Last month, Massachusetts Gov. Charlie Baker signed an equal pay law aimed at narrowing the wage gap between men and women. Significantly, the law prohibits employers from asking applicants about their wage or salary history as a condition of being interviewed or considered for an offer of employment, or from screening applicants based on the same information. Previous wages or salaries are often used as a factor in making compensation decisions, and as the Lilly Ledbetter case illustrated, a disparate-pay decision early on can affect an employee’s earnings trajectory for the rest of his or her career.
While similar legislation has not been proposed in the mountain states, MSEC members should take note of this law. Now is a good time to review the factors your organization considers in making compensation offers. As the Massachusetts law acknowledges, seniority, merit, production, education, training, experience, geographic area, and travel are legitimate factors that justify variations in pay. But paying an employee less than what you would have offered based on their wage or salary history could unwittingly perpetuate a previous employer’s discriminatory pay decision.
If you ask job applicants to disclose their wage or salary history, what do you do with that information? While this information may be useful as a data point, be careful to ensure that your pay offer fits within your overall compensation philosophy and structure, and that you have legitimate business reasons to back it up. And as always, if you need help navigating this area of law, please call us!