Maryland Expected to Expand Pay Transparency Requirements in Fall 2024

[Update: On April 25, 2024, Maryland Governor Wes Moore signed this bill into law.]

Maryland is poised to join the growing list of jurisdictions that have enacted pay transparency requirements for job postings, which includes jurisdictions such as California, Colorado, Hawaii, Illinois, New York, Washington State, and Washington D.C. House Bill 649 was passed by the General Assembly earlier this month, and if signed by the Governor, will take effect on October 1, 2024.

Maryland’s Current Pay Transparency Law

Maryland’s current wage history and wage range law that went into effect on October 1, 2020, already requires employers to disclose the wage range for a position upon a job applicant’s request. The existing law also includes a salary history ban that prohibits employers from:

• Relying on an applicant’s wage history when screening or considering the applicant for employment;
• Determining an applicant’s wages based on their wage history; and
• Seeking an applicant’s wage history.

However, Maryland employers may rely on or confirm an applicant’s voluntarily disclosed wage history, after making an initial offer of employment that includes compensation, provided the reliance or confirmation is to support a higher wage than the employer initially offered and does not otherwise result in an unlawful pay differential. The law also prohibits retaliating against or refusing to hire, interview, or employ an applicant because the applicant requested a wage range or did not provide their wage history.

Expansion to Maryland’s Pay Transparency Law

Disclosure of the Applicable Wage Range

Maryland’s new law will require employers to include: (i) the wage range; and (ii) a general description of benefits and any other compensation offered for the position, in all public and internal job postings for roles that will be physically performed at least partially within the state. The wage range must be a good faith estimate of the minimum and maximum hourly rate or salary for the position at the time of posting, set by reference to:

• Any applicable pay scale;
• The range previously determined for the position;
• The range provided to any employees in a comparable role at the time of the posting; or
• The amount the employer has budgeted for the position.

Further, if an employer does not have a public or internal job posting available for the position, it must disclose the wage range and a general description of benefits and any other compensation to an applicant before discussing compensation and at any other time upon the applicant’s request.

The Maryland Department of Labor (MDOL) will publish a model form that employers may use to comply with the pay disclosure requirements by including a completed copy in each public or internal job posting and providing the completed form to applicants before discussing compensation, or at any other time upon request.

Recordkeeping Requirements

Employers must keep a record to show their compliance with the pay disclosure requirements for at least three years after the position is filled or, if the role is never filled, from the date the position was initially posted. It is unclear what documentation employers will need to maintain to demonstrate such compliance, especially where the employer did not create a public or internal job posting for an open role. Employers must await further rulemaking or guidance from the MDOL to clarify the recordkeeping requirements.

Anti-Retaliation Protections

House Bill 649 extends the existing anti-retaliation protections for applicants to employees, prohibiting employers from retaliating or refusing to interview, hire, or employ an applicant or promote or transfer an employee because the individual requested a wage range, refused to provide their wage history, or exercised any rights under the law.

Enforcement and Penalties

Employers who do not comply with the pay disclosure requirements will be subject to an order from the MDOL compelling compliance and have civil penalties assessed at the Commissioner’s discretion as follows:

• For a first violation, there is no fine, but employers will still receive a letter compelling compliance;
• For a second violation, a civil penalty of up to $300 for each employee or applicant for whom the employer is not in compliance; and
• For each subsequent violation, a civil penalty of up to $600 for each employee or applicant for whom the employer is not in compliance if the violation occurred within three years of prior violation.

The Commissioner will consider the gravity of the violation, the size of the employer’s business, the employer’s good faith, and the employer’s history of violations when determining the amount of penalty to assess. The law does not specify how the MDOL will calculate the number of employees or applicants affected by the employer’s noncompliance.

Pay Transparency in the DMV

Maryland’s pay disclosure requirements align with similar legislative efforts in neighboring jurisdictions. As we recently reported, starting this summer, Washington, D.C. employers will need to include the pay range for an open role in all job postings, promotions, and transfer opportunities. Further, Washington, D.C. employers will have to disclose the health care benefits an employee may be eligible to receive prior to the applicant’s first interview.

The Virginia Assembly also passed a pay disclosure law during this session, however, Governor Youngkin vetoed the legislation on March 14, 2024. Given that the Virginia Assembly passed the bill narrowly on a party-line vote, it is unlikely that they will find the required two-thirds majority in both chambers to override the Governor’s veto.

How to Prepare

All employers with employees who perform at least some work while physically present in the State of Maryland should prepare to update job advertisements for new positions to include the required pay range information. Employers should also keep a look out for the MDOL’s model form and any additional guidance that may address the ambiguities in the current law.

Maryland employers should also be mindful of how pay transparency requirements impact their recruitment and retention efforts. Employers should conduct a thorough pay audit of current employees’ wages and benefits, remedy any potential pay differentials, and ensure that current employees are compensated within a newly posted position’s marketed range. To maximize attorney-client privilege claims as to any such pay audit, companies should consider conducting the audit under the guidance of counsel to provide advice on whether an employer’s compensation practices meet the various regulatory requirements, e.g., wage hour and equal pay, in addition to wage transparency.