Hiring Managers and Human Resources Professionals most likely cannot remember a time when they were unable to ask a potential candidate in an interview, “What did you make at your previous job?” This has been common practice for many years and has been a crucial element to ensure prospective candidates align with budgets. However, starting July 1, 2018, this question will be prohibited and a direct violation in Massachusetts under the Statute 2016, c.177: An Act to Establish Pay Equity.
Along with Massachusetts, several other states have implemented a version of this pay equity act. Other states, such as Rhode Island, currently being voted on to have these laws in place to promote equal pay between men and women. Massachusetts has made it clear that employers can only ask or verify an applicant’s salary history after the salary has been negotiated and a job offer has been made. They must trust they offered the right compensation package the first time around. Employers are at least permitted to ask what potential candidates salary expectations are, since they do need a range of some sort to go by.
To comply with the Act to Establish Pay Equity, organizations must now offer compensation packages based on experience, labor market data, performance, education and proven skills.
This law marks a moment in history for advocates who have been pushing to close the gender wage gap for years. And Massachusetts, always being the progressive leaders for change in America, have made the issue of equal pay a top priority for the Commonwealth.
According to the National Women’s Law Center, women still earn on average about 80 cents to a man’s dollar nationwide and the gap hasn’t shrunk much in the past decade. If we keep going at the pace the rate has changed between 1960 to 2016, predicted women would reach pay equity with men in 2059. This law will hopefully make it happen sooner and attract more states to join the cause.
Moments before signing the bill on Aug. 1, 2016, Massachusetts Gov. Charlie Baker said the legislation will help ensure that in Massachusetts “people are paid what they are worth based only on what they are worth and not on something else.”
The gender wage gap also is less for different races. According to an article from The American Association of University Women , in 2016 Hispanic or Latina, black or African American, American Indian or Alaska Native (AIAN), and Native Hawaiian or other Pacific Islander (NHPI) full-time women workers had lower median annual earnings compared with non-Hispanic white and Asian women. Compared with salary information for white male workers, Asian women’s salaries have the smallest gender pay gap, at 87 percent, while Hispanic women were paid only 54 percent of what white men were paid in 2016.
The salary inquiry has been a very difficult question to answer in an interview. If a candidate answers honestly, that information could have potentially short changed their value, which could have resulted in a lower offer.
However, if a candidate had falsely disclosed their previous compensation history, in efforts to reach their targeted compensation, a background screening service could discover the untruth. That could’ve potentially resulted in an offer being rescinded. This is just another reason why so many advocates have pushed to ban the question completely. The job should be compensated based on your skills and what you bring to the table, not by what you made at your last job.
Statute 2016, c.177 An Act to Establish Pay Equity states , “No 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.”
There are other parts to the law as well. Organizations will not be in violation of this law if they are compensating males at a higher rate than females based on seniority, sales revenue or production, geographic location (where the job is performed), extra education and training or travel- if it’s related to the job. If someone is making more money because of these stipulations, it’s protected by this law and the organization won’t be in violation.
The law describes “Comparable Work” as substantially similar skill, effort and responsibility and is performed under similar working conditions; provided, however, that a job title or job description alone shall not determine comparability. Throughout the law, this term is used as a standard that organizations will have to abide by to compare positions.
The new law also creates a three-year defense from liability to help encourage organizations to correct compensation disparities between women and men internally before going to court. This will give time for organizations to correct any pay gaps that currently exist.
The law also increases “compensation transparency” by ensuring employee’s freedom to talk about their salary or wages to coworkers. It prohibits employers from firing or punishing employees who discuss their compensation with others. With this new protection, employees can find out if they are being paid unfairly and have time to work with their organization to correct the issue.
There’s no question it will be difficult for the state to enforce this law. If an organization is brought to court and found guilty of asking the salary question or violating any part of the law, they are liable to the employee affected in the amount of the employee’s unpaid wages, and an additional equal amount of liquidated damages.
The law also states the court shall, in addition to any judgment awarded to the plaintiff, award reasonable attorneys’ fees to be paid by the defendant and the costs of the action. If an employer is in violation of the law, they can’t just reduce the wages of any employee solely to comply with the law or change the employee to a contractor to avoid complying.
The law may be enforced by the Attorney General or one or more employees in a court of competent jurisdiction. Therefore, an employee doesn’t need to first file a complaint with the Massachusetts Commission Against Discrimination. There are also ways to steer the interview or salary negotiation, where the candidate doesn’t feel the need to storm out of the room because the organization asked their previous salary information. It will take time for hiring managers and organizations to adjust.
Organizations have known about this law for close to two years now, but have they prepared for it? It’s going to take a lot of work to change what hiring managers, HR professionals and recruiters have been doing for years. They’ll have to be very careful with their interview questions and paperwork to exclude all salary history questions. There are a couple of areas in which organization’s can focus on, to prepare their staff: Training, Documentation and Salary Negotiations.
Salary history discriminatory questions can happen a couple different ways. It can be in an interview with an employer asking you what you made previously or in an annual review. Therefore, training your managers, recruiters and human resources professionals is extremely important. They can discuss the candidate’s salary expectations and organizations can rebut with a range of what they are willing to pay, to ensure both parties are in the same ballpark before going further.
It’s important to train hiring managers and interviewers to ensure applicants aren’t asked about their current or prior salary, but rather their salary expectations and the anticipated salary of the position. It’s a good idea to review contracts with recruiters and agencies to ensure that they are solely responsible for their own violations. Organizations can no longer request any compensation history information to be included from background screening services.
It’s important to ensure all your application and questionnaires (print and online) omit any questions pertaining to compensation history in any way, shape or form. Questions on applications referring to what the candidate made previously is a direct violation of this law.
When it comes time to make an offer of employment to a candidate, employers need to ensure that the offer is in full compliance with this law. They must use labor market data and the candidate’s educations, skills, performance and experience to come up with a fair offer, not based on what they previously made.
Staffing Agencies and Search Firms do this every single day and are experts in getting the best price for well-qualified candidates. Hiring Managers and Human Resources Professionals are going to need to rely on outside resources for local market data-with the skills gap, low unemployment numbers and high demand for talent. This is truly a candidate driven market!
The data gathered from labor market tools do not paint the entire picture of what makes a competitive offer for today’s market. Many of those tools are surveys and don’t factor in the supply and demand of specific skills, the geographical area and seniority level etc. Employers will need to base their budgets and offers to perspective candidates with significant facts.
Employers are also not allowed to contact former employers or speak to former colleagues of potential candidates to inquire on previous compensation history. Transparency is essential in abiding by the upcoming law. Employers should be up front in terms of the range they are willing to pay and candidates need to follow suit and also divulge what they’re targeting for annual compensation packages.
This is a game changer for all parties involved (organizations, candidates, 3rd party agencies) but can be a tremendous resource for you in navigating your organization through these changes. Micro Tech Staffing Group has access to real-time local compensation data and over 30 years of trusted partnerships with Massachusetts organizations across various industries to help share best practices with you to ensure we are all complying with the spirit of this law. And ultimately even the playing field across genders and race to ensure compensation is being based on what you bring to the table!