In an effort to close the gender gap when it comes to equal pay, Massachusetts just passed a sweeping equal pay bill that, in part, makes it illegal for employers to ask for the salary histories of prospective employees.
The law states that it is an unlawful practice for an employer to “screen job applicants based on their wage, including benefits or other compensation or salary histories, including by requiring that an applicant’s prior wages, including benefits or other compensation or salary history satisfy minimum or maximum criteria; or request or require as a condition of being interviewed, or as a condition of continuing to be considered for an offer of employment, that an applicant disclose prior wages or salary history.”
The law also goes on to say that employers cannot “seek the salary history of any prospective employee from any current or former employer; provided, however, that a prospective employee may provide written authorization to a prospective employer to confirm prior wages, including benefits or other compensation or salary history only after any offer of employment with compensation has been made to the prospective employee.”
The new law requires companies to put forth a salary figure upfront, based on the applicant’s anticipated worth to the company, as opposed to what the applicant made in a prior position. Currently, companies tend to set salaries for new hires using their previous salary as a guide.
The bill, signed into law in early August by Republican Governor Charlie Baker, makes Massachusetts the first state to enact such a law.
The question is, will others follow?
There’s a firm belief by many that if employers are not allowed to ask women what their prior salaries were, it could serve as a huge disruption to the disturbing trend of lower salaries that women commonly earn when compared to their male counterparts.
According to the American Association of University Women, in 2014, median earnings for men in Massachusetts were $60,588 compared to women’s median earnings of $49,470.
But women aren’t the only potential beneficiaries of this law.
Sometimes workers take pay cuts in order to work at a company that may not be able to pay them what they’re worth now, but may have the potential to in the future – particularly in the startup world. If that company then doesn’t thrive, and you’re required to tell a future prospective employer what your prior salary was, it then enables that employer to “low ball” you, even though you may be worth more.
Furthermore, oftentimes the main reason people are looking for other jobs is to increase their pay. Having to disclose to a recruiter or prospective employer their current salary, can certainly limit them.
I spoke with Emily Martin, Vice President for Workplace Justice at the National Women’s Law Center, who said, “When your salary in a new job is based on what you earned in your previous job, pay discrimination can have a long reach, following you into new jobs and new opportunities. The new Massachusetts law breaks that cycle.”
The new law will also allow workers to discuss their salaries with each other, something that employers often discourage. Now employees will be able to see what their coworkers are making and determine whether they are being paid fairly.
Kristen Prinz, an employment attorney at the Prinz Law Firm in Chicago, said she’s not sure how quickly other states may follow suit, but that the law provides a great opportunity for equal pay.
“Although I doubt many states will be quick to follow Massachusetts, the law is a great stride towards addressing pay inequality,” she said. “Employers have been able to use prior employers’ discriminatory pay as a basis to perpetuate wage inequality. The new law gives employees the opportunity to negotiate based on job value instead of prior compensation.”
This law serves as an update to Massachusetts’ original equal pay law, which was first passed 1945.
The law will go into effect July 2018.