Pay Transparency Laws:
What Employers Need to Know
Last Updated: Oct. 10, 2023 | Read Time: 15 min
Pay Transparency Laws:
INTRODUCTION
One major employment law trend in recent years has been the rise of pay transparency laws.
Sparked in part by the #MeToo movement, these laws can take many forms, though the most noteworthy are those that require employers to include pay ranges in job postings.
Still, there are other forms of pay transparency for employers to monitor. This guide, created in October 2023, will cover a wide range of these types of laws, including:
- Salary history bans
- Pay range requirements (upon request and at points during the interview process)
- Requirements for job postings
- How to maintain compliance
We will also answer some scenario based questions such as:
- If you are a California employer but the job can be performed outside of the state, do you still have to post the salary range for the position?
- Does the New York City pay transparency law apply to internal promotions?
Employers should also note that there is active pay transparency legislation pending in some jurisdictions, including Washington, D.C.
Table of Contents
What Are Pay Transparency Laws?
Pay transparency laws are regulations that require employers to disclose information about employee compensation, either to the employees themselves or to the public. The specific requirements of these laws can vary depending on the jurisdiction, but they generally aim to promote fairness and reduce pay disparities based on factors like gender, race and ethnicity.
Salary History Bans
Salary history bans are adjacent to pay transparency laws and generally prohibit asking job applicants about their pay history. Again, these laws were put in place to address race and gender inequalities.
They vary by location and may bar employers from requesting salary history altogether, prohibit salary history inquiries before providing an offer or ban the use of salary history to set pay.
These laws vary by jurisdiction and employers should ensure hiring managers understand the nuances to remain compliant.
Also, employers should note that Michigan and Wisconsin are two states that have prohibited jurisdictions from enacting salary history bans.
U.S. jurisdictions with salary history bans include: Alabama, California (and San Francisco), Colorado, Connecticut, Delaware, Hawaii, Illinois, Maine, Maryland, Massachusetts, Missouri, Nevada, New Jersey, New York, Ohio cities of Cincinnati and Toledo, Oregon, Pennsylvania, Rhode Island, Vermont and Washington.
Pay Transparency Laws
WITHOUT JOB POSTING REQUIREMENTS
Moving to pay transparency laws, several jurisdictions require employers to:
- Provide applicants with the salary range for a posted position at a specified point during the hiring process
- Provide employees salary range upon request, when changing jobs, or upon hire
Connecticut Pay Transparency
Connecticut’s law requires employers to provide salary range information to applicants by the time they extend an offer of compensation — even if the applicant did not request it.
Meanwhile, employees are entitled to salary range upon hire and when changing roles, in addition to upon request.
Nevada Pay Transparency
In Nevada, employers must disclose the salary range to applicants who have completed an interview for the position.
Also, salary range information must be given to employees for a promotion or transfer if the employee has applied, completed an interview or has been offered the position (and if requested).
Rhode Island Pay Transparency
Effective January 2023 in Rhode Island, employees are entitled to salary range upon hire, when changing jobs and upon request.
Washington State Pay Transparency
In Washington, salary range information must be provided to employees changing roles if requested. But the state also recently passed a law that requires salary ranges to be included in job postings. (See more below.)
Ban the Box
Another compliance concern for hiring practices involves so-called ban the box laws. Generally, these laws bar employers from asking about an applicant’s criminal history until a later point during the application or hiring process.
Ban the box laws often:
- Limit what employers can ask job applicants before an initial interview
- Set a point in the application process when employers may ask about an applicant’s criminal history
- Prohibit how far in the past an employer may inquire about an applicant’s criminal history
- Prevent ads for jobs from excluding those with a criminal history
Most ban the box laws include exceptions for certain types of professions — those that require inquiries under other state or federal laws, or jobs that care for minors or vulnerable adults, for example.
Pay Transparency Laws
WITH JOB POSTING REQUIREMENTS
Below are the jurisdictions that, as of September 2023, require employers to include salary ranges in job postings.
Note, however, that similar legislation is under consideration in other jurisdictions, including Washington, D.C., and employers should always monitor the latest developments wherever they have locations.
Effective Dates of Pay Transparency Laws Regarding Job Postings
- California – in effect
- Colorado – in effect
- Hawaii – effective Jan. 1, 2024
- Illinois – effective Jan. 1, 2025
- Ithaca, N.Y. – in effect
- Jersey City, N.Y. – in effect
- New York City – in effect
- New York State – in effect
- Westchester County, N.Y. – void as of September 2023
- Washington State – in effect
California Pay Transparency Law
California updated its pay transparency law to include salary ranges in job postings in September 2022. It applies to employers with 15 or more workers.
“Pay scale” means the salary or hourly wage range that the employer reasonably expects to pay for the position, and the law also applies to third parties that post jobs on behalf of the employer.
However, California’s pay transparency law updated also expanded state pay data reporting requirements, which include employee sex, race and ethnicity information, to cover contracted employees. Learn more about the California pay transparency law.
Pay Transparency Scenario No. 1
Question:
If you are a California employer but the job can be performed outside of the state, do you still have to post the salary range for the position?
Answer:
The California pay transparency law applies to employers with 15 or more employees and at least one employee working in the state. Employers that meet this are generally required to include the wage range in job postings. However, if the position cannot be performed in California – either in person or remotely – then the employer would not need to include the wage range.
Colorado Pay Transparency Law
Colorado was the first state to pass a pay transparency law regarding job postings.
It applies to Colorado employers with at least one employee, as well as out-of-state employers, which has become an issue for some companies. There has been pushback among some employers that have decided not to consider applicants in Colorado for remote jobs specifically because of the law.
In addition to including pay ranges in job postings, Colorado employers must give formal notice of internal opportunities for promotion on the day the opening occurs to employees in the state.
Hawaii Pay Transparency Law
Under the Hawaii pay transparency law, job postings must include an hourly rate or salary range that “reasonably reflects the actual expected compensation.”
However, there are exceptions to the law, including:
- Jobs that are internal transfers or promotions within a current employer
- Public employee positions for which salary, benefits or other compensation are determined through collective bargaining
- Jobs with employers that have fewer than 50 employees
It is notable that the Hawaii law does not cover internal positions, as some other pay transparency statues do.
It goes into effect Jan. 1, 2024.
Illinois Pay Transparency Law
The Illinois pay transparency law requires employers to include a good-faith estimate of the pay scale and benefits in any job posting.
“Pay scale and benefits” under the language of the legislation means:
The wage or salary, or the wage or salary range, and a general description of the benefits and other compensation, including, but not limited to, bonuses, stock options, or other incentives the employer reasonably expects in good faith to offer for the position, set by reference to any applicable pay scale, the previously determined range for the position, the actual range of others currently holding equivalent positions, or the budgeted amount for the position, as applicable.
It is notable that this requirement can be satisfied in electronic job posts by including a link to a public page with the pay scale and benefits information.
Also, the Illinois pay transparency law also applies to third-party vendors, which would be liable for noncompliance, unless the group could demonstrate the employer did not adequately provide the information.
Meanwhile, promotional opportunities would need to be made known to existing employees no later than 14 calendar days after an employer creates an external job posting (in most instances). This section of the law only applies to jobs that are:
- Physically performed, at least in part, in Illinois
- Physically performed outside of the state but the employee reports to “a supervisor, office, or other work site in Illinois”
Other provisions under the Illinois pay transparency law include:
- Employers are not required to create a job posting
- Employers are allowed to ask applicants about their wage or salary expectations
- For jobs that aren’t posted internally or externally, employers must provide pay scale and benefits information prior to any offer or discussion of compensation — and at the applicant’s request
- Existing employees in jobs deemed “exempt from competitive selection” by the State of Illinois are excepted from the employer requirement for internal postings
Pay Transparency Laws:
Smaller Jurisdictions in New York State
WITH JOB POSTING REQUIREMENTS
Ithaca, N.Y., Pay Transparency Law
Applying to employers with at least four workers, the Ithaca, N.Y., pay transparency law requires employers to include salary ranges in job postings, as well as transfers or promotions.
However, it does not apply to job postings for temporary employment from a temporary help firm.
Also of note, Ithaca’s law does not include any guidance as to geographical or jurisdictional scope of the law.
Jersey City, N.Y., Pay Transparency Law
The pay transparency law in Jersey City, N.Y., applies to employers with at least four employees.
While job postings must include the position’s wage range, the Jersey City ordinance applies only to employers with principal place of business in Jersey City.
Also, it only applies to job postings made through print or digital media that circulates through the city.
Westchester County, N.Y., Pay Transparency Law
Though Westchester County, N.Y., had passed a pay transparency law, it became void when the New York State law went into effect in September 2023.
New York City Pay Transparency Law
Under the New York City pay transparency law, it is considered an “unlawful discriminatory practice” to exclude from job listings the minimum and maximum salary offered for any position located within the city.
The range for the listed maximum and minimum salary must extend from the lowest salary to the highest salary that the employer in good faith believes it would pay for the advertised job, promotion, or transfer.
New York City’s law about salary ranges in job advertisements went into effect May 15, 2022, amending the New York City Human Rights Law.
The New York City pay transparency law applies to employers with four or more workers in the previous year — that includes part-time and temporary employees, interns and independent contractors.
Temporary staffing firms are exempt from the NYC law, as they already provide such information after interviews in compliance with the New York State Wage Theft Prevention Act.
Pay Transparency Scenario No. 2
Question:
Does the New York City pay transparency law apply to internal promotions that are not posted?
Answer:
No. Under the law, employers must include salary ranges in any advertisement, as well as internal bulletin boards, company intranets and printed materials.
So, if the job is not posted anywhere internally or externally, the law would not apply. But if it is offered to any pool of candidates, employers would have to include the salary range.
New York State Pay Transparency Law
Applying to employers with four or more workers, the New York State pay transparency law went into effect in mid-September 2023.
The law defines range of compensation as:
The minimum and maximum annual salary or hourly range of compensation for a job, promotion, or transfer opportunity that the employer in good faith believes to be accurate at the time of the posting of an advertisement for such opportunity.
Also of note, in addition to salary ranges, employers must include a job description (if it already exists) in postings. The law also includes recordkeeping requirements, anti-retaliation provisions and fines for noncompliance.
For employers hiring remote workers, the law applies to jobs that “can or will be performed, at least in part, within the state of New York.”
Washington State Pay Transparency Law
Since Jan. 1, 2023, many employers in Washington State must disclose the salary range, or wage scale, and a description of all benefits and other compensation in job postings. The law applies to employers with 15 or more workers.
Washington amended its previous requirements (see above) that employers must disclose wage information to applicants only upon their request.
Employers are not required to distribute job postings, but if they are used, employers must include the appropriate disclosures. Learn more about the Washington State pay transparency law.
Maintaining Compliance with Pay Transparency Laws
Clearly, there is plenty for employers to consider regarding pay transparency laws.
In closing, here are a few tips for maintaining compliance:
- Know and understand the variety of pay transparency laws
- Conduct a pay audit – consider doing so under attorney-client privilege
- Identify and resolve any pay inequities
- Clearly define pay ranges for each position
- Make sure there are clear job descriptions for your positions
- Train hiring managers and others in HR
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