A recent wave of pay transparency laws has left many employers apprehensive about recruiting across state lines. Pay transparency refers to the practice of making employee compensation figures visible to others – internally, externally, or both. Roughly 1 in 4 U.S. workers lives in a state or locality with a salary transparency law in place, and more are coming. Currently, eight states and six cities and localities have passed legislation specifically addressing pay transparency. Below is a brief overview of the laws in place in states across the country.
California
In January 2018, California’s Equal Pay Act became the first in the country to ban employers from asking applicants about their salary history. The law also requires employers to disclose the pay range for a job if an applicant asks for it after an initial interview. The state’s new pay transparency law requiring the inclusion of pay scales in job openings applies to employers with 15 or more employees, at least one of whom is located in California, went into effect January 1, 2023, making California the largest state where job listings will require salary information by law. California’s law applies to remote positions.
Colorado
Since January 2021, Colorado’s Equal Pay for Equal Work Act has required employers with one or more employees in Colorado to disclose the hourly or salary compensation, or a range of the hourly or salary compensation, that the company would pay for the role, in each posting for a job opening. In addition to compensation, a job posting must also include a description of any bonuses, commissions, or other compensation and a general description of benefits offered, including healthcare, retirement benefits, paid vacation, and any tax-reportable benefits. Colorado’s law applies to all remote job openings as long as the employer has at least one worker in Colorado, unless the work at issue is specifically tied to a non-Colorado worksite.
Connecticut
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 when communicating an offer, whichever comes first. The Connecticut Department of Labor has confirmed that the law applies to employers within the state using the services of one or more employees for pay even if such employees are located outside the physical confines of Connecticut.
Maryland
In 2020, Maryland updated its Equal Pay for Equal Work law to ban employers located in the state from asking candidates about their salary history and to require employers to disclose the pay range to applicants upon request. Once an applicant is hired, however, the employer may ask for salary history information to support a request for higher wages.
New York
Effective September 2023, employers located in New York 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 applies to employers with workers who are physically working from New York plus those with employees who are working outside New York as long as their supervisor, office, or other work site is located in New York.
Nevada
As of October 2021, Nevada employers cannot ask about salary history and must provide the salary range to applicants after an initial interview automatically, even if the applicant hasn’t asked for it. They must also provide this information to current employees who apply for or are offered a promotion or transfer. The law prohibits employers from asking for an applicant’s wage or salary history in determining their pay rate.
Rhode Island
Effective January 1, 2023, the Rhode Island Equal Pay Law requires Rhode Island employers to provide candidates pay range information during interviews upon request or at the time of hiring, whichever is earlier. Employers must also provide to current employees their wage range at the time of hire and when the employee moves into a new position even in the absence of a request. The Pay Equity Act does not require employers to post pay ranges on job ads.
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. Effective January 1, 2023, Washington’s Equal Pay and Opportunities Act requires all employers with 15 or more employees to disclose the pay range for a job on any digital or printed ad on the company’s hiring board or listed on a third-party site. The law applies broadly to employers regardless of whether they have a physical presence in Washington if they recruit Washington-based employees or recruit for jobs that could be filled by a Washington-based employee, even if they are working remotely.
Pay transparency laws pose unique challenges for employers who recruit across state lines. The burden on employers is further complicated by the trend toward remote work, which can create obligations and liabilities for a company in states in which they have no physical presence. A company advertising for a position that could be performed by a worker in any state must ensure that the posting complies with all applicable pay transparency laws. And employers cannot avoid these obligations by stipulating that residents of a particular state or locality are not eligible for an advertised role.
Liskow’s employment law team can assist you in reviewing your pay practices and staying compliant with the growing list of states and localities with pay transparency laws. Download our Pay Transparency Snapshot for more information on pay transparency laws.
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