Massachusetts Employers Brace for ‘Lose-Lose’ Salary Range Law

Massachusetts businesses are scrutinizing their hiring and pay practices in a bid to stave off employee unrest once they’re forced to disclose salary ranges in job postings next year.

The Bay State this year became one of 12 states to enact legislation mandating pay transparency in an effort to advance workplace equity. Large businesses will need to submit wage data to the state in February 2025, and public and private employers with 25 or more workers in Massachusetts will need to start disclosing pay ranges in job postings come October 2025.

Management-side employment lawyers say it’s best to conduct pay equity audits in advance and resolve discrepancies before salary ranges become public, as a way to avoid discrimination suits.

“If you are an employer out there and you don’t do a great job with compensation, this is a really scary law,” said Alicia Samolis, a partner at Partridge Snow & Hahn, who described it as a “lose-lose” for businesses.

‘Now Is the Time’

Companies face a delicate balance for hiring under the new law. They can advertise a low pay range for a position in an effort to ward off request for more money from current employees, but they may face a slimmer talent pool, Samolis said. On the other hand, they could advertise a high pay range to lure in top talent, which could lead to internal personnel issues.

“No matter how you define the pay range, somebody is going to be upset” she said.

The law’s implementation will likely hit small and mid-sized companies the hardest, since they may have less experience already navigating a salary transparency law in another state.

But the half-baked compensation schemes the law is meant to threaten, where salary decisions are a matter of guesswork, exist in companies big and small, Samolis said.

Pay equity audits are especially important after the “great resignation” sparked by the Covid-19 pandemic and the hiring boom that followed, said Katherine Rigby, a member of Epstein Becker & Green. Such audits would also give businesses an opportunity to ensure they haven’t run afoul of the state’s 2018 equal pay law prohibiting wage discrimination since its enactment.

“Now is the time for companies to ensure that their house is in order,” said Rigby.

Mark Pomfret, a partner at K&L Gates, recommends clients do that work with an attorney in a privileged setting “to prevent automatic disclosure to governmental authorities or litigants.”

Muted Impact?

The Massachusetts law has several “business-friendly” provisions, including a “fairly long roll out period” before companies could be penalized by the attorney general’s office for noncompliance, said Terence McCourt, a shareholder at Greenberg Traurig.

“The law is intended not so much to be punitive but to be educational,” and that time “will hopefully encourage employers to self-correct” any wage discrepancies, McCourt said.

“A few really big loopholes,” including the law’s vagueness around what constitutes a reasonable pay range for a posting could allow an employer to comply with the law by providing a broad pay range that’s not “a true snapshot of what will be paid for the position,” Samolis said.

Once penalties do kick in, companies can be fined anywhere from $500 to $25,000 depending on how many violations they’ve committed.

Attorney General Andrea Campbell (D) said in a statement that her office “will enforce this new law just as it does for all laws on the books, while understanding that it may take some time for employers to fully understand their new obligations.”

The state plans to release more information about the law’s implementation, which Rigby said she hopes will address some of its unanswered questions. Among them are whether the law applies to job postings for remote workers, or jobs where employees work in person in Massachusetts and remotely from other states.

“The Massachusetts Attorney General’s office is somewhat aggressive in their auditing, so companies need to take that seriously,” Rigby said.