In 2021 and 2022, we saw a wave of pay transparency laws aimed at improving pay equity. It first started with Colorado in 2021, then New York City in late 2022. Recently, states such as California, New York, Washington, and Rhode Island have passed similar pay transparency laws. These laws often differ by locality and state, creating many compliance questions for employers.
California
Beginning January 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. “Pay scale” is defined as either the salary or hourly wage range. Other forms of compensation (such as bonuses) are not required to be disclosed. Employers are also required to maintain a record of job titles and wage history during each employee’s employment (and for three years after termination). Lastly, private employers with over 100 employees will be required to file an annual pay data report with the California Civil Rights Department (formerly known as the Department of Fair Employment and Housing or “DFEH”) by the second Wednesday in May. Note that federal Employer Information (EEO-1) reports can no longer be used to satisfy this reporting requirement.
New York
As of November 1, 2022, New York City began requiring employers with four or more employees 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.
New York state recently passed a comparable law. Beginning September 2023, New York state will require employers with four or more employees to include the compensation or “range of compensation” for every advertisement for a job, promotion, or transfer opportunity if the job can or will be performed, at least in part, in the state of New York. The law defines “range of compensation” as the minimum and maximum annual salary or hourly range of compensation for a job, promotion, or transfer opportunity that the employer in good faith believes to be accurate at the time of the posting. This law is equally applicable to job postings advertising internal promotions or transfers.
Washington
Since 2019, employers in Washington state with 15 or more employees have been required to disclose the minimum wage or salary for a position on an applicant’s request if an offer of employment has been made. However, beginning January 1, 2023, any employer doing business in Washington must disclose the wage scale or salary range for an opening in any job posting. Additionally, upon request, employers must provide the wage scale or salary range for any current employee’s new position when they are being internally transferred or promoted.
Rhode Island
Beginning January 1, 2023, employers with one or more employees in Rhode Island must provide the wage range for a position to an applicant upon 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.
Takeaways
In light of the developing legislation regarding pay transparency (for example, Massachusetts and South Carolina both have pay transparency laws pending), employers should be proactive in confirming their job postings comply with all applicable pay transparency laws. Employers should note the scope of coverage of applicable pay transparency laws when determining whether a job posting should include the salary or hourly wage range. This is especially important in situations where the advertised position may be performed remotely.