Pay Transparency Laws:
What Employers Need to Know
Last Updated: August 2024 | 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, updated in August 2024, 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 pay transparency law in Hawaii apply to internal transfers or promotions within a current employer?
A growing number of states and local jurisdictions have passed or are considering pay transparency laws. To remain compliant, employers need to understand and follow current laws and keep an eye on new laws in this area.
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 employers from 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. states with salary history bans for private employers include: Alabama, California, Colorado, Connecticut, Delaware, District of Columbia, Hawaii, Illinois, Maine, Maryland, Massachusetts, Minnesota, Nevada, New Jersey, New York, Oregon, Rhode Island, Vermont, and Washington.
Pay Transparency Laws
WITHOUT JOB POSTING REQUIREMENTS
There are several jurisdictions with pay transparency laws requiring employers to:
- Provide applicants with the salary range for a posted position at a specified point during the hiring process
- Provide employees with a salary range upon request, when changing jobs, or upon hire
Maryland Pay Transparency
Maryland’s law requires employers to provide the wage range for a position to an applicant upon request.
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.
In addition to being entitled to a salary range upon request, employees are also entitled to this information upon hire or when when changing roles.
Nevada Pay Transparency
In Nevada, employers must disclose a 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
In Rhode Island, employees are entitled to a salary range upon hire, when changing jobs, and upon request. Employers are also required to provide a wage range for the position an applicant is applying for prior to discussion about compensation for the position.
Washington State Pay Transparency
In Washington, salary range information must be provided to employees changing roles if requested. In addition, the state also recently passed a law that requires salary ranges to be included in job postings. (See more below.)
Pay Transparency Laws
WITH JOB POSTING REQUIREMENTS
Below are the states that, as of August 2024, require employers to include salary ranges in job postings.
Note, however, that similar legislation is under consideration in other jurisdictions, 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
- District of Columbia – in effect
- Hawaii – in effect
- Illinois – effective Jan. 1, 2025
- Massachusetts – Effective July 31, 2025
- Minnesota – Effective Jan. 1, 2025
- New York – in effect
- Washington – in effect
- Vermont – Effective July 1, 2025
New Vermont Pay Transparency Law
Effective July 1, 2025, Vermont employers with four or more employees will be required to include compensation ranges (minimum and maximum annual salaries or hourly wages) for any job opening advertisement, including job openings where there is a base wage or range for those paid as tipped workers. The legislation provides one exception to disclosing a compensation range, and that is specifically for a job opening advertisement where the prospective employee is to be paid on a commission basis. Learn more.
New Massachusetts Pay Transparency Law
On July 31, 2024, Governor Maura Healey signed into law a Pay Transparency bill that mandates employers with 25 or more employees to include salary ranges in all job postings. The Pay Transparency bill will take effect on July 31, 2025, giving employers time to review and adjust their compensation practices to ensure compliance.
New District of Columbia Pay Transparency Law
D.C. passed a new pay transparency law in early 2024. As of June 30, 2024, employers of any size in D.C. must include the minimum and maximum projected salary or hourly pay for a position in all job postings. Information about the existence of healthcare benefits associated with the position must be disclosed to the applicant prior to the first interview.
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 update 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.
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 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 many other pay transparency statutes do.
This law went into effect on 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 Scenario No. 2
Question:
Does the pay transparency law in Hawaii apply to internal transfers or promotions within a current employer?
Answer:
No, the law requires job listings to disclose an hourly rate or salary range that reasonably reflects the actual expected compensation for the position. However, the law does not apply to job listings for positions that are internal transfers or promotions within a current employer.
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 on pay transparency
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