As workers and lawmakers continue to push for enhanced employee rights, pay transparency laws are becoming more common.
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.
These laws require employers to be more, well, transparent with salary ranges and benefits. Depending on the jurisdiction, these laws require employers to:
- Provide applicants 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
- Include salary range in job postings
Many states have passed their own pay transparency laws, which may require employers to disclose salary ranges for open positions, prohibit retaliation against employees who discuss their pay with colleagues, or require employers to report pay data to government agencies.
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Pay Transparency Laws: Effective Dates
Below is an at-a-glance list of the locations and corresponding effective dates that require disclosure of pay range under certain circumstances. Each law is different, so employers should review each specific jurisdiction’s requirements to ensure compliance:
- California – effective Jan. 1, 2023
- Colorado – effective Jan. 1, 2021
- Connecticut – effective Oct. 1, 2021
- Maryland – effective Oct. 1, 2020
- Nevada – effective Oct. 1, 2021
- Jersey City, N.J. – effective April 13, 2022
- Ithaca, N.Y. – effective Sept. 1, 2022
- New York City – effective Nov. 1, 2022
- Westchester County, N.Y. – effective Nov. 6, 2022
- Cincinnati – effective March 13, 2020
- Toledo, Ohio – effective June 25, 2020
- Rhode Island – effective Jan. 1, 2023
- Washington – effective Jan. 1, 2023
As of this writing, several jurisdictions in the U.S. have some form of a pay transparency law. But more could be on the horizon.
Of course, as with all aspects of employment law, each jurisdiction handles these requirements differently.
Starting at a high level, some states have laws that require employers to disclose the pay range for a position if the applicant asks for it:
Even among these states, there is some variation in how they implement their pay transparency laws.
Pay Transparency Laws by State
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 will be entitled to salary range upon hire, when changing jobs and upon request.
In Washington (more information below), salary range information must be provided to employees changing roles if requested.
Related: Can Employees Discuss Pay and Salaries?
Pay Transparency Laws: Job Postings
Some jurisdictions go further regarding pay transparency laws and require salary ranges to be listed in job postings.
New York City Pay Transparency
Starting with the latest news on the pay transparency front, the effective date of New York City’s pay transparency was delayed.
It now goes into effect Nov. 1, 2022, rather than mid-May 2022. And city officials also made some tweaks to the ordinance.
At a high level, employers in November 2022 must include “good faith” estimates of salary ranges in job advertisements, as well as for promotions or transfers.
Additionally, New York provided some clarification regarding the law.
The law now applies only to jobs performed within New York City, including an employee’s home if they work remotely.
Regarding pay transparency, the city council changed the law to require salaries or hourly wages instead of “compensation.”
Employers also will not suffer penalties for an initial violation of the law as long as it is corrected within 30 days of receiving a complaint from the New York City Commission on Human Rights (NYCCHR). Subsequent violations, however, would not receive the same leeway.
The NYCCHR has provided a two-page fact sheet regarding the law, which outlines other information, including:
- Employers must post maximum and minimum salary ranges, not “$15 an hour and up” or “maximum $50,000 per year”
- Salary does not include other compensation, such as health insurance, paid time off, 401(k) plans, etc.
- The law also applies to promotions or transfer opportunities
- Clarifies the status of employment agencies and temporary help firms
Lastly, covered listings include postings on internal bulletin boards, internet advertisements, printed flyers distributed at job fairs and newspaper advertisements. The law does not prohibit employers from hiring without using an advertisement or require employers to create an advertisement in order to hire.
Colorado Pay Transparency
California can’t always be first when it comes to employment 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.
Washington State Pay Transparency
Starting 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 posting.
It applies to employers with 15 or more workers. The pay transparency law amended Washington’s existing requirements that employers must disclose wage information to applicants only upon their request.
Under the amended law, job postings are not required, but if job postings are used, employers must include the appropriate disclosures, effective Jan. 1, 2023.
A “job posting” is defined as:
“Any solicitation intended to recruit job applicants for a specific available position, including recruitment done directly by an employer or indirectly through a third party, and includes any postings done electronically, or with a printed hard copy, that includes qualification for desired applicants.”
Employers still need to provide salary range or wage scale upon request to employees offered a new position, promotion or internal transfer.
Related: Ban the Box – Updates and State Laws
Salary History Bans in the United States
Related to pay transparency laws are salary history bans.
These laws preclude employers from relying on pay history to set compensation, part of the growing employment law sector related to the #MeToo movement. Employers can usually ask for pay expectations but not actual pay history.
What states have salary history bans?
States, or jurisdictions within them, that have salary history bans include:
- California (and San Francisco)
- New Jersey
- New York State
- Ohio (only Toledo and Cincinnati)
- Pennsylvania (Philadelphia only)
- Rhode Island
The list above is for private employers There are several other jurisdictions that have similar laws for government employers.
There are several jurisdictions in the U.S. that have considered pay transparency laws of late, including:
- South Carolina
- Washington, D.C.
And California has a draft bill that would mirror much of Colorado’s pay transparency law.
Plus, a competitive job market could spur companies to unilaterally opt to start including pay ranges with job postings, though there is some concern that it could create issues with existing employees who may not earn as much even though they hold the same position.
Still, employers with locations in the jurisdictions listed above should review their hiring practices to ensure they align with the law.