A Reminder Of Pay-Transparency Requirements Taking Effect In Massachusetts

Highlights

• An Act Relative to Salary Range Transparency (the Act), a law implementing pay-transparency requirements and reporting for covered employers, will take full effect in Massachusetts on Oct. 29, 2025.
• The Act requires employers to list the "the salary range or hourly range that the covered employer reasonably and in good faith expects to pay" for the position at the time of posting.
• The Act was signed into law in July 2024, and since then, the Massachusetts Office of the Attorney General has released guidance and FAQs to address key provisions and assist employers with understanding requirements.

Signed into law by Massachusetts Gov. Maura Healey on July 31, 2024, An Act Relative to Salary Range Transparency (the Act) requires private employers with 25 or more employees to post the pay range for a position in both internal and external job postings. (See Holland & Knight's previous alert, "Massachusetts Enacts Pay-Transparency Requirements for Employers," Aug. 2, 2024). The disclosure requirement applies to "any advertisement or job posting intended to recruit job applicants for a particular and specific employment position" and includes postings made through recruiters or a third party.

Employers must list the "pay range," which is defined in the Act as "the salary range or hourly range that the covered employer reasonably and in good faith expects to pay" for the position at the time of posting. Though this definition does not require disclosure of other forms of compensation (e.g., bonuses or benefits), the pay range must include piece rate or commission pay if the position's compensation is based on piece rate or commissions.

The Act does not clarify if this includes positions where compensation is structured as salary plus commissions or where compensation may include incentive pay similar to commissions, although the guidance seems to suggest the focus may be on requiring inclusion of commissions in the pay range for positions in which the compensation is based primarily on commissions.

Attorney General Clarifies Guidance

The guidance from the Massachusetts Attorney General's (AG) Office provides further clarification on several key aspects of the Act, including the following:

• To determine if they reach the 25-employee threshold for application of the Act, employers must count all full-time, part-time, seasonal and temporary employees with a primary place of work in Massachusetts. Remote employees who work out of state may count toward this threshold if their primary place of work is considered to be Massachusetts.
• The definition of "primary place of work" under the Act is the same definition as adopted in the AG's Earned Sick Time FAQs. Under those FAQs, employees with a primary place of work in Massachusetts include employees who:
  • spend work hours traveling outside Massachusetts for work but return regularly to a Massachusetts base of operations
  • telecommute through an arrangement with their employer to a Massachusetts worksite
  • spend the plurality of their working time in Massachusetts over the course of one year
• The Act applies to all job postings where the position's primary place of work is Massachusetts. However, remote employees with a Massachusetts worksite and remote employees with a primary place of work in Massachusetts are included in this requirement. If the employee hired for a position may have a primary place of work in Massachusetts (even if the employee hired could also be located outside of Massachusetts), employers would be well advised to comply with the Act's requirements for that posting.

Pay Disclosures on Promotion and Request

The Act also requires employers to disclose the pay range for a position offered to a current employee as a promotion or transfer, as well as provide the pay range for a specific position to any employee in or applicant for that position upon request.

It is not clear at what time in the promotion or transfer process a pay range must be disclosed or in what particular manner.

With respect to a current employee's request, the AG's guidance clarifies that the pay range must be provided even if there is no current or expected vacancy in that role. The pay range disclosure in response to a request by an employee is for the "particular and specific employment position" held by that employee. Employers should be clear regarding the "particular and specific" position for which it is disclosing the range and consider whether that "particular and specific" position may account for differences in geographic location, level or seniority, education or experience, or other clarifying factors.

Wage Data Reporting Obligations

The Act has also required, since Feb. 1, 2025, that employers with 100 or more employees submit an annual aggregate wage data report, including workforce demographic and pay data categorized by race, ethnicity, sex and job category. These are not new reports but rather copies of the same required data as the U.S. Equal Employment Opportunity Commission (EEOC) Employer Information Report, commonly known as an EEO-1 report. Employers who file EEO-3 or EEO-5 reports must submit these reports every other year beginning on Feb. 1, 2025. Employers who file EEO-4 reports must submit these reports every other year beginning on Feb. 1, 2026.

As with the Act's employee threshold for pay disclosures, the 100-employee threshold for pay reporting includes all full-time, part-time, seasonal, temporary and remote employees with a primary place of work in Massachusetts.

Retaliation and Enforcement

Employers should be reminded that they may not discriminate, retaliate against or terminate any employee or applicant who has exercised a right under this law. Protected activities under the law include making a complaint to the employee's or prospective applicant's employer or the Massachusetts AG regarding a violation of the law, as well as instituting or testifying in a proceeding under the Act. Protected activities also include an employee's request for the pay range for their current position.

The Massachusetts AG has the sole ability to enforce the Act, with the exception of the section prohibiting discrimination or retaliation. An initial violation of the Act is subject to a warning; however, subsequent violations will incur escalating fines. Enforcement may focus, at least at first, on an employer's inclusion of the required pay range in a job posting rather than the degree of accuracy of the pay range. Further, until Oct. 29, 2027, employers will have two business days to resolve any defects upon receipt of a Notice to Cure letter from the AG's office.

Although there is no expressed private right of action under the Act, a plaintiff's lawyer may attempt to invoke the Act in support or furtherance of other claims such as those based on pay equity, discrimination or wrongful termination. Additionally, despite no private right of action, the AG's guidance and FAQs encourages employees to file a complaint regarding any violation with the AG's Civil Rights Division so the office may investigate.

Key Considerations for Employers

Employers should consider the following, as the Act takes full effect on Oct. 29, 2025:

• Job postings subject to pay-transparency disclosures may include informal postings such as a post on social media by an employer or an employee about job opportunities at an employer. Employers can satisfy the Act's requirements with respect to social media postings by including a link to the formal job posting that includes the pay range.
• All employees involved in the job posting process should be trained on the Act's requirements.
• All managers should also be trained on the Act's requirements and provided guidance on how to respond to pay range requests from current employees. Employers may wish to consider directing all such requests to a certain human resources representative or other employee familiar with the Act. Managers should also be educated regarding the Act's prohibition of retaliation against those who request pay information.
• Employers should review the details of all remote positions to accurately reflect the employer's headcount for employee thresholds and ensure that job postings for covered remote positions are compliant with the Act. The AG's office hosted a webinar training for employers on the Act
• The Massachusetts law is less demanding than similar pay-transparency statutes in other states. Multistate employers may want to consider whether to adopt an approach intended to comply with the requirements in all states or vary disclosures based on the state in which the position will be based.
• Employers should evaluate if compensation modifications are needed for current employees to ensure equity and appropriate pay ranges, particularly as salary information becomes public for new hires and available to current employees.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.