As an executive employment lawyer focusing on employment agreements and severance arrangements, identifying the sources of my client’s leverage for negotiations is critical. Having access to reliable information on pay can provide valuable leverage, as well as “ammunition” for potential claims of employment discrimination, retaliation, unequal pay, and more. Historically, executive lawyers and advocates have relied upon incomplete client-provided information, compensation data in published surveys (such as Salary.com, Indeed, Monster, Glassdoor, etc.), costly databases (e.g., Options Impact), and other resources. Public company salary and total compensation data is more readily available for the C-Suite through the Securities and Exchange Commission’s online database, Edgar, at SEC.GOV.
A new Massachusetts law will require employers with twenty-five or more employees to publish some of this pay data, which is now difficult to obtain. While base salaries and hourly wage rates will be more transparent, this law does not apply to the disclosure of bonus pay, commission, deferred compensation, stock options, and other equity grants. Thus, the law provides limited help for executive compensation matters.
This law aligns with similar initiatives in other states and countries aimed at reducing discrimination, retaliation, unequal pay, and the imbalance of bargaining power between employers and employees. However, the law’s focus on base salary and hourly rates leaves many unanswered questions for executives, salespeople, and others who receive compensation beyond a simple salary.
Massachusetts Pay Transparency Law Overview
On July 31, 2024, Massachusetts Governor Maura Healey approved the state’s first pay transparency law, the Frances Perkins Workplace Equity Act (the “Act”). The Act requires eligible employers to disclose either a salary or hourly rate range with every new job listing. Effective July 1, 2025, employers with at least 25 Massachusetts-based employees must disclose the pay range in the following scenarios:
- Job Postings: Any advertisement or posting intended to recruit applicants for a specific position, pertaining to posts made directly by the employer and by any third-party platform, such as LinkedIn, Indeed, Glass Door, and many others;
- Internal Transfer/Promotion: Employees who are promoted or transferred to a new position with different job duties and responsibilities.
- Upon Request: The pay range for a particular position must be disclosed to applicants of the position or current employees, upon request.
Data Reporting Requirements
Private employers with 100 or more Massachusetts-based employees will be required to submit an annual report to the Equal Employment Opportunity Commission, along with pay data, categorized by race, sex, ethnicity, and job. Currently, eligible private employers are required to annually submit federal EEO-1, which merely oblige employers to submit employee demographic information (e.g., race, ethnicity, sex), but do not mandate pay data information. Employers must submit their first EEO form or like document by February 1, 2025. Many compliance questions remain open, especially since pay data reporting is not currently required on the federal EEO-1 form. Further, the Massachusetts Act does not mandate the disclosure of the benefits provided to otherwise qualified individuals.
Prohibition of Retaliation Clause
An employer subject to pay transparency requirements may not retaliate or discriminate, including through termination, against an employee or potential hire who has:
- Taken measures to enforce the rights provided by law,
- Filed a complaint to their employer or the attorney general regarding an alleged violation of the law,
- Testified or plans to do so in a proceeding under the law
For more information about the Act, please reach out to Michael Chinitz on LinkedIn, or see his contact info here.
This information is a general description of the law and is intended for general information purposes only. It is not intended to provide specific legal advice nor is it intended to create an attorney-client relationship with Chinitz Law LLC. Before taking any action on this information you should seek professional counsel. Attorney advertising. Prior results do not guarantee a similar outcome.
