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)
- 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.
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.
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.
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
About GovDocs
GovDocs simplifies employment law compliance for multi-jurisdiction employers in the U.S. and Canada. The GovDocs software platform integrates three solutions in one convenient place to help you master the employment laws impacting your business. Whether you manage a labor law poster, minimum wage, pay transparency, or paid leave programs, our products cut through research time, provide proactive insights into the everchanging landscape of employment laws and reduce the risk of noncompliance.