Over the past five years, ten states and several local jurisdictions across the country have passed wage transparency laws in an effort to address gender and racial wage disparities. Wage transparency laws may apply to wage range disclosures and promotional opportunities in job advertisements, among current employees and job applicants. In this changing landscape, employers must be diligent in order to comply with these laws, given their variety with respect to who must receive disclosures, which factual circumstances trigger disclosure requirements, and what information the laws require employers to disclose.
Among of the most common forms of wage transparency laws are those requiring employers to include a range of compensation when advertising an employment opportunity. Laws including this requirement, however, can vary significantly depending on the level of specificity they demand. As we have covered, New York’s statewide salary transparency law went into effect on September, 17, 2023, requiring New York employers who advertise job openings to include the base rate of pay for the position. The base rate of pay requirement is especially important for hospitality workers or financial services professionals given the wide range of possible earnings due to gratuities or bonuses. Indeed, the New York State Department of Labor’s proposed regulations would prohibit employers from including the value of other forms of compensation such as insurance, paid time off, potential or expected bonuses, tips, and commissions in their advertised base rate of pay. The proposed regulations will allow employers to separately list these additional benefits and potential earnings.
Another significant aspect of wage transparency laws to consider is the level of precision that the law requires for advertised wage ranges. New York State’s proposed regulations, for example, will require employers to provide the range of compensation in “good faith,” which the DOL defines as “the range of compensation the employer legitimately believes they are willing to pay the successful applicant or employee at the time they post an advertisement.” According to the proposed regulations, one example of bad faith compensation wage ranges is when an advertised wage range is “so broad, without further information explaining the reason for the breadth” such that it “ha[s] the effect of preventing the potential or prospective applicant from understanding the legitimate range of compensation[.]” The New York law also prohibits open-ended compensation ranges, such as “$20 per hour and up” or “maximum $50,000 per year.”
Another common wage transparency provision requires employers to provide applicants with a position’s compensation range, rather than to require employers to include it on job listings. Employers doing business in multiple states must be mindful of the nuances regarding the timing of different state’s wage transparency laws. Maryland’s wage transparency law requires employers to provide applicants the wage range for the position they applied for “on request,” while Nevada’s law requires employers to provide applicants with the wage range after they complete an interview.
Wage transparency laws regarding current employees typically come in two forms: those requiring employers to actively promote internal promotion or transfer opportunities to their entire workforce, and those that require employers to provide compensation ranges for internal applicants or current employees upon request. Connecticut’s wage transparency law requires employers to provide wage ranges to employees upon hiring, whenever they change positions with the employer, and upon request. Illinois, meanwhile, will require employers to begin actively promoting promotion opportunities among their employees beginning January 1, 2025. Specifically, the law will require employers to “announce, post, or otherwise make known all opportunities for promotion to all current employees no later than 14 calendar days after the employer makes an external job posting for the position[.]”
It is important that employers stay on top of the wage transparency laws in the states and localities where they do business, and ensure they remain in compliance when attempting to fill a position, whether they seek internal or external candidates. State and municipal legislatures are continuing to propose and evaluate wage transparency laws, and we expect more locations to join in enacting wage transparency legislation.