Pay Transparency and How to be Compliant
May 22, 2023
Pay transparency laws are regulations that require employers to disclose information about employee compensation, both to individuals and publicly. These laws are typically in reference to salary range and benefits offered for a particular job. As many states have recently passed pay transparency laws, some enacted as recently as 2023, employers and third-party recruiters are required to be compliant in disclosing compensation and benefit information during the hiring process, when requested, and within job postings for roles in these locations.
Society of Human Resource Management data released on Equal Pay Day, March 14, 2023, shows that, among more than 1,300 human resources professionals surveyed, 42% of their organizations or more operate in a location that requires job postings to include pay ranges. Pay transparency is meant to reduce pay inequities, and reduce wage discrimination with the thought that the knowledge of compensation and benefits will help candidates to set expectations and negotiate throughout the hiring process.
Below are pay transparency laws in effect by state, based on Pay Transparency Law Updates for 2023 - Foley & Lardner LLP:
Employers in California have long been required to provide applicants with the pay scale for a position upon reasonable request. However, beginning Jan. 1, 2023, employers with 15 or more employees, at least one of whom is located in California, must include the pay scale for a position in any job posting, including positions posted by third parties.
Employers with one or more employees in Colorado are required to disclose the hourly or salary compensation, or a range of the hourly or salary compensation, that the company would pay for the role, in each posting for a job opening.
The Colorado Department of Labor has confirmed that this law applies, with a few narrow caveats, to all remote job openings so long as the employer has at least one worker in Colorado.
Employers must provide the wage range for a position at the applicant's request, and employers are prohibited from refusing to interview or hire an applicant because they requested the wage range for the position.
Employers must provide the wage or salary range or rate of pay for a position to applicants who have completed an interview for the position.
New York City
As of Nov. 1, 2022, employers with four or more employees are required to include a position's minimum and maximum annual salary, or hourly wage, in any job posting. The law applies to any position that could be filled by a candidate who resides in New York City or any position that could be performed at least in part in New York City.
Beginning Jan. 1, 2023, employers must disclose the wage scale or salary range for an opening in any job posting. The Washington State Department of Labor and Industries' Employment Standards Program has issued guidance for employers and sample job postings that meet the disclosure requirements under Washington state law.
Employers with one or more employees in Connecticut must provide a wage range to current employees and applicants upon the receipt of either: (1) the applicant's request or (2) the communication of an offer of employment, whichever comes first.
The Connecticut Department of Labor has confirmed that the law applies to employers within the state using the services of one or more employees for pay even if such employees are located outside the physical confines of the state.
Beginning Jan. 1, 2023, employers with one or more employees in Rhode Island must provide the wage range for a position to an applicant on request or at the time of hiring, whichever is earlier. Even when the applicant does not make a request, the law encourages employers to provide the wage range for the position prior to discussing compensation.