One of the key provisions of the new Massachusetts Equal Pay Act (which goes into effect on July 1, 2018) is that it prohibits employers from requiring prospective employees to disclose their salary history. The reasoning behind this provision is as follows: if employers are allowed to ask applicants about their salary history, and base compensation on the answers to those questions, applicants who have been on the receiving end of discriminatory pay practices in the past will continue to be hampered by past pay inequity throughout their careers. If employers cannot base pay on what an applicant made previously, so the thinking goes, employers will have to set pay based on what the job is worth.
A new survey from PayScale seems to support the notion that prohibiting salary history questions may help close the salary gap between the genders. PayScale found that, while disclosing salary history can reduce female workers’ earning potential over the course of their lifetimes, simply declining to answer such questions isn’t a solution. The survey showed that female applicants who declined to answer questions about their salary history were paid 1.8% less than female applicants who disclosed their salary history. Surprisingly, male applicants who declined to answer questions about salary history were actually paid 1.2% more than male applicants who disclosed their salary history. In other words, the problems with salary history questions are compounded when applicants decline to answer, with female applicants being penalized and male applicants being rewarded for not disclosing past pay.
Massachusetts employers should be preparing now for the implementation of the Equal Pay Act next year by, among other things, reviewing hiring practices and procedures and modifying application materials as necessary to comply with the new law.