The call for equitable pay has been echoing for some time. While some states and cities had previously enacted pay equity statutes, they’re now embracing a new tactic to ensure fair pay: wage transparency.
Proponents believe that increasing wage transparency in the hiring process can close the gender pay gap, reduce discrimination, and promote fairer compensation practices. By requiring employers to disclose pay scales, job applicants can have a better sense of what to expect in terms of pay before they apply and negotiate salaries more effectively.
Here is a summary of wage transparency laws recently enacted around the country.
Effective January 1, 2023, California employers with at least 15 employees, and with at least one located in California, must share pay scales in job postings. The posting need not be for a job that is performed in California; the law applies to remote work positions too.
Employers must also share salary and wage information with current employees upon request. Employers are not permitted to ask for a job applicant’s salary history.
Penalties for failing to disclose pay scales can be up to $10,000 per violation.
Each year, California employers with at least 100 employees must submit a report to the California Civil Rights Department that details the median and mean hourly rate for each race, ethnicity, and sex for each job category for employees and contractors. The first reports are due on May 10, 2023. Penalties for failing to comply with these reporting requirements can be up to $200 per employee.
Colorado’s wage transparency law went into effect on January 1, 2021. The law requires employers to include compensation in job postings, to notify employees about opportunities for promotion, and to maintain job description and wage rate records.
Employers must include in each job posting the compensation for the job or a range of compensation; a description of any bonuses, commissions, or other compensation; and a general description of benefits offered, including healthcare, retirement benefits, paid days off, and any tax-reportable benefits.
The law applies to any employer that employs at least one person in Colorado. It does not cover an employer with no employees in the state even if they consider applicants from Colorado or ultimately hire someone in Colorado.
Employers may be fined between $500 and $10,000 per violation.
Connecticut’s wage transparency law went into effect on October 1, 2021. The law requires employers located in Connecticut with at least one employee in the state to disclose to applicants and employees the salary ranges for positions upon request or before an applicant receives an offer. The law covers applicants and employees who live outside of Connecticut who work remotely or who apply for remote work.
Violation of the law can result in compensatory damages, punitive damages, and attorneys’ fees and costs.
Starting October 1, 2020, Maryland’s Equal Pay for Equal Work Law requires employers to provide a wage range for a position upon a job applicant’s request. The law prohibits employers from retaliating against applicants based on this request.
This pay transparency law also bans employers from asking applicants about their salary history and from using their history to screen applicants for employment or determine an applicant’s wages. Once an applicant is hired, the employer may ask for the information to support a request for higher wages.
As of October 1, 2021, Nevada employers must disclose salary or wage ranges to job applicants after an interview. They must also provide this information to current employees who apply for or are offered a promotion or transfer.
Employers also cannot ask for an applicant’s wage or salary history in determining their pay rate. Businesses can be fined up to $5,000 per violation.
Beginning in September 2023, employers with at least four employees plus employment agencies must include the minimum and maximum annual salary or range of hourly wages for each advertised job, promotion, or transfer opportunity. If the position is paid on commission, the employer must only disclose that the compensation is commission-based.
The law also prohibits employers from asking applicants about their salary history and includes an anti-retaliation provision.
A new wage transparency law went into effect in Rhode Island on January 1, 2023. The law, which also addresses pay equity, requires employers to share wage ranges for current or prospective roles upon the request of an applicant or current employee.
Washington State’s Equal Pay and Opportunities Act took effect on January 1, 2023. It requires employers to disclose the compensation for each job opening in every job posting. Specifically, employers must share the wage scale or salary range, including the starting range and general range, and describe all benefits and other compensation offered, including bonuses, commissions, and stock options. The benefits description must address healthcare, retirement options such as 401(k), vacation and paid time off, paid holidays, and any other benefits that are reportable under tax laws. The disclosure should also include paid sick time if the employer’s policy is more generous than what’s required by state or local laws.
This pay transparency law applies broadly to employers both inside and outside Washington if they recruit Washington-based employees, even if they are working remotely. An employer cannot avoid becoming subject to the law by refusing to hire applicants from Washington state.
Employers can be fined $500 for each violation of the act or up to $1,000 or 10% of the damages, whichever is greater, for repeated violations.
Cities and Localities With Wage Transparency Laws
Several cities have also adopted wage transparency laws.
- Cincinnati, Ohio: As of March 13, 2020, employers must provide the pay range for a job upon an applicant’s request and cannot ask an applicant for their salary history.
- Jersey City, New Jersey: As of April 13, 2022, all employers with four or more employees and with their principal place of business in Jersey City must post the salary range for every job posting.
- Ithaca, New York: As of September 1, 2022, all employers with four or more employees must publish the salary range for each new job.
- New York City, New York: As of November 1, 2022, certain New York City employers with at least four employees must disclose salary ranges in job advertisements.
- Toledo, Ohio: Toledo employers must disclose the pay range for a job upon an applicant’s request and cannot ask job applicants about their salary history.
- Westchester County, New York: As of November 6, 2022, employers based in the county with four or more employees must share the minimum and maximum salary range for a job if the job is performed in whole or in part in the county. This law will become null and void when New York State’s pay transparency law goes into effect later this year.
What employers should do next to comply with wage transparency laws
Employers must stay on top of the growing list of states and localities with pay transparency laws and take steps to comply with them, including modifying job postings and job applications.