Asking About Salary History Now Prohibited in Massachusetts

Equal Pay
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You’re looking for a new job, and you’ve landed a callback interview. You can tell things are going well because your interviewer has started talking about how wonderful the company is and its generous compensation package.

Before the interview is over, your interviewer asks a final question: what you earned in your previous job. Sensing this importance of this question, but not knowing exactly how to handle it, you answer honestly.

As anticipated, the company you interviewed with offers you the job. However, the salary it offers is suspiciously close to what you made in your previous position.

You probably already know that being forced to throw out the first number when negotiating is rarely advantageous. Not only does it potentially force you to lowball yourself, but it can also perpetuate long-standing pay inequalities, especially if you’re a woman or a minority.

The latter reason is why Massachusetts recently passed a law that prohibits employers from asking prospective job hires to divulge the compensation they received from their prior jobs.

Unequal Pay

People have debated why individuals get different pay for the same or similar jobs for decades. There is no easy answer to explain why minorities and women are consistently paid less for the same work.

For example, according to a 2013 study, “The Simple Truth About the Gender Pay Gap,” women only make 78% of what men make. Even after accounting for variables other than sex, the gap is still about 3%, according to Payscale.com’s findings in “The Truth About The Gender Pay Gap.”

The discrepancy also exists for minorities. For every dollar a white male makes, a Pew Research Center analysis found that a black male makes 75 cents.

Over the past few decades, federal and state lawmakers have attempted to close this gap. One of the most notable pieces of federal legislation has been the Equal Pay Act of 1963. More recently, on the state level, Massachusetts passed the Pay Equity Act.

Equal Pay Act of 1963

The Equal Pay Act of 1963 (EPA) requires practically all employers to provide equal pay to men and women who do the same or substantially similar work. The equal pay requirement factors in an employee’s total compensation, including bonuses and benefits, not just salary or hourly wage.

In explaining whether two jobs are the same or substantially similar, the EPA looks at the nature of the job, not the job title. Another requirement of the EPA is that an employer must equalize differences in pay by increasing the pay of the employee getting paid less, not by reducing the pay of the employee getting paid more.

In essence, the EPA prohibits sex discrimination among employees within the context of employee pay. As a result, an employer who has violated the EPA may have also violated Title VII of the Civil Rights Act of 1964.

There are some similarities between the EPA and Title VII. However, unlike Title VII, an employee who wishes to sue under the EPA doesn’t have to file a charge with the Equal Employment Opportunity Commission (EEOC) first. A charge is basically a written complaint filed with the EEOC.

Another key difference between the EPA and Title VII is that to successfully sue under the EPA, the employee does not have to prove that the employer acted intentionally when it violated the law.

For more information about the EPA and the differences between the EPA and Title VII, please read our blog post titled “Equal Pay Act” and the EEOC’s publication “Facts About Equal Pay and Compensation Discrimination.”

Other Ways of Achieving Equal Pay

The EPA has made significant progress in achieving equal pay and eliminating the gender pay gap. However, the complexities of the pay gap mean there’s no quick and easy fix. As a result, lawmakers and scholars have suggested different approaches and theories.

For instance, two popular proposals are a prohibition on salary negotiations and promoting salary transparency. We discussed these two ideas in our early blog post “Taking On the Gender Pay Gap.” Another proposal is to stop employers from asking about a job applicant’s salary history. This is the crux of the Massachusetts Pay Equity Act (PEA).

Massachusetts Pay Equity Act

bostonThe PEA is the first law of its kind, making Massachusetts the only state to have such a law. Largely targeted toward addressing the gender pay gap, it can also address unequal pay in general.

In our hypothetical, the employer used the applicant’s prior salary as a starting point for making the initial offer. This isn’t a problem from a pay gap point of view, assuming the job applicant was fairly compensated in the earlier job.

But if the job applicant had been underpaid in that earlier position, the subsequent job offer would perpetuate the underpaying of that particular individual. After all, why would an employer offer a salary that’s higher than one the job applicant is willing to take? By stopping this cycle of paying workers less because of their prior job, lawmakers hope that the PEA will further reduce the gender pay gap.

The PEA also requires equal pay among employees not just with similar jobs but jobs that are of “comparable character.” Lawmakers expect this language to widen the definition of what constitutes equal pay for equal work under Massachusetts law.

The PEA still has permissible reasons for pay discrepancies, including the employee’s skills, geographic location, and travel requirements.

Summing It Up

  • Pay inequalities based on sex and race continue to exist, even after accounting for factors other than race or sex.
  • Attempts to eliminate pay gaps, such as the Equal Pay Act of 1963, have worked but not eliminated gaps entirely.
  • Massachusetts, in its own attempt to address pay inequality, just passed the Pay Equity Act.
  • The Pay Equity Act’s most notable feature is that it now prohibits employers from asking employees what they earned in their previous jobs.