Massachusetts Adopts Wage Equity and Pay Transparency Legislation: What Employers Need to Know

On July 31, 2024, Massachusetts Governor Maura Healey signed into law the “Frances Perkins Workplace Equity Act” (H.4890 or the “Act”). The legislature drafted this new act to enhance wage equity and transparency across the Commonwealth. The law imposes new obligations on employers regarding pay transparency and wage data reporting.

Pay Transparency Requirements

Starting July 31, 2025, the Act mandates that employers with 25 or more employees in the Commonwealth must disclose “pay ranges” under the following circumstances:

1. 1. Job Postings and Advertisements: Pay ranges must be included in all job postings and advertisements intended to recruit applicants, whether posted directly by the employer or indirectly through a third-party.
   2. Promotion or Transfer Offers: When an employee is offered a promotion or transfer to a new position with different responsibilities, the pay range for that position must be disclosed.
   3. Employee and Applicant Requests: Current employees may request the pay range for their positions, and applicants can request the pay range for the positions they are applying for.

The law defines “pay range” as the “annual salary range or hourly wage range that the covered employer reasonably and in good faith expects to pay for such position at that time.” This does not mandate the disclosure of additional compensation, such as bonuses, benefits, stock options or other forms of incentive-based pay.

Employers who fail to comply with these pay transparency obligations may be subject to penalties, beginning with a warning for the first offense and potentially escalating to fines of up to $25,000 for additional offenses. However, for the first two years from the Act’s effective date, in order to allow employers room to adjust to the new legislation, employers have a two-day grace period after receiving notice of a violation to correct any issues before fines are imposed.

Wage Data Reporting Obligations

Beginning February 1, 2025, employers with 100 or more employees in Massachusetts who are subject to federal wage data report filing requirements (such as EEO-1, EEO-3, EEO-4, or EEO-5 filings) must submit their federal filing EEO information report to the Commonwealth as well.

For private employers who are required to file an EEO-1 report, the report must be filed annually with the Commonwealth. For the remainder, reports are required to be filed biennially with the Commonwealth.

Using these reports, the Commonwealth will publish anonymized aggregated data online annually, offering public insight into wage disparities.

Recommendations for Employers

Employers in the Commonwealth are encouraged to begin evaluating their pay structures and data reporting capabilities. Employers may want to consider taking the following steps to ensure compliance:

1. Update Job Postings: Ensure all job postings include clear pay ranges to comply with the new transparency requirements.
2. Enhance Record-Keeping: Develop or upgrade systems for tracking and reporting wage data and/or review the federal EEO reporting process in place. Be prepared to submit a report by February 1, 2025.
3. Train HR and Management: Educate HR personnel and managers on the new requirements, especially regarding posting and reporting requirements, and handling employee inquiries about pay.
4. Evaluate Current Pay Structures: Evaluate the current salary structures in place and consider making modifications to existing salaries to prevent potential conflicts or dissatisfaction when pay ranges for new positions are disclosed.