Ringing the Bell for Pay Equity
The Massachusetts legislature's new pay-equity law attempts to define what constitutes "comparable work" and allows employees to discuss their salaries with other workers without facing retribution from their employers. Will other states follow suit?
By Susan R. Meisinger
One of the many important member benefits provided by professional societies and trade associations is access to information on recently enacted and emerging legislation. These organizations usually have staff and resources dedicated to monitoring legislation at the state and/or federal levels that might impact their members if passed. Some organizations will lobby on behalf of their memberships; others just report on what's happening in Congress or state legislatures.
But with 50 state legislatures it can be difficult -- and expensive -- to closely monitor every state, even when using one of many reporting services that flag newly introduced legislation and hearings.
As a result, many professional societies and trade groups identify and track closely a more limited number of states. They identify bellwether states -- the states that have historically been legislative trendsetters in areas that impact their membership. Past experiences have taught them that when something is enacted in bellwether states, it's safe to assume that other state legislatures will follow suit and consider similar or identical measures.
Perhaps the most followed bellwether state is California. Anyone who does business in California knows it's different. Legislative initiatives first enacted in California seem to work their way east, frequently introduced and passed in state legislatures across the country.
The word "bellwether" comes from a time when shepherds put a bell on the leading sheep of a flock. Upon hearing the bell, the other sheep would follow the leader.
I think an important bell has just sounded in Massachusetts, and HR executives should pay attention.
Earlier this summer, the Massachusetts legislature enacted legislation that attempts to define what constitutes comparable work and allows employees to discuss their salaries with other workers without facing retribution from their employers. This part of the legislation is not unusual this year; California, New York, Maryland and Nebraska have all passed pay equity legislation in 2016, expanding employee protection from pay discrimination.
What's unusual is that the Massachusetts law also made it illegal for an employer to ask prospective workers to provide a salary history. It's the first state in the nation to do so.
I'm comfortable in predicting that a similar provision is coming soon to your state. Consider this: The bill was passed unanimously by the Massachusetts House and Senate, which are controlled by Democrats, and was signed into law by the governor -- who is a Republican. It was a bipartisan measure.
The stated goal of this and other pay equity legislative measures is to eliminate practices that can perpetuate lower salaries for women. Since many employers base a new hire's compensation on a candidate's previous compensation, those that are paid less -- frequently women -- are at a disadvantage; earlier pay inequities are perpetuated.
What does all this mean for HR professionals?
Well, for starters, there will certainly be more litigation as some of the terms that are used in the Massachusetts law and other laws are defined and refined. Massachusetts employers will also have to change job applications ("list previous salary" will have to go) and provide training on the new law for recruiters, HR staff and hiring managers.
I know it seems like there's always new legislative or regulatory mandates that make continuous professional development a must for HR professionals and managers. So why am I highlighting this one?
I believe the Massachusetts statute represents a noteworthy move by a state legislature into dictating how employers can and can't negotiate compensation with a candidate.
Although the law allows a candidate to volunteer compensation information, it will be a question of fact as to whether the information was really volunteered or was, as a practical matter, extorted from a candidate. And while the law doesn't preclude an employer from asking what the candidate expects as salary, doing so may involve some risk. For example, how will HR ensure that a hiring manager doesn't, upon hearing that the candidate would like to be paid $50,000, respond by asking the candidate "Why?", causing the candidate to say that "it's 10 percent more than my current salary"?
The Massachusetts Pay Equity Act isn't scheduled to take effect until 2018, and the state's Attorney General must still issue additional interpretive guidance. (Most expect the Attorney General to interpret the statute broadly, providing maximum protection to applicants and employees.)
Yet while 2018 may seem a bit far off, Massachusetts employers should probably begin to gear up for the changes today, modifying applications, checking pay practices to identify potential inequities, and developing training for HR and hiring managers.
And as for those based in other states? Well, were I in their shoes, I wouldn't be breathing a sigh of relief. I'd be worried, too.
Remember what I said about bellwether states? The bell has rung, and similar legislative action is coming your way soon!
Susan R. Meisinger, former president and CEO of the Society for Human Resource Management, is an author, speaker and consultant on human resource management. She is on the board of directors of the National Academy of Human Resources.