Massachusetts Enacts Pay-Transparency Requirements for Employers

Massachusetts Gov. Maura Healey on July 31, 2024, signed into law An Act Relative to Salary Range Transparency (the Act), which will implement pay-transparency requirements in Massachusetts. The Act will take effect on July 31, 2025, and it requires disclosure of salary information in job postings and reporting of pay data to the Commonwealth.

By enacting the legislation, Massachusetts joins the District of Columbia and a number of other states enacting similar legislation in recent years, including California, Colorado, Connecticut, Hawaii, Illinois, New York, Rhode Island and Washington.

Pay Disclosures in Job Postings 

The Act requires private employers with 25 or more employees to post the pay range for a position in both internal and external job postings. A job posting is defined as "any advertisement or job posting intended to recruit job applicants for a particular and specific employment position" and includes postings made through recruiters or a third party. Although not explicitly referenced in the Act, this definition may also include informal postings, such as a post on social media by an employer or an employee about job opportunities at an employer.

Pay range is defined as "the salary range or hourly range that the covered employer reasonably and in good faith expects to pay" for the position at the time of posting. This definition does not require disclosure of other forms of compensation (e.g., bonuses, commissions) or benefits.

Employers can satisfy the Act's requirements with respect to social media postings by including a link to the formal job posting that includes the pay range.

In addition to disclosing pay ranges, the Act also requires employers to provide the pay range for positions offered as part of a promotion or transfer to current employees. However, the Act does not specify at what time or in what manner the pay range must be disclosed during the process of a promotion or transfer. Further, employers must provide the pay range for an existing position to any employee or applicant upon request.

Wage Data Reporting Obligations

The Act also requires private employers with 100 or more employees to submit an annual "aggregate wage data report," including workforce demographic and pay data categorized by race, ethnicity, sex and job category. This report must include all of the same required data as the U.S. Equal Employment Opportunity Commission (EEOC) Employer Information Report, commonly known as an EEO-1 report. Unions, state and local governments, and elementary and secondary schools must submit similar information every other year.

Following submission of these annual reports to the Secretary of the Commonwealth, the aggregate data from these reports will then be published on the Massachusetts Department of Labor website. Individual employer reports will not be considered public records, but employees could potentially seek to discover them in litigation.

Employers must submit their first round of EEO and pay data by Feb. 1, 2025.

Retaliation and Enforcement

Employers covered under the Act may not discriminate, retaliate against or terminate any employee or applicant who has exercised a right under this law. Protected activities under the law include making a complaint to the employee's or prospective applicant's employer or the Massachusetts Attorney General regarding a violation of the law and instituting or testifying in a proceeding under the Act. Protected activity may extend to requesting the pay range of the employee's current position.

The attorney general has the sole ability to enforce the Act, with the exception of the section prohibiting discrimination or retaliation. A first offense for violation of the Act is subject solely to a warning. Subsequent offenses result in a fine of:

• no more than $500 for a second offense
• no more than $1,000 for a third offense
• $7,500 to $25,000 for a fourth or subsequent offense

Under the Act, "an offense shall include 1 or more job postings for positions made by the same employer during a 48-hour period." Violations are not subject to treble damages under the Massachusetts Wage Act.

Conclusion and Best Practices

Employers should consider the following steps in anticipation of the Act taking effect on July 31, 2025:

• Adopt procedures to ensure the required pay ranges will be incorporated into job postings.
• Adopt procedures to properly ascertain the pay ranges for all positions that may be posted.
• Develop a communications strategy for current and prospective employees, as salary information will now be more widely broadcast and available upon request.
• Evaluate whether any compensation modifications are needed for current employees to ensure equity and appropriate pay ranges, particularly as salary information becomes public for new hires and available to current employees.
• Train all managers and employees involved in the job posting process on the Act's requirements (including the prohibitions on retaliation).
• Ensure that all processes are in place and the required information is readily available in order to timely submit the necessary aggregate wage data report by Feb. 1, 2025.

For more information on this topic or for assistance with best practices, please contact the authors or your Holland & Knight attorney.

Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem, and it should not be substituted for legal advice, which relies on a specific factual analysis. Moreover, the laws of each jurisdiction are different and are constantly changing. This information is not intended to create, and receipt of it does not constitute, an attorney-client relationship. If you have specific questions regarding a particular fact situation, we urge you to consult the authors of this publication, your Holland & Knight representative or other competent legal counsel.