Massachusetts made headlines last year when it passed a law that bans employers in that state from asking about applicants’ salaries before offering them a job. The pay equity act action has been hailed as an important step toward bridging the gender wage gap.
Without previous salary information to use as a baseline, hirers must come up with figures that truly represent what they’re willing to pay for services. This prevents pay disparity from compounding over the course of a career. (For instance, The American Association of University Women reports an unexplainable 7 percent difference in the earnings of male and female college graduates one year after graduation, even after accounting for various factors.)
While employers in Massachusetts undoubtedly need to familiarize themselves with all the ins and outs before the law goes into effect July 2018, companies everywhere should take note.
Here are four ways the Massachusetts Pay Equity Act may end up affecting your business:
1. Other places may follow suit.
New York City is on the way to a similar law, and an ordinance already passed in Philadelphia is scheduled to take effect on May 23 (though its constitutionality is being challenged). And last September, Representative Eleanor Holmes Norton took national action by introducing the Pay Equity for All Act of 2016. If passed, the bill will make it unlawful for an employer to screen prospective employees based on their previous wages or to seek salary history information from past employers.
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2. Remote workers will need to be considered.
As noted by the Society for Human Resource Management (SHRM), “With remote working arrangements increasingly common, both employers and applicants in other states are more likely to be involved in situations where the Massachusetts law applies.” Employers may want to rethink their approach to salary-related questions regardless of location in order not to inadvertently cause a problem.
3. Candidates anywhere may think twice about offering a salary history.
News spreads fast in this age of social media. As people outside of Massachusetts become increasingly aware of that state’s law, candidates may reconsider what information they want to share with prospective employers.
4. Compensation-related conversations will increase.
Along that same line, overall discussion about salary issues such as negotiation and transparency are bound to become more numerous. Besides discontinuing the practice of asking salary history, the Massachusetts law takes other noteworthy steps to combat pay discrimination. Two of the biggest are:
- informing companies that they can’t prohibit workers from telling others how much they are paid;
- requiring equal pay not just for workers whose jobs are alike, but also for those whose work is of “comparable character” or in “comparable operations.”
Businesses already thinking about such topics will not be caught unprepared. And employers who truly strive for fairness may find their efforts rewarded with dedicated employees and an enhanced reputation.
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