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October 4, 2023

Biz groups behind changes to pay disclosure bill set for Wednesday vote

Photo | Courtesy of Commonwealth of Massachusetts Massachusetts State House

The House will vote Wednesday on a bill that requires many employers to disclose a wage or salary range on job postings, Speaker Ron Mariano's office said, building on pay equity efforts that began nearly a decade ago.

The House Ways and Means Committee polled its members Tuesday morning on the salary transparency bill (H 4100), which Mariano signaled last week would be a priority for the House this fall.

"Enhancing wage transparency is a critical facet of the effort to ensure equal pay for equal work, and to make Massachusetts more competitive," Mariano said in a statement to the News Service on Tuesday.

The Labor and Workforce Development Committee advanced a redrafted version of the bill, which has 78 sponsors, in late September. They dubbed the bill the Frances Perkins Workplace Equity Act, commemorating a Massachusetts native who was the first woman to serve as U.S. labor secretary.

The bill requires businesses with at least 25 employees to include a projected pay range in any hiring advertisement for a specific position, which would align Massachusetts with a small but growing number of states with similar measures on the books.

Any public or private employer with 25 or more employees posting a job would need to list the annual salary or hourly wages they "reasonably and in good faith" expect to pay if the bill becomes law. Some businesses already make that information available, but the legislation would impose it as a wide-reaching requirement.

Advocates say the practice of posting salaries evens the playing field for workers, especially for women and people of color who historically have not given as much at the negotiating table.

"We are pleased to see that this legislation features strong tools to address racial and gender wage gaps in our Commonwealth," Nicole Obi, president and CEO of the Black Economic Council of Massachusetts, said. "The provisions pertaining to salary transparency stand to benefit not only workers but also the younger generation by fostering access to sustainable career opportunities that enable them to remain in Massachusetts. Additionally, the data collection measures will play a vital role in highlighting and evaluating potential solutions for the racial wealth gaps that persist in the business sector."

Employers will also have to report wage data to the Executive Office of Labor and Workforce Development. The state will then publish aggregate data reports on its website while protecting the identity of employers.

Brooke Thomson, president of the Associated Industries of Massachusetts, said protecting employers' identities was among the compromises that made the bill more agreeable to both advocates and business groups.

"I think in some other states there has been a view that depending on how the language is drafted, there can really be sort of this naming and shaming of employers who aren't making as much forward movement as they'd like to be," Thomson said. "So when we sat down with advocates and with the chairs of the committee, both Chairwoman Jehlen and Chairman Cutler, we really just said, okay, what are the goals here? How do we reach this goal of equity but also not punish our employers?"

Thomson said when AIM met with Sen. Pat Jehlen and Rep. Josh Cutler, who redrafted the bill in the Labor and Workforce Development Committee, she emphasized that in the wake of the pandemic, businesses in Massachusetts are struggling amidst a competitive marketplace.

In order to avoid unnecessarily punishing businesses, Thomson said the bill was changed in committee to include a first violation warning.

If an employer violates the wage data reporting requirements or fails to provide a pay range for a specific position, they would receive a warning, after which they would be fined up to $500 for a second offense and $1,000 for a third violation.

"The changes that have been made certainly ease concerns for small businesses as far as liability and fines and so forth," said Jon Hurst, president of the Retailers Association of Massachusetts.

Though Hurst added that he would have preferred the legislation exempt small businesses, as "I think the intent here is for big businesses."

"We have to just, going forward, recognize that small businesses don't have HR departments, they don't have staff attorneys, and wherever we can, we shouldn't be making them go out and pay for consultants to protect them on liability issues. Red tape is the number one complaint I hear from many small businesses," he said.

Another major change that Thomson said she advocated for is that the attorney general's office get exclusive enforcement power over the law. There is no private right of action.

"There needs to be a system of accountability, but we didn't want a situation where everybody runs to the courthouse," she said. "The goal here was not to punish businesses unfairly."

The version of the bill that the Ways and Means Committee polled its members on Tuesday adheres closely to the version that was reported out of the Labor and Workforce Development Committee.

One minor change would give covered employers a two-year grace period during which they could address a violation within two days before a fine is imposed, according to Cutler's office.

"The bill being taken up by the House will empower workers, reduce persistent gender and racial wage gaps, and help businesses attract and retain talent. Pay transparency is good policy for employees and employers alike," Cutler said Tuesday in a statement to the News Service.

Alliance for Business Leadership Board Chair Andrea Silbert said the bill represents a compromise between worker and business interests.

"We are thrilled to see it gain the backing of other business groups," Silbert said. "No state in the nation has passed wage transparency and equity legislation that both business organizations and advocates support. ABL strongly believes this bill will help strengthen our state's capacity to attract and retain employees by demonstrating that in Massachusetts everyone can expect to be paid fairly."

The issue has come quickly into Beacon Hill's attention at a time when lawmakers are trying to make Massachusetts competitive as businesses and workers are fleeing to lower-cost states. The bill is being brought to the House floor for a vote only a week after it was favorably reported out of the Labor and Workforce Development Committee.

Compared to other issues that House leadership identified as priorities early this session -- such as gun safety reform and a long-term care bill -- the salary transparency bill is advancing quickly through the legislative process.

But it also builds on a recent history of pay equity legislation in Massachusetts.

Former Gov. Charlie Baker signed a law in 2016 intended to close the state's gender pay gap, which prohibited discrimination on the basis of gender in the payment of wages for comparable work.

The 2016 bill also forbade businesses from requiring a job applicant to disclose their previous salary history, and encouraged businesses to evaluate their own pay practices and allow self-evaluations to be used as an affirmative defense in a pay discrimination claim.

Since the gender wage gap law took effect, Massachusetts has jumped from 18th place nationally for pay equity, according to the Institute for Women's Policy Research's earnings index, to third place among all other states and Washington, D.C.

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