Definitive guide to pay transparency.

Pay transparency laws by state

 

Generally speaking, pay transparency laws are laws that require employers to openly share information relating to job compensation with applicants – and sometimes with employees as well. They may require employers to disclose the pay range for a particular position in a job posting or at some other point during the hiring process.

Only a small minority of states, joined by a few local jurisdictions, have enacted pay transparency laws that are currently in effect. That’s going to change as more laws continue to work their way through the legislative process in the future.

States that have pay transparency laws

California

In September of 2022, Gov. Gavin Newsom signed a new state pay transparency law that expanded already existing state-law transparency requirements. The new law took effect at the start of 2023.

Under the 2023 law, employers who have at least 15 employees must disclose a position’s pay scale in all job postings. In addition, they must provide pay scale information for a position to any applicant “upon reasonable request.”

The new law also requires employers to provide salary range information to current employees upon a current employee’s request.

Employers covered by the law cannot rely on an applicant’s salary history to determine whether to hire an applicant and what to pay them. Nor can they seek information about an applicant’s salary history at time of hire or any other time leading up to employment.

Penalties range all the way from $100 to $10,000 per violation.

Colorado

The state’s Equal Pay for Equal Work Act took effect in 2021. The law requires employers to include information about job compensation in job postings and tell their current employees about opportunities for promotions.

The law was amended to impose new requirements on employers beginning at the start of 2024. The amendments require employers to provide notice internally for all job opportunities and not just those relating to promotions. They also set new post-selection notification requirements. More specifically, employers must provide information about the newly selected candidates to other employees with whom the new hire will work on a regular basis.

Job postings must include the hourly or salary compensation or the range of the hourly or salary compensation; a general description of any other compensation or benefits; and the date when applications for the job will no longer be accepted.

The law covers all employers, including public and private, that employ at least one person in the state.

Violations may result in fines ranging from $500 to $10,000 per violation.

Connecticut

This state’s pay transparency requirements went into effect in 2021. It applies to all employers with one or more employees.

As to applicants, the Connecticut law says employers have to provide the wage range for the position in question upon the applicant’s request or before an offer is made – whichever is earlier.

As far as employees, employers must tell employees the wage range for the employee’s position at the time of hire, when their position changes, or upon the employee’s request.

This state law also blocks employers from both inquiring with a third party and directing a third party to find out about an applicant’s wage and salary history. There’s no problem for the employer if the applicant voluntarily discloses this information or if state or federal law authorizes the disclosure of the information.

An employer that violates this law may find themselves in court, as the law specifically says violations can be redressed by court actions. Applicants or employees who sue successfully can get compensatory damages, attorneys’ fees and costs, punitive damages and other relief. They have two years to file a lawsuit.

Hawaii

Hawaii’s pay transparency requirements took effect at the start of 2024.

Under the law, employers with at least 50 employees must include a job’s salary range or hourly rate in job postings and advertisements.

The law does not require the posting of wage ranges for job listings that involve internal transfers or promotions. Nor does it cover public employers, if pay is determined by collective bargaining.

The law does not set out specific penalties for violations. The Hawaii Civil Rights Commission accepts complaints that allege a violation of the law, and employers may face lawsuits for alleged violations.

Maryland

Maryland’s pay transparency requirements are set out in a state law called the Wage History and Wage Range law, which amended the state’s Equal Pay for Equal Work Law. The amendments that created the pay transparency law went into effect in October of 2020. The Equal Pay for Equal Work Law applies to all employers, regardless of size.

Under the law, employers may not ask applicants about their salary history, and they cannot have a third party discover that information for it, such as via a background check on the applicant.

Upon an applicant’s request, a wage range for the position sought must be provided. Employers can’t retaliate against applicants for making the request.

Once an offer is made, the employer can raise the compensation offered based on the applicant’s voluntary disclosure of their prior salary history. But it may not rely on the prior history if doing so would create an unlawful pay differential.

Employers who violate this law can be fined up to $300 for an initial violation and as much as $600 for additional violations that occur within three years of the first one.

Nevada

In Nevada, pay transparency requirements took effect in October of 2021.

The Nevada law applies to employers and employment agencies. It bars employers from seeking the wage or salary history of applicants. Under it, employers may not rely on an applicant’s wage or salary history to decide whether to offer the applicant a position or to decide the applicant’s pay rate.

Once an interview has been completed, employers must disclose the wage or salary range or rate for the position. The same disclosure requirement applies with respect to transfers and promotions, if the employee has applied for the job, has completed an interview or been offered the job, and has asked for the information.

Employers are free to ask about salary expectations for the position being sought.

The text of the law does not exempt any employer based on size.

Violations carry penalties of up to $5,000 per violation.

New York

New York state’s pay transparency law went into effect in September of 2023.

Employers with at least four employees must meet the law’s requirements.

Under this law, covered employers must list the salary range for open positions in job postings and advertisements. If the compensation for a position is based on commission, the employer must disclose this fact.

Job postings and advertisements must also include the job description for the position, if there is one. They also need to maintain records relating to compensation ranges and job descriptions.

The law applies to new hires as well as internal promotions and transfers.

The law does not apply to temporary help firms that are seeking to hire workers to perform work for other employers.

Employers that violate the law are subject to penalties of $1,000 for a first violation, $2,000 for a second violation, and $3,000 for any additional violations.

Rhode Island

Rhode Island’s pay transparency law took effect at the start of 2023.

At an applicant’s request, and before discussing compensation, employers must provide the wage range for the position that is being sought.

At the time of hire and when an employee moves into a new position, the employer must provide this information.

In addition, the information must be provided to current employees upon the employee’s request.

The law bans inquiries into an applicant’s wage history and reliance on such history when deciding whether to hire them and what to pay them. In addition, employers may not stop employees from talking about their wages or the wages of other employees.

If an employer offers a particular wage, and the applicant then voluntarily discloses their wage history without prompting, then the employer can rely on that disclosure to offer a higher wage offer – as long as the higher wage does not create an unlawful pay differential based on a protected class such as gender.

Example: An employer offers a male applicant a job at an annual salary of $100,000. The applicant voluntarily discloses that he is making $150,000 in his current position. The employer then offers the applicant $200,000. All other employees holding the same position for the employer are female. They all have the same level of expertise and experience as the applicant, and they are all paid $100,000. In this example, the higher wage creates an unlawful pay differential.

The law does not set out a minimum number of employees that must be retained in order for an employer to be covered by it.

Violators can be required to pay up to $1,000 for a first violation; up to $2,500 if there has been a prior violation within the previous five years; and up to $5,000 if there have been two or more violations within the prior seven years.

Washington

Washington state employers with at least 15 employees the wage scale or salary range in each posting for each job opening.

This law became effective at the start of 2023.

They must also generally describe all the benefits and other compensation that will be offered to the hired applicant.

The law applies to recruitment that is done directly by an employer or indirectly through a third party.

If a current employee is offered an internal transfer or a promotion and asks for the wage scale or salary range for the new position, the employer must provide that information.

Violators are subject to a penalty of up to $500 for a first violation and up to $1,000 or 10% of damages (whichever is greater) for additional violations. In addition, aggrieved individuals can sue for the greater of actual damages or $5,000.

Other jurisdictions with pay transparency laws

In addition to states, several cities and at least one county have passed their own pay transparency laws. Here is a description of some of them.

Jersey City, New Jersey

Jersey City’s pay transparency requirements are set forth by a local ordinance that was approved in 2022.

Under the ordinance, employers with at least five employees must disclose a minimum and maximum salary or hourly range in job postings and advertisements. Employers covered by the ordinance may not screen job applicants based on their salary history or require that an applicant’s salary history satisfy any minimum or maximum.

The law also applies to transfers and promotions.

The city has also said job postings must disclose job benefits being offered.

The ordinance says violations are “punishable through state law,” and the city has said violations are punishable by fines of up to $2,000.

New York City, New York

New York City’s pay transparency requirements became effective at the start of November 2022.

The law applies to employers with at least four employees, and it requires all advertisements for a job, promotion or transfer to include a pay range. The range must include a minimum and maximum; it cannot be open-ended.

The law does not require disclosure of other forms of compensation, such as employer-provided insurance or overtime pay, in job advertisements.

The city has said violators “may have to pay monetary damages to affected employees, amend advertisements and postings, create or update policies, conduct training, provide notices of rights to employees or applicants, and engage in other forms of affirmative relief.”

It has also said civil penalties of up to $250,000 may be assessed for violations that are not corrected within 30 days following receipt of notice of a violation.

Ithaca, New York

Ithaca’s requirements relating to pay transparency took effect at the start of September of 2022.

This law requires all employers with at least four employees to disclose a salary range when advertising a job, promotion or transfer.

The ordinance does not include any information relating to penalties for violations.

Westchester County, New York

Westchester County’s pay transparency law took effect in November of 2022.

The law applies to all employers in the county, except for the county itself.

Job postings for any job, promotion or transfer must disclose the range of the salary, which is defined to include an hourly rate if applicable, for the position.

The law does not require disclosure of other types of compensation, such as stock options, commissions or overtime pay, in job postings.

Employers may not rely on an applicant’s wage history to determine wages unless the applicant discloses that information voluntarily in support of a request for a better offer.

Nor can they require applicants to disclose their current or former wages. They are also barred from seeking that information on their own.

Violators can be subjected to a civil penalty of up to $125,000, which may be increased to up to $250,000 in cases involving a “willful, wanton or malicious” violation.

Cincinnati, Ohio

This city’s pay transparency requirements took effect in March of 2020.

The ordinance applies to employers with at least 15 employees. Those employers may not inquire about an applicant’s salary history or screen job applicants based on their current or prior compensation or their salary history.

Upon request, employers must provide the pay scale for the position being sought. This requirement applies only after a conditional job offer has been made.

The law does not apply to internal transfers or promotions. Nor does it apply to applicants who have worked for the employer within the previous five years, provided the employer has the salary history relating to the applicant’s prior employment with it. The law does not apply to positions whose salaries are set by collective bargaining.

Aggrieved applicants have two years from the accrual of the cause of action to pursue a private right of action under the ordinance.

Toledo, Ohio

Toledo’s Pay Equity Act took effect in June of 2020. It applies to employers with at least 15 employees.

Employers may not screen job applicants based on prior wages, benefits, other compensation or salary history. They are also barred from relying on an applicant’s salary history when deciding whether to offer employment when determining salary or other benefits.

Upon request and once a conditional offer has been made, employers must provide a pay scale for the job.

The law does not apply to internal transfers or promotions. Nor does it apply to applicants who have worked for the employer within the previous five years, provided the employer has the salary history relating to the applicant’s prior employment with it. The law does not apply to positions whose salaries are set by collective bargaining.

Aggrieved applicants have two years from the accrual of the cause of action to pursue a private right of action under the ordinance.

In summary

The trend toward pay transparency is here to stay, and it is likely to continue to strengthen. Even if it is not legally required, pay transparency can reap benefits for employers by fostering a sense of trust. Ultimately, pay transparency is a win-win for employers and employees alike.

 

Pay transparency laws by state: Here's your definitive guide (hrmorning.com)

 

Commentary by: Raylea Stelmach

Edited by:

 

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