Find out the state of pay equity today and what your company can do to support equal pay for all.
An increase in salary transparency laws in many states and cities are spurring more open discussions of pay with job candidates and employees alike. What do pay transparency laws require, and how will they affect your business? Learn what this growing trend means to you.
In today’s tight labor market, pay equity has become a hot topic. Although the Equal Pay Act requires equal pay for comparable work regardless of gender, race, and ethnicity, a Salary.com survey discovered nearly half (46%) of employees believe they aren’t paid fairly compared to their counterparts at competing companies and 37% think they’re paid unfairly relative to their internal counterparts.
Federal laws including Executive Order 11246, which applies to federal contractors, and the National Labor Relations Act (NRLA), which applies to most businesses, forbid employers from discriminating against job candidates or employees who inquire about or discuss salary, or disclose their own pay or that of other employees or applicants. Many states and cities have also passed laws that prohibit employers from inquiring about a candidate’s salary history, to further protect job applicants and employees from discrimination and wage inequality.
Now, a growing number of states and jurisdictions are going a step further by instituting laws requiring salary transparency. These laws require salary disclosure in a job posting, during the hiring process, or upon request. Currently, eight states and five cities have such laws, including a new law recently passed in California. In some cases, these pay transparency laws affect both candidates and existing employees.
Here’s a closer look at how the legal requirements may affect your organization.
Disclosure in Job Postings
- California: A new law, Senate Bill 1162, will become effective January 1, 2023, requiring California employers with more than 15 employees to disclose a pay range in all job postings. Additionally, all employers will be required to provide a pay scale for an employee’s current job upon the employee’s request.
- The new law will also increase pay data reporting requirements. California already requires employers with 100 or more employees to provide pay data including the number of employees by race, ethnicity, and sex to the Civil Rights Department of the Business, Consumer Services, and Housing Agency. SB 1162 will expand that reporting to include employees hired through a third party (such as a temporary help agency); fine employers for not filing the report; and require employers to report the median and average hourly pay rate for employees in each job category by each combination of race, ethnicity, and sex.
- Colorado: The Equal Pay for Equal Work Act requires all employers to disclose hourly or salary compensation, or a range of compensation, and a general description of any benefits and other compensation for each job, promotion, or transfer opportunity in job postings. The law also applies to any multi-state employer that already has at least one employee in Colorado and is posting remote work roles that might be filled by a Coloradoan.
- New York City, Ithaca, & Westchester County, New York: All employers in these New York State localities with four or more employees must disclose the minimum and maximum salary or hourly wage for each job, promotion, or transfer opportunity in job postings.
- New York City’s law, which takes effect November 1, 2022, exempts jobs that cannot or will not be performed, at least in part, in the city.
- Ithaca’s law exempts advertisements for temporary jobs at temporary help companies.
- Westchester County’s law covers any job that must be performed wholly or partly in the county, including work done remotely, in the office or in the field. It exempts advertisements for temporary jobs at temporary help companies and “Help Wanted” or similar signs posted in a business location.
- Jersey City, New Jersey: The Pay Transparency Ordinance requires all employers with five or more employees to disclose the minimum and maximum salary, or hourly wage, and benefits for each job, promotion or transfer opportunity in job postings.
- Washington: Effective January 1, 2023, Senate Bill 5761 requires all employers with 15 or more employees to disclose the pay range for a job, as well as a general description of benefits and other compensation, in the job posting.
Disclosure During Hiring Process
- Connecticut: All employers must provide a position’s pay range to job applicants at the earliest of 1) the candidate’s request, or 2) before or at the time of making an offer. Pay range for a job must also be shared when the employee is hired, when the employee’s position changes or when the employee requests it.
- Nevada: All employers must provide the pay range for a position to job applicants who have completed an interview. Pay ranges must also be provided to employees who have applied for a promotion or transfer; completed an interview for promotion or transfer and been offered the job; or requested the job’s pay range.
- Rhode Island: Effective January 1, 2023, all employers must provide the pay range for a position to job applicants upon request and before discussing compensation, as well as at the time of hire and upon request during the person’s employment.
Disclosure Upon Request
- California: All employers must provide the pay range to job applicants upon request once an applicant has completed an initial interview.
- Maryland: All employers must provide the pay range for a position to job candidates upon request.
- Cincinnati: All employers in the city with 15 or more employees, including city government (but exempting local, state or federal government), must provide the pay range for a position to job applicants upon reasonable request once a conditional offer of employment has been made.
- Toledo: All employers in the city with 15 or more employees, including city government but exempting local, state or federal government, must provide the pay range for a position to job applicants.
Pending Salary Transparency Laws
- Massachusetts: A bill pending before both the House and Senate would require companies with 50 or more employees to disclose the pay range for a position to both candidates and employees upon request.
- South Carolina: The Act to Establish Pay Equity would require employers to disclose the pay range of a position to job applicants either 1) upon request, 2) when asking the applicant’s wage expectations, or 3) when making a compensation offer, whichever occurs first.
The Benefits of Salary Transparency
The idea of openly discussing wages may take some getting used to as discussing finances is often viewed as taboo. But as employers join together to further their commitment to pay equity, salary transparency will be a critical tool in achieving that goal—and some have already implemented pay transparency practices.
Studies have shown pay transparency has positive impacts on employees’ perceptions of trust, fairness, and job satisfaction. Additionally, it can make your company a more desirable place to work, foster engagement among employees, and demonstrate your commitment to treating employees equitably. Salary transparency is beneficial for both employers and employees alike–and companies may wish to implement these policies even if they are not legally required to do so.
The resources provided here are for educational purposes only and do not constitute legal advice. We advise you to consult your own counsel if you have legal questions related to your specific practices and compliance with applicable laws.