The first of the year brought with it new pay transparency obligations for employers in several states, including Rhode Island, California, and Washington. Halfway through the year, this type of legislation remains a focus for legislators from coast to coast, including in jurisdictions like Colorado, where similar laws are already on the books. While these proposed laws are all generally rooted in pay equity principles, their substantive differences and sheer volume raise serious questions for employers looking to recruit, hire, and retain talented employees across the country.
In this part one of a two-part blog series on pay transparency legislation, we summarize a sampling of salary range disclosure legislation pending in federal and state chambers. Part two of the series will focus on pay data reporting legislation.
At the federal level, the Salary Transparency Act (STA) would amend the Fair Labor Standards Act to require employers to disclose wage or wage range information in the following situations:
- in all job postings (public or internal);
- to applicants upon request and, if no job posting was previously issued, before discussing compensation; and
- to employees upon hire, annually thereafter, and upon request.
In addition to requiring disclosure of wage range information, the STA includes a retaliation provision barring employers from “refus[ing] to interview, hire, promote, or employ” or otherwise retaliating against an employee or applicant for seeking disclosure of wage ranges. Importantly, the bill broadly defines “wage range” to include not only the wage or salary range that the employer anticipates in good faith applying to the position, but “other forms of compensation” as well. No further guidance is provided as to what would be included in these “other forms” of compensation, which is important given that the STA’s remedies include civil penalties of $5,000-$10,000, depending on the number of prior violations for the employer, as well as a private right of action for violations.
No further action has been taken since the STA was introduced in the House of Representatives on March 14, 2023.
At the state level, salary range disclosure bills are having varying levels of success. For example, in Illinois, legislators have introduced multiple bills to amend the state’s Equal Pay Act to include salary range disclosure requirements; however, the bills have significant differences both in substance and outcome (thus far).
H.B. 3129 recently passed both chambers of the legislature and is awaiting Governor J.B. Pritzker’s signature. If signed, the bill will require employers to make a number of disclosures beginning on January 1, 2025, including:
- Employers with 15 or more employees (as well as any third parties the employer engages) must disclose pay scale and benefits information on job postings for positions performed (at least in part) in Illinois, as well as positions that report to a supervisor, office, or worksite in Illinois;
- All employers, regardless of size, must disclose pay scale and benefits information at any time, upon the applicant’s request, and prior to any offer or discussion of compensation with an applicant (practically, this means that positions that are not posted and for small employers, the pay scale and benefits must be disclosed upon request); and
- All employers, regardless of size, must disclose promotion opportunities to current employees.
In contrast, S.B. 2038, which remains pending in the Illinois Senate, would impose disclosure obligations on employers of all sizes, including an additional obligation to disclose pay scale and benefits information to employees upon hire/promotion/transfer, annually thereafter, and upon request.
Hawaii has been similarly successful with its salary range disclosure legislation, with SB 1057 passing both chambers of the legislature and awaiting Governor Josh Green’s signature. If signed, SB 1057 would amend the state’s Equal Pay law as of January 1, 2024 to require employers with 50 or more employees to disclose an hourly rate or salary range in job listings for positions other than internal transfers/promotions. The bill does not identify whether all 50 employees must be in Hawaii. Relatedly, the bill also prohibits employers from discriminating in pay based on any lawfully protected characteristic, not just sex.
Perhaps next in line to adopt salary range disclosure legislation is Massachusetts, where H.1849 and S.1191 are currently pending in their respective chambers. If passed, these bills would require employers with 15 or more employees in the state to disclose “pay range” information for both salaried and hourly positions as follows:
- in all job advertisements or postings;
- to applicants upon request; and
- to employees offered a promotion or transfer, as well as, upon employee request, as to their current position.
Like the STA, the Massachusetts bills also include anti-retaliation provisions, civil penalties, and a broad definition of “pay range.” Unlike the STA, the bills do not provide individuals with a private cause of action for violations.
Finally, salary range disclosure legislation was also pending earlier this year in jurisdictions where employers might not expect to see such regulations, including Missouri, Kentucky, and Montana. However, these pieces of legislation were unsuccessful and died at the close of the legislative session in their respective states.
What Should Employers Do Now?
While none of these bills are final laws yet, they offer valuable insights for employers to consider going forward, most important of which is that a one-size-fits-all compliance approach will not work for multi-state employers. As such, employers should work with employment counsel to monitor federal, state, and local developments; if/when legislation becomes law, modify their current practices to comply with the relevant jurisdictional requirements; and as increased wage transparency continues to remain a hot-button issue, be prepared to respond to employee and applicant requests for information.
- Member of the Firm