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With the switch to remote work during Covid-19, many changes took place in the pay transparency movement. Often pay transparency is lumped together with the ability to freely discuss your salary without retaliation from your employer. However, pay transparency is a slightly different but equally important aspect of the pay equality initiative.
At its core, pay transparency is a strategy for helping employees and applicants make informed decisions with employment. This approach is just one of several different strategies and tools seen as a critical first step towards pay equity.
There are currently 7 states and 3 municipalities in the U.S. that have laws around pay transparency and disclosure. Pay transparency is the practice of disclosing compensation ranges either upon request or compulsory at the time of posting.
Currently the following locations require employers to disclose salary ranges: New York City, California, Colorado, Connecticut, Maryland, Nevada, Rhode Island, Washington state, Toledo, Ohio and Cincinnati, Ohio.
We will review them on a state-by-state basis.
Effective November 1, 2022, all New York City employers must post the salary range for every open position. This includes all transfers and promotions. In the recently passed law, § 2. Section 8-107(32), New York City did not define salary nor did the law specify whether the rule applies to remote work that could be performed within New York City. With the recent passing of this law, New York state is looking to follow suit. Subsequently, there is further room to clarify the grey areas around remote work in New York.
Effective January 1, 2016, California’s Equal Pay Act, Labor Code § 1197.5 and § 432.3 requires employers to provide pay ranges for the position posted ONLY IF the applicant asks for the pay range after the first interview. This law further states that employers must maintain “wage records” for three years for all postings and employees.
For Colorado, effective January 1, 2021, Part 2 of the Equal Pay for Equal Work Act (“EPEWA”), C.R.S. § 8-5-101 et seq., requires employers to include total compensation and general benefits outlined in position postings, notify all employees of promotion opportunities, including transfers, and keep job descriptions and wage rate records for up to three years.
The Colorado Department of Labor and Employment (“CDLE”) is actively reviewing postings (they have dedicated a team for “educational” compliance enforcement and review of postings) on a frequent and ongoing basis. This statute does not outline what the penalties might look like, and we do not yet have case law on it because of how new it is.
Connecticut enacted HB 6380 § 1(b)(8)-(9) effective October 1, 2021. The scope of the pay transparency law is more moderate compared to other jurisdictions like Colorado. It requires an employer to provide the wage range within the timeframe of (1) the applicants response at or after the time of application and (2) prior to or at the time of an offer is made.
This law is unique in the sense that it allows for punitive damages, attorney’s fees, and costs if an employer fails to comply. While the statute does not outline how the damages will be calculated or enforced, we will keep an eye out for cases to analyze how Connecticut courts address this moving forward.
Effective February 1, 2022, Maryland has the Labor and Employment Article Title 3, Subtitle 3 (§ 3-304.2). This law requires pay transparency by employers in Maryland.
Pay transparency in Maryland is defined as employers providing pay ranges to candidates upon request. This means that upon application and at any point within the application process, a prospective employee can request the pay range.
Nevada passed Senate Bill 293 § 1.3 (N.R.S. 613.330-613.345), effective October 1, 2021. In Nevada, employers must provide a salary range to candidates after the first interview. This is compulsory and required.
Nevada’s law is very similar to California’s, but it is compulsory instead of upon request. However, there is a component here for transfers and promotions too. The range must be disclosed if certain criteria are met.
Rhode Island’s pay transparency law will become effective January 1st, 2023. This will require employers to provide pay ranges to an interviewee upon request and enables current employees to ask for the range for their current role during their employment. This law will also apply to transfers and promotions as well.
Employers MUST disclose the wage range prior to discussing compensation or asking for wage expectations.
Washington’s laws currently require employers to provide pay ranges to applicants upon request and enables current employees to ask for the range for their current role during employment. This will also apply to all transfers and promotions as well.
Additional pay transparency law updates will become effective January 1, 2023. The changes in 2023 will require compulsory disclosure of hourly or salary compensation and a general description of all benefits to be offered in the original posting.
Toledo, Ohio passed a law effective April 16, 2020. This law requires wage range disclosure to all candidates who have received an employment offer.
Cincinnati, Ohio passed a law effective April 12, 2020. This law requires wage range disclosure to all candidates who have received an employment offer.
Many employers are asking how the new pay transparency laws impact them. They also want to know how it intersects with remote work, and the implications of Covid-era hybrid work styles.
Our key takeaways are:
With the handful of states and cities leading the way for pay transparency, it is likely to spread throughout the country. The pay transparency trend is just the latest trend to reducing or eliminating pay equity issues throughout the country. This movement is proceeded by Ban the Box, Equal Pay Act, and salary history request movements, making it the newest in a series of adjustments to the employment world.
As we evaluated the 10 current cities and states with these laws, we would be remiss to not look to the horizon. There are four current pieces of legislation that are pending and will likely have further impacts on the trend: South Carolina, Massachusetts, New York State, and the Paycheck Fairness Act. So, stay tuned for further employment law updates from The Lipp Law Firm.
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