A BILL REQUIRING employers to disclose salary ranges on all their job postings is making its way through the Massachusetts Legislature, but a check with other states that have gone this route suggests the law may not be the huge breakthrough its sponsors are hoping for nor the terrible burden employers have complained about.
The Massachusetts bill, dubbed the Frances Perkins Workplace Equity Act after the first woman to serve as a US cabinet secretary, would require employers with more than 25 employees to post pay ranges on all job postings. It would also require employers with 100 or more employees to file annual employment data reports with the state providing information on employee demographics and salaries.
Different versions of the bill have passed the House and Senate, and members of the two branches are now trying to work out their differences. If the bill becomes law, Massachusetts would join a small cohort of states with pay transparency rules, including Maryland, Colorado, Connecticut, Nevada, California, New York, Rhode Island, and Washington.
Sponsors of the legislation talk grandly about the bill’s potential to address racial and gender discrimination in the workplace.
“This monumental legislation will ensure that job applicants who have historically earned less are empowered knowing that they have access to salary and hourly wage information prior to applying for a job,” said Rep. Brandy Fluker Oakley of Boston, one of the lead sponsors of the bill. “This bill achieves the dual objectives of attracting a talented workforce, while also working to actualize the right to gender and racial equity in the Commonwealth.”
The bill is meant to empower employees, particularly women and people of color, to negotiate their salaries and help the state track pay inequities. Such policies have been shown to reduce inequity and gender pay gaps. The legislation is also meant to make the Massachusetts job market more attractive to university students and young job seekers who, when surveyed, say they are more likely to apply for jobs with posted salary ranges.
Employers in some of the states with pay transparency rules have complied with the law by posting enormous salary ranges. News reports out of New York indicate some employers have posted jobs with a six-figure difference between the low and the high salary. Deloitte, the consulting firm, posted a salary range of $86,800 to $161,200 for a senior tax accountant. The Wall Street Journal listed a job with a salary range of $50,000 to $450,000.
While these ranges are extremely large, they illustrate a frequent employer gripe about salary range laws – that pay depends on a variety of factors, including educational background and work experience.
However, employers in some tight labor markets are narrowing their ranges to attract more workers. This is especially true for lower-wage and in-person roles like driving, childcare, and food preparation.
There are other ways companies can sidestep salary transparency laws. For example, employers might compensate workers through bonuses or other perks that might not be advertised within the salary range. One of the previous versions of the proposed Massachusetts law required employers to post “other compensation” in addition to salary, but that phrase was removed in response to concerns from the Greater Boston Chamber of Commerce.
Both versions of the Massachusetts legislation address another corporate workaround by requiring employers to include salary ranges whether the job is posted by the company directly or indirectly. Some companies in other states have sidestepped their laws by having an outside search firm oversee the hiring process or by hiring workers through word of mouth.
In Massachusetts, the new bill would require a covered employer to share a salary range that they “reasonably and in good faith” expect to pay. Employers who don’t post salary ranges to their job postings will be issued a warning initially and then fines for subsequent offenses. Good faith may ultimately be in the eye of the enforcer. Massachusetts, as in other states, does not explicitly lay out what size salary ranges would be acceptable.
According to Colorado state Sen. Jessie Danielson, who sponsored the salary transparency legislation in her state that became law two years ago, there is always the possibility of “bad actors” seeking to avoid posting salary ranges. “I don’t know if there’s a way that you can write a law to completely avoid those bad actors,” she said, “but they went through the process and if they continued to try to skirt the law, they were penalized or hopefully brought back into compliance.”
Danielson also shed some light on what has become a central flashpoint in the Massachusetts debate.
Some of the most vocal opposition to the bill locally has come from the Retailers Association of Massachusetts. The organization has argued that the proposed law will increase red tape and liability for small businesses. The association recommended that only businesses with 100 employees or more should be required to post salaries on job postings.
“When you’re putting a threshold that low, there will be some small businesses that will run afoul of the law, or be in non-compliance because they don’t have the resources to comply,” said Ryan Kearney, general counsel at the Retailers Association. ”We’re not necessarily opposed to what’s trying to be done. Some uniformity is what we’re looking for.”
In Colorado, every employer must post salary ranges and make them available.
Colorado’s Chamber of Commerce voiced similar concerns to those that have cropped up in Massachusetts – that the law creates problems for smaller employers. “The original law and implementing regulation lacked clarity in many ways, causing compliance confusion for employers and often leading to increased legal and human resources costs,” said Loren Furman, president of the Colorado Chamber of Commerce.
However, according to Danielson, compliance in Colorado was fairly immediate even with smaller companies. If employers were non-compliant, they were issued a warning. Very few companies were actually fined and, even in those cases, fines were waived once companies became compliant.
“I was not willing to accept [a higher employee threshold] for the simple reason that you shouldn’t be allowed to discriminate against your employees no matter how many employees you have,” said Danielson in a phone interview. “So what we found is that it’s not a burden on smaller companies.”
Colorado did pass a law following passage of the original legislation to make clear that out-of-state employers with fewer than 15 Colorado employees only needed to post salary ranges for remote job opportunities. The follow-up law did not raise the employee threshold.
Sasha Goodfriend, president of feminist organization Mass NOW, sees the Massachusetts legislation as an important first step in addressing the gender and racial wage gap. The data collection that will happen through the bill, according to Goodfriend, will lead to more conversations around things like benefits and classifying salary ranges.
“This bill was never intended to single-handedly solve the wage gap,” said Goodfriend in an email statement. “No one bill can do that. Achieving wage equity requires a multi-sector strategy to address the underlying social and economic issues.”
Sen. Patricia Jehlen of Somerville said the data gathered by the bill will be crucial in adding wage disparities. “Data collection is vital as we cannot fix what we don’t measure,” she said.