The amended Massachusetts Equal Pay Act (MEPA) goes into effect July 1, 2018.  The purpose of the new law is to ensure that all workers in Massachusetts are paid equally for comparable work performed and to provide the opportunity to earn competitive salaries in the workplace.  This new law imposes strict equal pay obligations on employers and limits certain information employers can request regarding the salary history of job applicants and generally prohibits employers from restricting employees from discussing their salaries.

Does MEPA Apply to My Cannabis Business?

MEPA applies to all employers in Massachusetts, with some very limited exceptions, and also applies to employers outside of Massachusetts that have employees with a primary workplace in Massachusetts.  Cannabis employers should take steps now to ensure their forms and policies comply with the MEPA requirements as well as undertake a self-evaluation of their pay practices, so that the employer can avail itself of the affirmative defense under MEPA.

How Does MEPA Affect My Cannabis Business?

Specifically, MEPA prohibits employers from paying different wages to employees of different genders who perform “comparable work,” defined as work that “requires substantially similar skill, effort, and responsibility, and is performed under similar working conditions.”  In the cannabis industry, this could range from crop managers to horticulturalists, chemists, transportation specialists and other roles.  Wages are defined broadly to be “all forms of remuneration for employment” and include hourly wages, salary, bonuses, commissions, vacation, health insurance, and other fringe benefits.  MEPA does not define “substantially similar,” “skill,” “effort,” or “responsibility.”  However, the Massachusetts Attorney General issued a guide in the form of Frequently Asked Questions, which provides further information concerning MEPA.  Cannabis business owners should take care to read these FAQs thoroughly.

In short, the guide provides that:

• “substantially similar” means that each of the factors being considered is alike to a great or significant extent but not necessarily identical or alike in all respects;
• “skill” includes experience, training, education, and ability required to perform the jobs and is to be measured in terms of the performance job requirements and not the skills an employee happens to have;
• “effort” refers to the amount of physical or mental exertion needed to perform a job; and
• “responsibility” is the degree of discretion or accountability involved in performing the essential job functions and the duties regularly required to be performed for the job.

Comparability cannot be determined based on job titles alone.

MEPA permits variations in pay based on only six statutory factors:

• a system that rewards seniority with the employer;
• a merit system;
• a system that measures earnings by quantity or quality of production, sales, or revenue;
• the geographic location in which the job is performed;
• education, training, or experience (to the extent reasonably related to the particular job); or
• travel (if it is a regular and necessary job condition).

These six factors are exclusive factors on which variations in pay can be based in the cannabis industry.  MEPA does not recognize any other valid reasons for pay variations between persons of different genders performing comparable work.  Employee wage or salary history cannot be a basis for a variation in pay and will not be a defense to a claim of unequal pay.  Likewise, an employee’s agreement to work for less than a comparable wage will not be a defense to a claim of unequal pay.  An employer who violates the statute by paying unequal wages to employees of a different gender for comparable work will be liable for the amount of the wages, plus an equal amount in liquidated damages and attorney’s fees.

MEPA also prohibits additional employment practices that can result in liability.  A cannabis employer is prohibited from:

• banning employees from inquiring about, discussing, or disclosing information about their or another employee’s compensation;
• seeking or requesting wage or salary history from a prospective employee ;
• seeking or requesting prospective employee’s wage or salary history from a current or prior employer, except after negotiating and making an employment offer that includes compensation details; or
• discharging or in any other manner retaliating against an employee for opposing an act or practice that violates MEPA, making or indicating an intent to make a complaint under MEPA, testifying, assisting or participating in an investigation or proceeding under MEPA, or disclosing the employee’s wages or inquiring about or discussing the wages of any other employee.

Cannabis employers may prohibit human resources employees, supervisors, or employees whose job responsibilities give them access to other employees’ compensation information from discussing or disclosing such other employees’ wages.  However, these particular categories of employees may discuss or disclose their own wages and cannot be prohibited from doing so.

Self-Evaluations May Provide Cannabis Employers With a Defense to Unequal Pay Claims

MEPA provides cannabis employers with a complete defense to an unequal pay claim if the employer has conducted a good faith, reasonable self-evaluation of its pay practices within the previous three years and before an employee sues.  The self-evaluation must be reasonable in detail and scope, and the employer must show reasonable progress towards eliminating any unlawful gender-based wage differentials revealed by its self-evaluation.  Employers eligible for this defense under MEPA will also have a defense to liability for any pay discrimination claim under the Massachusetts law prohibiting discrimination in employment.  However, this affirmative defense does not apply to claims under federal laws including the Federal Equal Pay Act.  Employers should consult with counsel before conducting a self-evaluation as it may be discoverable in government investigations or litigation.

What Are the Penalties for Violating MEPA?

MEPA significantly increases the potential liability under MEPA’s provisions for significant damages for employers – in any industry – that do not take affirmative steps before July 1, 2018, to revise forms, policies, and practices to be in compliance with MEPA and undertake a good faith, reasonable self-evaluation of its pay practices.  Under MEPA, the cannabis employer’s intent is irrelevant.  Unless a pay differential can be justified by one of the six exclusive statutory factors listed above, the employer will be liable for paying employees of one gender less than employees of another gender who perform comparable work.  Employees and their attorneys are well aware of the general existence of pay inequality in the workplace.  Any existing pay inequality will be a MEPA violation on July 1, 2018, absent the employer conducting a good faith reasonable self-evaluation.

Cannabis employers will be well served to take reasonable steps now to protect themselves against unequal pay claims under MEPA.