Got Employees in Massachusetts and New Jersey? What You Need to Know as MA and NJ Employers are Mandated to Break the Glass Ceiling

Q.  Are there any Equal Pay Acts that apply specifically to employers in Massachusetts and New Jersey?

A.  On July 1, 2018, an updated equal pay law becomes effective in Massachusetts, referred to as “MEPA” (Massachusetts Equal Pay Act). MEPA covers nearly all Massachusetts employers, irrespective of size, and most employees, including full-time, part-time, seasonal, per-diem, and temporary employees. Employees who telecommute to a primary place of work in Massachusetts also are covered.

The Massachusetts law provides that “[n]o employer shall discriminate in any way on the basis of 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.” “Comparable work” is not defined by an employee’s job title; rather, “comparable work” is work that requires substantially similar skill, effort, and responsibility, and is performed under similar working conditions. For multistate employers, employees in the same “geographic location” within Massachusetts are to be paid equally for comparable work.  The statute does not define the term “geographic location.”

Employers can rely on one of the six permissible variations in pay for comparable work: (1) a system that rewards seniority with the employer; (2) a merit system; (3) a system which measures earnings by quantity or quality of production, sales, or revenue; (4) the geographic location in which a job is performed; (5) education, training or experience to the extent such factors are reasonably related to the particular job in question; or (6) travel, if the travel is a regular and necessary condition of the particular job.

The State of New Jersey enacted legislation similar to the MEPA.  The Act, prohibits New Jersey employers from paying different salaries to employees based on any protected category, including sex, where the employees are engaged in “substantially similar” work.  Like Massachusetts, the effective date of the New Jersey statute also is July 1, 2018.

The phrase “substantially similar” work is not defined, other than a statement that it is to be viewed as a “composite of skill, effort and responsibility.” An employer in New Jersey may pay a different rate of compensation only if the employer demonstrates that the differential is made pursuant to a seniority system, a merit system, or the employer demonstrates that: (1) the differential is based on one or more legitimate factors other than sex (or any other protected category), such as training, education or experience, or the quantity or quality of production; (2) the factors are not based on, and do not perpetuate a sex-based or other protected-category based differential in compensation; (3) each of the factors is applied reasonably; (4) one or more of the factors account for the entire wage differential; and (5) the factors are job-related with respect to the position in question and based on a legitimate business necessity. A factor based on business necessity shall not apply if it is demonstrated that there are alternative business practices that would serve the same business purpose without producing the wage differential.

Both statutes significantly expand the reach of the concept of equal pay, by broadening the net of jobs used for comparison purposes to “comparable” (MEPA) or “substantially similar” (NJ). Both standards are somewhat vague and will need to be interpreted by the courts.  Employers in Massachusetts and New Jersey will have to evaluate their pay  structures carefully to comply with the law and to assess risks of actions under these statutes.

When MEPA becomes effective, employers with employees in Massachusetts not only will be unable to justify pay differential based on salary history, but also will not be permitted to ask for an applicant’s salary history prior to an employment offer, or seek such information through a recruiter. By contrast, the New Jersey ban on salary history questions, which was put in place by Executive Order effective February 1, 2018, applies only to employer that are state agencies.

Employers who violate either the Massachusetts or New Jersey laws will be liable for back pay and liquidated damages.

Rebecca Alperin and Tracey E. Diamond

 

 

 

 

Ninth Circuit Finds That Employers May Not Use Salary History to Justify Differences in Pay

Q.  Can my Company use an applicant’s salary history to set their current pay rate?

A.  Not for employees in the Ninth Circuit Court of Appeals (covering California, Alaska, Arizona, Hawaii, Idaho, Montana, Nevada, Oregon and Washington).  In a case decided the day before Equal Pay Day, the Ninth Circuit Court of Appeals ruled that, in a claim for violation of the Equal Pay Act, salary history is not a defense to a claim of gender discrimination when a female employee complains that her salary is lower than that of  her male counterpart.

For more details about this case, click here.

Hope A. Comisky and Tracey E. Diamond