As the workforce and lawmakers push for advancements in employee rights, employee-friendly regulations are popping up across the US.
Several states and localities have enacted pay transparency laws, typically requiring employers to disclose pay ranges and benefits information in job postings. By making pay and benefits public information, these laws are paving the way for pay equity.
State Trends
Colorado was the first jurisdiction to enact wage transparency legislation in 2021. Its law requires employers to list salary ranges and a description of general benefits on job advertisements for positions that could be filled in Colorado, including jobs that could be done remotely in the state.
Since then, at least 14 states and localities have followed, most recently in California, Rhode Island, and Washington, each enacting laws that took effect on Jan. 1, 2023.
In California, employers with 15 or more employees must include a pay scale for external job postings for applicants who are not current employees. This includes listings on the employer’s hiring page and advertisements provided on third-party websites like Glassdoor or LinkedIn.
California’s law also contains recordkeeping and reporting requirements. Employers must maintain a record of job titles and wage history during each employee’s employment and for three years after termination.
Additionally, private employers with over 100 employees must file an annual pay data report with the state civil rights department.
Like California, Washington’s Equal Pay and Opportunities Act requires employers with 15 or more employees to disclose the wage scale or salary range for each electronic or hard-copy job posting, regardless of whether the job is posted by the employer or through a third party.
Washington’s law requires employers to provide a general description of all benefits and other compensation offered to the new hire, including “health care benefits, retirement benefits, any benefits permitting days off” and any other “fringe benefits.”
Employers must comply if they have at least one Washington-based employee, engage in business in the state, or are recruiting for jobs that could be filled remotely by someone in the state.
Unlike California and Washington, Rhode Island’s amended Pay Equity Act does not require employers to provide wage range information in their job postings automatically.
Instead, employers must provide applicants with such information upon request. Employers must also provide employees with the wage range for a position at the time of hire, when an employee moves into a new position, and at the employee’s request at any point during their employment.
In New York, a salary transparency law takes effect on Sept. 17, 2023. It requires employers with four or more employees to list salary ranges for all advertised positions.
This applies to any job, promotion, or transfer opportunity that can or will be performed, at least in part, in New York. The bill also requires employers to maintain records of pay ranges for advertised positions as those ranges change over time, and maintain job descriptions for such positions.
Other states and localities with wage transparency laws already in place include Connecticut; Maryland; Nevada; Rhode Island; Cincinnati, Ohio; Toledo, Ohio; Jersey City, New Jersey; Ithaca, New York; New York City; and Westchester County, New York. Pay transparency legislation is pending in Massachusetts and South Carolina.
Employer Response
The prevalence of pay transparency laws has left some employers confused about how these new laws impact their ability to recruit across state lines, especially with varied technical requirements of laws state to state.
And the proliferation of remote work adds another layer of complexity when determining who must comply with these laws.
However, some jurisdictions make clear that employers may be bound by these laws if they hire remote workers in those states, even if the employer’s physical location is elsewhere.
For example, in an attempt to avoid Colorado’s law, some employers noted on remote positions that Colorado applicants need not apply. However, Colorado’s Department of Labor and Employment made clear that employers cannot avoid compliance by stating in job postings that Colorado residents are ineligible for advertised roles.
Likewise, California’s state labor commissioner states that a pay scale must be included in a job posting if the position could be filled in California, even remotely.
Ultimately, excluding workers in certain states is not a viable long-term strategy as it reduces candidate pools. Furthermore, non-compliance with laws may be costly. Penalties for non-compliance vary by jurisdiction but can range from $100 to $250,000 per violation.
Rather than try to avoid compliance, employers who anticipate recruiting across multiple jurisdictions, including for remote positions, should develop job postings that comply with the strictest pay transparency requirements rather than distribute different job postings for other states.
Regulations aside, providing a competitive pay range in a job posting could give employers an edge in this competitive job market.
Employers can still create wiggle room by providing a salary or hourly wage range with qualifying language explaining that where an applicant will fall within the range depends on various factors, including location and level of experience.
Employers should also be prepared to answer requests for pay ranges and wage reviews from applicants and current employees.
As employers move forward with recruiting talented employees nationwide, they should be vigilant in ensuring compliance with the wave of regulations. A lack of knowledge about regulations is not a defense for non-compliance.
Instead, employers should regularly review job postings to ensure compliance with all applicable laws and seek counsel as needed.
This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law and Bloomberg Tax, or its owners.
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Ashley Dillon is a partner in Stinson’s labor, employment, and employee benefits practice.
Molly Keppler is a partner in Stinson’s labor, employment, and employee benefits practice.
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