Your sign-on bonuses could be creating unintended liability in Massachusetts

We’ve all seen the signs, whether on paper, online, or on flashing billboards: “HELP WANTED! $1,000 sign-on bonus for all new hires!” It isn’t any secret that businesses are having increasing difficulty hiring employees and are looking for creative ways to encourage people to apply for and accept jobs. But could a sign-on bonus create liability under the Massachusetts Equal Pay Act (MEPA)? Yes, if you aren’t careful.

MEPA provides little flexibility

MEPA was amended and went into effect on July 1, 2018. Under the Act, which was aimed at strengthening pay equity for women in the commonwealth, pay differences between persons of different genders performing comparable work are acceptable only if based on:

• Seniority systems;
• Merit systems;
• Per-unit or sales compensation schemes;
• Job’s geographic location;
• Education, training, and experience; or
• Amount of required travel.

MEPA defines “comparable work” as labor that requires “substantially similar skill, effort, and responsibility” and is performed under “similar working conditions.” The state law’s “substantially similar” language is broader than the wording used under federal law.