What is the Massachusetts Pay Transparency Law and How Does it Affect Employers?

A new Massachusetts law, H. 4890, mandates that employers with 25 or more staff in the state must disclose pay ranges in job postings, with full compliance expected by late 2025. This legislation, signed by Governor Maura Healey, aims to promote pay equity and transparency, joining a growing national trend. Employers should prepare now for significant changes to their recruitment and HR reporting processes.

What Are the Key Requirements of the Massachusetts Pay Transparency Law?

The law, known as H. 4890, establishes several core obligations for covered employers. A pay range is defined as the salary or hourly wage range the employer reasonably expects to pay for the role. This requirement extends to all advertisements, including those posted by third-party recruiters.

Beyond external job postings, employers must also provide a pay range:

• To an applicant for an open role upon request.
• To an employee for their current position upon request.
• To an employee being offered a promotion or transfer to a new role with different responsibilities.

The bill does not include a private right of action, meaning individuals cannot sue employers for violations. Instead, the Massachusetts Attorney General will enforce the law. Penalties are structured as follows:

It's important to note that multiple job postings made by the same employer within a 48-hour period will be considered a single offense.

When Do Employers Need to Comply with the New Law?

The timeline for compliance is staggered. The law took effect 90 days after Governor Healey's signature on July 31, 2024. However, the pay transparency requirements for job postings themselves will become enforceable one year after that effective date. Based on our assessment experience, this sets a likely compliance deadline in late October or early November of 2025. This grace period provides employers with crucial time to audit their current pay bands, establish consistent salary ranges, and train their hiring teams.

How Does Massachusetts' Law Compare to Other State Pay Transparency Laws?

Massachusetts is now the thirteenth state, alongside the District of Columbia, to enact a pay transparency law. This places it among a growing number of jurisdictions, like California, New York, and Washington, that require salary disclosure. While the core principle is similar, details like employer threshold size (25 employees in MA), enforcement mechanisms, and requirements for providing ranges to current employees vary. This patchwork of state laws creates a complex compliance landscape, especially for multi-state employers who must adhere to the strictest standard applicable to each posting.

What Additional Workforce Data Reporting is Required?

Beyond pay transparency, H. 4890 includes a significant data collection component. Employers who are already required to submit EEO-1, EEO-3, EEO-4, or EEO-5 reports to the federal Equal Employment Opportunity Commission (EEOC) must now file the same demographic data annually with the Massachusetts Secretary of the Commonwealth. This move centralizes workforce demographic information at the state level. Furthermore, the federal EEOC has announced plans to propose a new rule in January 2025 regarding the collection of pay data, which could mean that these reports will eventually include compensation information, further amplifying transparency efforts.

To prepare for the 2025 deadline, employers should take several key steps:

• Conduct a pay equity audit to identify and address any disparities.
• Define clear and justified salary bands for all positions.
• Update job posting templates and recruitment processes to include pay ranges.
• Train hiring managers and HR personnel on the new requirements.
• Review and prepare for enhanced state-level EEO-1 reporting.