The New Pay-transparency Law

By Amelia J. Holstrom, Esq. and John S. Gannon, Esq.

Last year, Massachusetts joined a growing list of states with pay-transparency laws when Gov. Maura Healey signed “An Act Relative to Salary Range Transparency” into law. The law, which takes effect in various stages this year, will require many Massachusetts employers to disclose salary and pay ranges in all job postings and advertisements. The law also requires larger businesses to file certain wage data and information with the Commonwealth of Massachusetts.

According to the state Office of Labor and Workforce Development, the pay-transparency law is aimed at eliminating gender, racial, and other wage disparities, as well as boosting employee loyalty and improving morale. Here is what employers need to know.

Beginning Oct. 29, all businesses in the Commonwealth with 25 or more employees will be required to:

• Disclose pay-range information in all job postings and/or advertisements. This includes “any advertisement or job posting intended to recruit job applicants for a particular and specific employment position,” regardless of whether the employer recruits directly or utilizes a third party for such purposes;

• Disclose pay-range information to current employees who are transferred or promoted to a new position for the new position; and

• Upon request, provide pay-range information to employees for the positions they hold and applicants for the positions to which they applied.

The law defines pay range as the “annual salary or hourly wage range that the covered employer reasonably and in good faith expects to pay for that position at that time.” The statute also prohibits employers from retaliating against any employee, or applicant, who requests pay-range information. Employers who violate the new pay-transparency law can be fined by the Massachusetts attorney general. Conceivably, violations could also trigger a larger inspection of the employer’s pay practices.

Larger Employers Required to File Wage Reports

In addition to the new pay disclosure obligations discussed above, employers with 100 or more employees in the Commonwealth who are subject to the federal EEO-1, EEO-3, EEO-4, or EEO-5 reporting requirements will be required to file certain workforce demographic data with the Commonwealth of Massachusetts on an annual or every-other-year basis. Currently, EEO reports contain workforce demographic and pay data categorized by race, ethnicity, sex, and job category.

As of this past Feb. 3, employers with 100 or more employees in the Commonwealth subject to the EEO-1 reporting requirements were required to file a copy of their EEO-1 data report with the Commonwealth of Massachusetts. The law requires this to be done annually for EEO-1-covered employers on Feb. 1 or the next business day.

On the same date, employers subject to the EEO-3 (covered unions) and EEO-5 (covered schools) reporting requirements were required to file a copy of those reports with the Commonwealth. EEO-3 and EEO-5 reports need to be filed every other year. Likewise, employers subject to the EEO-4 (covered state and local governments) reporting requirements will need to file a copy of those reports every other year, beginning on Feb. 1, 2026.

Recently, the Massachusetts Executive Office of Labor and Workforce Development published a set of frequently asked questions designed to help employers determine if they are covered by the new filing requirements and, if so, what they need to do to comply. The FAQs can be found at www.mass.gov/info-details/workforce-data-reporting-faqs.

The reports submitted by employers will not be public records under Massachusetts law. In other words, members of the public will not be able to request and receive copies of these records. The Commonwealth, however, will use the data submitted by employers to publish aggregate wage and workforce data on the Department of Labor and Workforce Development’s website no later than July 1 of each year, beginning in 2025. These aggregate reports will be broken down by industry.

Next Steps

Needless to say, if you have more than 100 employees in Massachusetts and are subject to EEO reporting requirements, and you have not filed your wage-data report with the Commonwealth of Massachusetts, you need to act fast. As for the salary-range disclosures, although Oct. 29 may seem far away, employers should start preparing now to comply with the deadlines. If not already in place, employers need to start developing pay ranges for each position in their workforce.

Employers also need to consider how and to what extent posting pay ranges in job postings will impact morale in the workplace. For example, consider a scenario where your business places an advertisement for an entry-level position at $28 per hour. Now, let’s assume someone with your company has been working in that role (or a similar job) for a few years, and is earning the same wage. That current employee is likely to learn about the advertisement and question why they are not making more money. Employers need to be prepared with a communication strategy should this situation unfold.

Businesses may also want to consider conducting a pay-equity audit to ensure there are not any pay disparities, as employees will now be able to request and discuss this information in the workplace. There are other important benefits to conducting a pay-equity audit under the Massachusetts Equal Pay Act. For starters, it may help identify if you have any potential pay-equity liability in your workplace. Also, employers who conduct good-faith self-evaluations of their pay practices may have an affirmative defense against a pay-equity lawsuit.

If you plan to conduct a pay-equity audit, you should strongly consider working with your employment counsel to preserve the attorney-client privilege, which may prevent certain information from being disclosed in any subsequent litigation.

Amelia Holstrom and John Gannon are partners with the Springfield-based law firm Skoler, Abbott & Presser, P.C., a law firm exclusively practicing labor and employment law for more than a half-century, focusing on litigation avoidance, employment litigation, and labor law and relations; (413) 737-4753.