Business Guide to Massachusetts Pay Transparency & Equity Laws

Massachusetts has taken a bold step to address pay equity and transparency. New legislation is reshaping how employers approach compensation and workforce reporting. Businesses operating in the state must now adapt to meet new standards designed to close wage gaps and promote fairness.

On July 31, 2024, Governor Maura Healey signed An Act Relative to Salary Range Transparency, setting clear expectations for employers. The law targets inequities in pay by requiring disclosures and creating accountability measures. This marks a significant shift for organizations of all sizes in the Commonwealth.

With enforcement led by the Attorney General’s Office and data oversight by the Secretary of the Commonwealth, the law combines transparency with actionable reporting. Employers are now responsible for sharing salary ranges and submitting demographic workforce data, establishing a framework for greater equity.

Background of the Massachusetts Pay Transparency Law

Governor Maura Healey signed An Act Relative to Salary Range Transparency into law on July 31, 2024. The legislation focuses on reducing gender and racial wage disparities by mandating greater clarity in compensation practices across Massachusetts. Employers are required to take specific steps to align with the law's objectives.

The Attorney General's Office enforces compliance, ensuring employers meet requirements like pay range disclosures and protections against retaliation for employees exercising their rights. The Secretary of the Commonwealth oversees the collection and management of demographic data through annual EEO reporting.

The law introduces key measures, including mandatory salary range disclosures in job postings and upon employee or applicant request. Employers with 100 or more employees must also submit EEO reports to provide transparency in workforce demographics. These combined efforts aim to create equitable pay practices and strengthen accountability statewide.

Employer Coverage Thresholds

The Massachusetts pay transparency and equity state laws apply to employers based on specific employee headcounts. The requirements are straightforward and tied directly to workforce size, ensuring clarity for businesses operating in the state.

• Employers with 25 or more employees: Disclose salary ranges in job postings. Provide pay ranges to current employees upon request, including when offering promotions, transfers, or new roles.

• Employers with 100 or more employees: Submit annual Equal Employment Opportunity (EEO-1) reports to the Commonwealth, but only if already required to file federally.

Out-of-State Employers

Businesses based outside Massachusetts must comply if they meet the employee threshold and have workers whose primary place of work is in Massachusetts. This includes remote employees who perform most of their duties from within the state.

Determining Workforce Size

Employers must calculate headcount accurately to confirm coverage under the law. Use the average number of employees across all payroll periods in the year. Include part-time, full-time, and seasonal workers, as long as Massachusetts is their primary work location. Missteps in calculations can lead to non-compliance, so precision is key.

Pay Range Disclosure Requirements

Massachusetts pay transparency and equity state laws require employers to disclose pay ranges with precision. A pay range refers to the annual salary or hourly wage range an employer reasonably and in good faith expects to pay for a specific role at the time of disclosure. This expectation applies to both internal and external processes, ensuring clarity for all stakeholders.

Key Employer Responsibilities

Employers have clear requirements to meet when handling pay range disclosures:

• Include pay ranges in job postings: Employers must specify the expected salary or wage range in all external job postings for covered positions.

• Disclose pay ranges during promotions and transfers: When offering an employee a promotion or transfer, the employer is obligated to share the salary range associated with the new position.

• Respond to requests from employees and applicants: Current employees can request the pay range for their existing role at any time. Prospective applicants also have the right to know the expected pay range for a position they are applying for.

Protections for Employees

The law explicitly protects employees and applicants who ask about pay ranges. Employers cannot retaliate against individuals for making these inquiries. This protection ensures that employees and job seekers can freely request compensation information without fear of negative consequences, such as demotion or termination.

Special Compensation Structures

For positions with unique pay structures, such as tipped or commission-based roles, employers must still disclose a pay range. The disclosed information should outline the piece rate or commission parameters the employer reasonably anticipates paying. This ensures transparency, even for roles where earnings may vary based on performance or other factors.

EEO Data Submission and Reporting

Employers in Massachusetts with 100 or more employees must now submit their Equal Employment Opportunity (EEO-1) reports to the Secretary of the Commonwealth. This requirement begins February 1, 2025, and applies to businesses already filing EEO-1 data at the federal level. The goal is to enhance transparency and accountability in workforce demographics statewide.

No Additional Reporting Requirements

Businesses won't need to collect new data or create additional reports. The state requirement only involves submitting the same demographic data already provided to the EEOC. By aligning with existing federal processes, the state minimizes extra administrative work for employers while reinforcing compliance efforts.

Steps to Prepare for Submission

To meet the February deadline smoothly, employers should take a proactive approach:

1. Verify federal submission timelines: Confirm when your next EEO-1 report is due to ensure the data you provide to Massachusetts is current and accurate.

2. Audit demographic data: Review workforce information thoroughly to address errors or inconsistencies before submission. Mistakes can lead to compliance issues and potential penalties.

3. Assign responsibility: Designate an HR team member or compliance officer to manage the state submission process and monitor future updates from Massachusetts authorities.

Future Deadlines and Data Use

After the initial 2025 submission, employers will need to continue reporting either annually or biannually, based on guidance from the state. The Attorney General's Office may provide updates on timelines or processes, so staying informed is critical.

Massachusetts will compile employer-submitted data into aggregate reports. While individual company data remains private, the published reports will reflect trends in wage equity and workforce demographics across the state. This approach not only supports transparency but also highlights progress in addressing pay gaps.

Penalties, Enforcement, and Compliance Guidance

The Massachusetts Attorney General's Office holds sole authority to enforce the state's pay transparency and equity laws. Employers must adhere to clear guidelines, as violations come with escalating penalties.

Penalty Details

The penalty framework is straightforward and escalates based on the number of offenses:

• First offense: Employers receive a formal warning.

• Second offense: Fines can reach up to $500.

• Third offense: Fines increase to a maximum of $1,000.

• Further violations: Penalties continue to rise, with fines potentially reaching $25,000 under state labor standards.

During the first two years of the law's implementation, employers benefit from a two-day grace period for correcting violations. This window allows first-time offenders to address compliance issues without facing immediate fines.

Compliance Preparation

To meet the requirements of Massachusetts pay transparency and equity laws, businesses should focus on actionable steps:

• Revise job postings: Add clear salary or hourly wage ranges to all internal and external job postings. Ensure the information aligns with the law's definition of pay ranges.

• Audit pay practices: Perform a thorough review of salary structures to identify disparities. Address inconsistencies where possible to maintain fairness and compliance.

• Provide staff training: Educate HR teams and managers on how to communicate pay ranges to employees and applicants. This ensures consistent messaging and avoids potential missteps.

• Organize reporting data: Centralize EEO-1 reports to simplify submissions to the Commonwealth. Confirm the accuracy of workforce demographic data before the February 1, 2025, deadline.

Clear processes and proactive measures will help employers avoid penalties while building trust within their workforce.

As you navigate the evolving landscape of pay transparency and equity in Massachusetts, having a trusted partner can make all the difference. We're here to support you every step of the way, providing the tools and expertise you need to stay compliant and build a thriving, equitable workplace. Book a demo with us today to see how we can help you streamline your HR processes and meet the new requirements with confidence.