A Massachusetts law intended to close gender-based pay gaps could signal a national trend.
Chances are, there's a pay gap between men and women employed by your healthcare organization. And for institutions in Massachusetts, a pay equity law going into effect July 1, 2018, means it's time to do something about it.
The implications are not limited to the Bay State.
"A lot of ideas that have come out of Massachusetts or California—two of the more liberal states—have spread," says Valerie Samuels, a partner with Posternak Blankstein & Lund LLP in Boston. "I think this is the beginning of a trend."
1. Nix Questions About Salary History
The law aims to prevent pay discrimination for comparable work based on gender primarily by prohibiting employers from asking about salary history on job applications or during the interview process before a formal offer is made.
"Women historically have a significant wage gap with men in just about every field, particularly the medical field," says Samuels.
So it might be commonplace, for example, for a female who earned $70,000 at her previous job to be offered $75,000 by a prospective employer, while a male previously earning $85,000 to be offered $90,000 or more for the same position.
"It just perpetuates the gender pay gap," says Samuels. "This way, companies will have to pay what the job is worth and not take advantage of the ongoing fact that women are underpaid relative to men for the same work."
2. Create Detailed Job Descriptions
According to the statute, " 'Comparable work' shall solely mean work that is substantially similar in that it requires substantially similar skill, effort and responsibility and is performed under similar working conditions; provided, however, that a job title or job description alone shall not determine comparability."
In other words, the day-to-day responsibilities of employees including nurses, medical assistants, nurse practitioners, and physician assistants, which can vary considerably by hospital or office, are more important than their titles.
"All employers should have detailed job descriptions," says Samuels. "People think they know what a PA does as opposed to an NP, but they really should write it down."
Comparing these positions can be complex. "If all the PAs are men and they're doing essentially the same work as the NPs who are women, an argument could be made that those are generally comparable jobs," Samuels says.
"But it depends. Are the PAs specializing in some area while the NPs are generalists? That might be a [defensible] reason," she says.
3. Conduct a Good Faith Self-Evaluation
Employers should analyze their pay practices now.
"The law encourages hospitals, physician groups, and any other employer to engage in a good faith self-evaluation, which is an affirmative defense in case they're sued," Samuels says. "The study must be reasonably detailed and of reasonable scope of their pay practices."
Because of the variables involved in compensation, especially regarding physician pay, organizations will likely have to hire consultants to help with the analysis, she notes.
"And also under the comparable work statute, pay doesn't just mean salary. It includes benefits, bonuses, the whole thing. They're going to have to evaluate all of this and try to figure out if there's a disparity—and if it's a permissible disparity under the law—such as seniority or location," Samuels says.
4. Invest Now or Pay Later
These audits may constitute a significant expense for healthcare providers, she acknowledges.
"It's not like you're going to do it once and never do it again," Samuels notes. "It's something that should be done, remedies need to be implemented, and then it should be redone every so many years. Someone has to be keeping track of this data in between studies or the problem will recreate itself."
Employers should also note that the law expands the statute of limitations on claims from one to three years, which can significantly add to their liability.
"Having a longer limitations period permits more people to become aware of it—and to sue for a lot more money," Samuels says. "If you've been paid incorrectly for two-and-a-half years and you finally figure it out, then you can go back."
As a result, damages, attorney fees, and interest could add up to an enormous liability, she says. "And I think we're going to start seeing class actions."
Debra Shute is the Senior Physicians Editor for HealthLeaders Media.