity

• r quality of production, sales, or revenue
• System that provides for variations in pay based upon the

quantity or quality of an employee’s individual production or sales or other revenue generation in a uniform, reasonably

• bjective way
• Includes piece-rate pay, commissions, and other revenue-

based incentives

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Geographic location

• May be used to justify pay variations when the locations

correspond with different costs of living or differences in relevant labor market from one geographic location to another

• No insight about what qualifies as a “location” or “labor

market”

• Changes within a particular labor market and market forces

alone are not valid justifications for pay variations

• Highlights the importance of benchmarking by location

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Education, training, or experience

• Valid justifications for pay variation only if reasonably related

to the particular job in question

• A “reasonable employer” would conclude that the education, training,
• r experience “would help the employee to perform the particular job

in a more efficient or more effective manner”

• Suggests that the determination must have been made at time the

employee’s wages or salary were determined

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Travel

• Must be “a regular and necessary condition of the employee’s

job”

• Travel is not considered “necessary” because a person

prefers or chooses to travel when alternatives are available

• Regular commuting to or from a work location does not qualify

as “travel” for purposes of this statute

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Hours worked

• Hourly employees can be paid differently based on the

number of hours worked

• Part-time and full-time employees can be paid different hourly

rates or offered different benefits so long as employees of different genders within each category are compensated at the same rate and offered the same benefits

• Important to ensure that assignment or availability of part-time
• r full-time work is not based on gender

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Can salary history justify a current pay disparity?

• No, even if a prospective employee volunteers the information
• Employers can’t ask an applicant or an applicant's former employer what

the applicant was being paid

• Employers can’t ask the applicant to volunteer such information
• Employers can ask prospective employees about salary expectations, so

long as such questions are not framed in a way that is intended to elicit information about salary or wage history

• Employers can ask about volume or quantity of objectives and whether

employee met those objectives

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National screening of applicants

• If there is any possibility that an applicant will be assigned to

work in Massachusetts or have Massachusetts as their “primary place of work,” the guidance cautions employers not to ask questions or seek information that violates MEPA

• The fact that the employer was unsure at the time where the

employee would be located is not a defense

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Can employers restrict discussions about wages?

• No, with limited exceptions
• Employers can prohibit human resources employees,

supervisors and other employees whose job responsibilities give them access to other employees’ wages from discussing the other employees’ wages, but not their own

• Employers cannot require that an employee keep his/her

wages confidential in a contract, handbook or similar document

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Pay audit (or self-evaluation) as a defense

MEPA provides an employer an affirmative defense - an excuse from liability - if, within the previous 3 years and prior to the filing of a legal action against it, the employer:

• has completed a “good-faith” self-evaluation, “reasonable in detail

and scope,” of its pay practices; and

• can demonstrate “reasonable progress” in eliminating gender-based

compensation differentials.

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Good faith self-evaluation

• Must be conducted in a genuine attempt to identify unlawful

pay disparities

• Evaluations conducted to achieve pre-determined results or to

justify known disparities will not qualify as good faith

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Reasonable scope and detail

• Depends on the “size” of the employer and “complexity” of its

workforce

• Relevant factors
• Does the evaluation include a “reasonable” number of jobs and

employees?

• Does the evaluation take into account “all reasonably relevant and

available information”?

• Is the evaluation “reasonably sophisticated” in its analysis of

potentially comparable jobs, compensation, and the 6 permissible justifications for pay disparities

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Reasonable scope and detail

• Depends on the “size” of the employer and “complexity” of its

workforce

• Relevant factors
• Does the evaluation include a “reasonable” number of jobs and employees?
• Does the evaluation take into account “all reasonably relevant and available

information”?

• Is the evaluation “reasonably sophisticated” in its analysis of potentially

comparable jobs, compensation and the 6 permissible reasons for pay disparities?

• Self-evaluation must have included the employee(s) or job(s) at

issue

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Reasonable scope and detail

• Guide to self-evaluations provides some advice for how to

calculate whether men and women are paid equally

• For small groups of employees performing comparable work, compare the

average wages earned by men and women to identify disparities (Pay Calculation Tool)

• Statistical analysis may be necessary when the number of employees in a

grouping exceeds 30 or the pay structure is “complex”

• Consider whether outliers should be included in the grouping
• Consider conducting one-on-one comparisons
• Guide suggests that “Employers should consult with legal counsel

about their options and what type of analysis is most appropriate.”

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Reasonable progress

• Factors considered
• How much time has passed since the self-evaluation
• The nature and degree of progress as compared to the scope of the

disparities identified

• The size and resources of the employer
• Employer must demonstrate that the steps its taking will

eliminate disparities in a “reasonable” amount of time

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Reasonable progress

• Adjust salaries or wages so employees performing

comparable work are paid equally

• Cannot reduce the wages of an employee to comply with the

law

• No requirement that employers pay employees retroactively to

compensate for historical disparities to take advantage of the defense

• However, the employee might still have a claim under the federal

Equal Pay Act or Title VII

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Credit for trying

• Limited protections available for “insufficient” self-evaluations
• An employer that undertakes a good faith self-evaluation that

is not reasonable in detail and scope, but can demonstrate reasonable progress in eliminating gender-based compensation differentials, employer will only be liable for the amount of unpaid wages and attorneys’ fees, not double damages

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Credit for trying

• The guidance states that “whether or not an employer is

eligible for an affirmative defense does not necessarily turn on whether a court ultimately agrees with the employer’s analysis

• f whether jobs are comparable or whether pay differentials

are justified under the law, but rather turns on whether the self-evaluation was conducted in good faith and was reasonable in detail and scope.”

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Admissibility of pay audit and remedial steps

• Evidence of audit or remedial steps undertaken are not

admissible in any MEPA or Chapter 151B (MA anti- discrimination law) in certain circumstances

• MA affirmative defense is not available under federal law -

Equal Pay Act or Title VII

• Evidence of audit or remedial steps may be admissible in a

suit alleging claims under federal law.

• Strongly recommend conducting the audit with the

assistance of counsel

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Goals of a pay audit

• Identify potential pay disparities among employees performing

comparable work

• Determine whether there are lawful explanations for those

disparities and/or take steps to correct the disparities as appropriate

• Identify and correct weaknesses in the organization’s systems

to protect against claims of pay disparity going forward

• Take advantage of the affirmative defense

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Anatomy of Pay Equity Audit

Step 1: Gather Relevant Data

• Name/employee ID
• Gender
• Primary work location
• Work type (full-time, part-time, temporary, etc.)
• Exempt/non-exempt status
• Date(s) of hire
• Job title
• Job code/grade/band
• Date in most recent job code/grade/band
• Division/department/business unit
• Job function/family
• Supervisor
• Performance ratings
• Highest level of education
• Special licences, certifications, etc.
• Pay type (salary, hourly, etc.)
• Annualized salary or hourly rate
• Shift differential
• Bonus eligibility
• Eligible benefit plans/programs
• Bonus paid
• Hours worked/type (regular, OT, etc.)
• Total compensation

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Anatomy of Pay Equity Audit

Step 2: Identify comparable jobs Step 3: Calculate whether men and women are paid equally Step 4: Assess whether differences in pay are justified under the law Step 5: Remediate any gender-based pay differentials

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Anatomy of Pay Equity Audit

Step 6: Adjust pay practices

• Attempt to determine the reason(s) for unjustified disparities
• Remedy practices and policies causing unjustified disparities
• Remove salary history questions from hiring documents
• Update policies and other employment documents to remove

restrictions on discussing wages

• Train hiring personnel and those making compensation

decisions

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Additional Resources

• https://www.mass.gov/files/documents/2018/03/01/AGO%20E

qual%20Pay%20Act%20Guidance.pdf

• https://www.fisherphillips.com/services-pay-equity
• https://www.fisherphillips.com/pay-equity-blog/
• https://www.fisherphillips.com/equity

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THANK YOU

Presented by: Cheryl Pinarchick and Monica Snyder Phone: (617) 722-0044 cpinarchick@fisherphillips.com mpsnyder@fisherphillips.com