Massachusetts: An Act to Establish Pay Equity

On January 28, the Massachusetts Senate passed S. 2119, titled “An Act to Establish Pay Equity” (the “Proposed Law”).   Touted by one of the Act’s co-sponsors as a way to “further close the wage gap between male and female workers in the Commonwealth,” the Proposed Law is claimed to ensure equal pay for comparable work by “establishing pay transparency and requiring fairness in hiring practices.” If enacted, the law virtually assures that there will be new litigation battles fought as employers defend against single plaintiff, class and collective actions asserting unlawful pay disparity. Beyond expensive litigation, another unfortunate consequence of the Proposed Law may be that many employers will assess and reassess whether it makes sense to continue to do business in Massachusetts.

Key provisions of the Proposed Law include:
•    Makes unlawful any disparity in the payment of wages (including benefits and other compensation) between different genders for “comparable work”, which is defined as work that is “substantially similar” in that it requires “substantially similar” skill, effort and responsibility, and is performed under “similar” working conditions. “Working conditions” is defined to include the “circumstances customarily taken into consideration in setting salary or wages, [such as] reasonable shift differentials, physical surroundings and hazards encountered by employees performing a job.” The Proposed Law provides no definition or further guidance as to what is meant by “substantially similar,” meaning that any such determination could only be made following an intensive and individualized factually inquiry in the context of litigated cases. Because of this, these cases will be extraordinarily expensive to defend.

•    Provides that employers can pay wages (including benefits and other compensation) that are different for comparable work if based upon (1) a “bona fide” seniority system; (2) a “bona fide” merit system[1]; (3) a “bona fide” system that measures quantity or quality of production or sales; (4) the geographic location in which a job is performed; (5) education, training, or experience, to the extent such factors are “reasonably related” to the particular job in question and “consistent with business necessity;” or (6) travel, if travel is a regular and necessary condition of the job. While some of these factors can be objectively measured (e.g., sales production), none of these factors permit differentials based on real workplace differentials influenced by qualitative performance and market differentials. In an economy that is driven by industries such as biotechnology (pharma and device), high technology, education and health care, many of these “exceptions” will have no practical application. As with the definition of comparable work, the one certainty is that there will be time consuming and expensive litigation over what these terms actually mean and their application to specific circumstances.

•    The Proposed Law requires pay equity for all compensation and benefits – it expressly provides that it covers “wages, including benefits or other compensation. This presumably includes bonuses, stock options or other equity awards, or any other economic benefit. This will have enormous impact for employers that attract new employees and/or reward top performers with periodic equity awards.

•    Provides that an aggrieved employee can bring a lawsuit, whether on his or her own behalf or on behalf of others (i.e, as a class or collective action). If the individual or group prevails, the employer is automatically liable for twice the lost wages (framed as liquidated damages), benefits and other compensation (with lost wages, benefits and other compensation calculated as the difference between what was paid and what should have been paid), and attorneys’ fees. A prevailing employer gets nothing.

•    There is a three year statute of limitations.

While The Attorney General also may also bring suit on behalf of one or more employees, it is far more likely that the litigation will be brought by the industry of plaintiffs’ attorneys who stand to be paid their attorneys’ fees, either by settlement or if they prevail .
An employer may defend against a claim if, within three years prior to the commencement of such claim, it completed a self-evaluation of its pay practices (which practices include wages, benefits, and other compensation) and can demonstrate that reasonable progress has been made towards eliminating any gender-based compensation differentials that may have been found. Amazingly, however, an employer that conducts a self-audit and discovers that one or more employees are overpaid in relation to other employees cannot reduce employees’ wages, benefits or other compensation to come into compliance.

In addition, if the Proposed Law is enacted as drafted, employers will not be allowed to:

•    Prohibit employees from discussing their own or other employees’ wages (this is already protected by federal law, specifically the National Labor Relations Act and, for federal contractors and subcontractors, Executive Order 13665).
•    Screen job applicants based on their wage history, or requesting or requiring an applicant, as a condition of being interviewed or continuing to be considered for an offer, disclose prior wage history. As with all other aspects of the Proposed Law, “wages” includes benefits and other compensation. This will make it very difficult to determine how to make a competitive offer to an individual.
•    Seek the compensation history of any prospective employee from any current or former employer, unless an offer of employment has been made and the prospective employee so authorizes, in writing.
•    Retaliate in any way against an employee exercising his or her rights under the Proposed Law.

Many employers obviously are concerned about the impact that this Proposed Law will have on their businesses. By way of example only, employers are concerned about the ability to attract talent at market rates that may be different than individuals already employed, as well as the myriad other circumstances where the Proposed Law may impede business decisions and expose them to costly and uncertain litigation. As the Proposed Law has not been enacted, for those employers who are concerned about it, now would be the time to contact industry associations, legislative representatives and any others with political involvement to raise their concerns about the negative consequences of this legislation as presently drafted.
[1] A published Federal Jury Instructions provides that in order to establish a bona fide merit system, an employer must demonstrate a “structured process under which employees are systematically evaluated according to established standards that are designed to determine the relative merits of their performance”. Such a definition defies the reality that an individual’s performance is measured in multiple ways, many of which are not easily measured (e.g., enthusiasm, commitment to a job, level of effort, etc.).

NLRB Declines to Assert Jurisdiction Over Religious School

By John F. Welsh

Over the past few years the National Labor Relations Board (“NLRB”) has been re-examining whether it can assert its jurisdiction over religious schools, universities and hospitals.  Recently, Bello Welsh LLP convinced the NLRB’s Division of Advice in Washington, D.C. that the NLRB lacked jurisdiction over our pro bono client, Nativity Preparatory School of Boston. The case is remarkable given that since April 2014, the NLRB has been expanding its jurisdiction inexorably over religious institutions based on its decision in .

Read more

Massachusetts Appeals Court Protects Staffing Companies – and their Clients

By Martha J. Zackin

In 2013, as reported here, a Massachusetts trial court upheld efforts by staffing companies and workers compensation insurers to close a loophole that allowed staffing-firm employees injured while providing services to a client company both to collect workers compensation benefits from their staffing company employer and to sue the client company.  Specifically, the court held that by virtue of an alternate employer endorsement naming a staffing company’s client as an insured under the staffing company’s workers’ compensation policy, the client company is entitled to the same immunities as the staffing company under the Workers Compensation Act (the Act).

Today, the Appeals Court of Massachusetts affirmed the trial court’s decision (disclosure: I represented State Garden both before the trial court and the Appeals Court).  Specifically, the Appeals Court held that an “alternate employer endorsement” to a staffing company’s workers’ compensation policy satisfies the requirements of the Massachusetts Workers’ Compensation Act, such that the staffing company’s client is entitled to the protection of the exclusivity provision of the Act.  In other words, the client company cannot be sued in tort by an employee of the staffing company who is injured while performing services to the client company, provided that the staffing company had obtained an alternate employer endorsement to its workers’ compensation policy that specifically names the client company as an additional insured.

The Appeals Court also held that the injured employee’s claim is barred by the terms of a valid waiver and release he signed at the beginning of his employment, pursuant to which he agreed not to sue a client company for damages based upon injuries covered by the Workers’ Compensation Act.

This case is important for at least three reasons.  First, the decision protects staffing companies from having to indemnify clients against claims arising out of workplace injuries – or fighting with clients about responsibility for such claims – the costs of which are almost never factored into the fees charged by staffing companies to their clients.  Second, the case protects companies that use staffing companies against claims for damages covered by their staffing company’s workers’ compensation policy.  And third, the Appeals Court’s decision is consistent with and supports the intended effects of the Workers’ Compensation Act, as well as all parties’ bargained-for rights and obligations.

In sum:

  • Staffing companies- obtain alternate employer endorsements that specifically name your client companies as additional insureds.
  • Workers’ compensation insurance carriers- tell your staffing company clients to obtain, and your client company clients to demand, appropriate alternate employment endorsements.

Supreme Court Backs EEOC in Religious Accommodation Case

By Martha J. Zackin

In a much anticipated decision, the United States Supreme Court today held that Abercrombie & Fitch violated the prohibition against religious discrimination, as set forth in Title VII of the Civil Rights Act of 1964, by refusing to hire a Muslim applicant who wore a headscarf (a hijab) during a job interview.  In so holding, the Court rejected Abercrombie & Fitch’s argument that an employer cannot be liable for discrimination unless it can be shown that the employer had actual knowledge of the applicant’s need for a religious accommodation.  Instead, the Court stated, an employer violates Title VII if its actions are motivated by a desire to avoid accommodating a religious practice even if the employer is not certain that an accommodation will be needed.  Importantly, the Court left for another day the question whether an employer may be liable under Title VII if it has neither knowledge nor suspicion that an applicant or employee may require a religious accommodation.

Read more

Top Employment Law Changes for Massachusetts Businesses- End of Year Review

By Sasha Thaler

2014 brought a number of legislative changes which will affect Massachusetts employers of all sizes in 2015.  Here is a recap of the top 5 changes employers should be prepared for in the New Year. Read more

Workshop: Employment Law Basics for Start-Ups and Small Businesses

On October 29, 2014, Bello Welsh will present a session on HR and Employment Law Issues for Start Ups and Small Businesses at the Cambridge Innovation Center, 1 Broadway, Cambridge, MA.

Start-up companies focus on developing their idea and bringing their product or service to market.  Small existing businesses work to implement their core business goals and strategies.  In either case, there is often little inclination or staff to pay close attention to day-to-day employee issues.    After all, how difficult can it be to manage a workforce comprised of a relatively few employees?  The answer is “very.” HR is a complicated patchwork of federal, state and local laws, regulations and requirements, most of which apply in some form to employers of all types and sizes.  HR problems can surface when least expected, and can be extremely time consuming and costly.

In this discussion, you’ll learn how to manage the complexities of Small Business HR and to minimize the risk of preventable lawsuits, penalties, and time-consuming employee-relations issues.  For example, you’ll learn about:

  • Creating and maintaining appropriate documentation, including job descriptions, offer letters, personnel policies, and other personnel documents;
  • Managing employee performance and terminations;
  • Managing leaves of absence;
  • Dealing with wage & hour issues; and
  • Handling internal complaints and investigations

The session will be held on October 29, 2014, 6:00 p.m. to 8:00 p.m. , at the Cambridge Innovation Center, 1 Broadway, Cambridge, MA, in the Charles River Room (14th Floor).

Please register at the following site:  http://tinyurl.com/qjmk3ez

 

 

 

B/W NEWS – 2012 Company Achievement Highlights

  • Bello / Welsh once again has been recognized by U.S. News and World Report as one of the “Best Law Firms” in the area of labor and employment law, both nationally and in the Boston Metropolitan area.
  • On October 1, 2012, Steve Weatherhead was a panelist at the FirmFuture – Practice Management & Legal Technology Conference that was held at the Boston Marriott Copley Place. Steve participated in a discussion entitled “Gnat Bags Elephant: How Small Firms Win (and Keep) Large Corporate Clients.” For more information please click here.
  • Chambers USA again has ranked Bello / Welsh as a top Labor & Employment law firm in the state of Massachusetts, and praised partners John Welsh, Kenneth Bello and Josiah Black for their respective accomplishments.

B/W NEWS – 2011 Company Achievement Highlights

  • John Welsh was recognized as the “Massachusetts Labor & Employment Attorney of the Year” by Corporate INTL Magazine in their 2011 Global Awards.
  • Bello Black & Welsh has been recognized by U.S. News as one of the “Best Law Firms” in 2011-2012 in the area of management-side labor and employment law.
  • Bello Black & Welsh sponsored a table at the Women’s Bar Association Annual Gala on November 17, 2011, where guest speakers included the Honorable Margaret Marshall, who recently retired as Chief Justice of the Massachusetts Supreme Judicial Court.
  • Josh Black recently was elected to the “Best Lawyers in America” in the practice area of Employment Law – Management.
  • John Welsh recently was honored by his alma mater, St. John’s High School, for his many contributions and distinguished service to the school. Among other things, John was recognized for his service on the Board of Trustees, for helping create a framework to facilitate dialogue among St. John’s constituents (including students, families and administrators), and for his commitment to ensuring the school remains affordable to students from the Worcester area.
  • The Firm’s affiliation with Ford & Harrison LLP was featured in the September 30, 2011 edition of the Boston Business Journal.
  • John Welsh and Steve Weatherhead authored the chapter on labor and employment law in a recent publication from Massachusetts Continuing Legal Education, Inc. entitled “Advising a Massachusetts Business.” Click here to learn more.
  • John Welsh was quoted in the September, 2011 edition of the Massachusetts Lawyers Weekly regarding the advantages of small firm practice.
  • Ken Bello was quoted in the May 23, 2011 edition of the Massachusetts Lawyers Weekly regarding the increase in worker-classification audits, particularly in Massachusetts. Click here to view the article.