As of July 31, 2024, Massachusetts has joined nearly a dozen other states in the country in enacting pay transparency laws. The new law will take effect on July 31, 2025. The goal of this law is for increased wage transparency in the hiring process to promote fairer compensation practices, eliminate biases based on any protected class, close wage gaps, ensure equal pay for equal work, and help job applicants negotiate salaries more effectively.
The law will require employers to disclose good-faith minimum and maximum salary ranges for job openings, not only in ads for new employees but also for existing employees for their current position or when offered promotions or transfers to a new position.
Note that it is unlawful for employers to retaliate or discriminate against employees or job applicants who request the pay range for a job position. In addition, companies with more than 100 full-time employees must also submit Equal Employment Opportunity (EEO) wage data reports annually to the state of Massachusetts; these data reports must include workforce demographic and pay data categorized by race, ethnicity, sex, and job category.
Be Proactive
In light of the newly passed law, employers should be proactive in ensuring their job postings – both internal and external – are in compliance with the law’s requirements. This may involve establishing pay ranges for all positions and reviewing the current distribution of salaries across employee positions (for example, longer-term employees’ pay ranges should be examined to make sure they make sense compared to those offered to new employees). Employers may additionally want to develop a communications strategy for notifying employees of the new law and of their right to ask for pay range information.
Use This as an Opportunity
Keep in mind that pay transparency laws can have significant benefits for employers. Studies have shown that pay transparency boosts employee engagement and retention, improves employees’ confidence that they are paid fairly for the work they do, and boosts overall job satisfaction and motivation. Pay transparency also attracts more qualified applicants for open positions, helps to resolve pay gaps, and can attract more diverse candidates.
Follow the “Goldilocks Rule”
Our guidance, based on reviewing other states’ postings and advising employers, is for employers to keep their pay range relatively narrow. We call this the “Goldilocks Rule”: employers don’t want to describe their pay range too narrowly (e.g., a salary range of $64k-$66k) or too broadly (e.g., a salary range of $50k-$200k). Instead, employers should aim for “just right” – a salary range that attracts top candidates, allows some wiggle room for experience (especially between candidates), and is a realistic (good faith) estimate of how much the employer plans to pay the employee in the position.
If you have any questions about the new pay transparency law, our team of experienced HR professionals and lawyers can help you understand the requirements of the law, communicate pay ranges to employees, and ensure your organization is compliant with the new law. We can also conduct pay equity audits and workplace trainings to guide your staff members through the requirements for both the pay transparency and EEO wage data laws. Get in touch with us to discuss your organization’s needs!
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