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Pay Equity Megaphone
Pay Equity Megaphone
Pay Equity Megaphone
Pay Equity Megaphone
Pay Equity Megaphone

Employers Face More Pay Disclosure

Nov. 29, 2022
Policymakers see pay transparency as a way to advance equity.

Although currently limited to a handful of states and cities, laws that require employers to report and disclose salaries and wages in job postings and advertising are gaining traction among policymakers seeking to eliminate perceived pay discrimination. Even if you are not located in one of the jurisdictions currently imposing such strictures, you may do so sooner rather than later.

“The national trend toward pay equity is gaining momentum, leading to transformative changes for employers,” observe attorneys for the law firm of Jones Day. “A growing list of states and local jurisdictions are enacting pay transparency laws, including requirements for employers to report detailed compensation data to the government, and to disclose compensation information and pay ranges in job postings and advertisements.”

States with some version of a pay disclosure law include Alabama, Colorado, Delaware, Hawaii, Illinois, Maine, Maryland, Massachusetts, Nevada, New Jersey, Oregon and Vermont. Among the cities with such laws are New York, Cincinnati and Toledo, Ohio.

The first jurisdiction to adopt a pay transparency law was the state of California in 2016 with the Equal Pay Act. Under that law, an employer is prohibited from asking job applicants any questions about their past salaries. It also was the first law to address gender pay equity by applying a standard that defined “substantially similar work” in regard to professions that were traditionally occupied largely by men or women.

Earlier this year, the state legislature added to employers’ annual reporting burden a new provision set to go into effect in May 2023. At that time, employers with 100 or more employees must submit a detailed pay data report covering the prior calendar year.

This obligation applies even where the employer is not required to file an EEO-1 form with the U.S. Equal Opportunity Employment Commission (EEOC), and employers may no longer satisfy the state requirement by just submitting its federal EE0-1 report, the Jones Day attorneys point out.

In addition, employers who have 100 or more employees working for them through labor contractors must submit a separate pay data report to the state for those workers. The covered employers with multiple establishments also must submit an individual report for each establishment, rather than one multisite report.

New York’s New Law

Another jurisdiction to jump on the equal pay bandwagon is New York City with a new law that went into effect on Nov. 1. Covered employers who post a job, promotion or transfer opportunity for a position that will or can be performed in the city must include a salary range for that position. New York State’s Westchester County and the city of Ithaca have enacted similar laws.

The New York City law applies to all employers who have four or more employees (including, for this purpose, full- or part-time employees, interns, domestic workers and independent contractors) so long as at least one of the employees works, in whole or in part, in New York City, note attorneys Genevieve Burger-Weiser and Robert Holtzman of the Kramer Levin Naftalis & Frankel law firm.

“The law applies only to positions that are to, or can, be performed, even in part, in New York City,” the attorneys explain. “As a result, postings by a covered employer for remote positions that could, in theory, be performed in New York City must comply with the law.”

The law also covers employment agencies. However, temporary help firms, such as staffing agencies, are exempt from the salary disclosure requirements.

The New York state legislature also passed pay transparency legislation earlier this year, but at last report it has not yet been signed into law by Gov. Kathy Hochul, although it is anticipated that she will. Once it is enacted into law, it will go into effect 270 days following its signing.

If enacted, the state’s law would add three requirements to New York City employers’ obligations under city law: A posting must include a job description if one exists; it also must include a general statement that compensation is based on commission, if applicable to such position; and employers must keep and maintain records of compensation history for posted jobs, promotions and transfer opportunities.

Other States

Starting on Jan. 1, 2023, employers in Washington state also must adhere to new pay disclosure requirements. Employers with 15 or more workers will be required to reveal their wage scale or salary range and supply a description of benefits and other compensation offered whenever they post job openings. This will be true even in situations where this information was not specifically requested by an applicant.

In the new law, the Washington state legislature removed a portion of the 2019 amendment to its existing pay disclosure law stating that, if there is no wage scale or salary range in place, employers are required only to provide the minimum wage or salary expectation before posting the position or making an internal transfer or promotion.

Starting in January 2023, Rhode Island employers also must provide applicants with requested salary ranges at the time of application. For current employees, they are expected to supply requested salary ranges at the time of hire, any internal move to a new position, as well as any other time when the employee chooses to request the information.

Illinois employers face deadlines coming up regarding a wage disclosure law passed in 2021. Any employer with 100 or more employees in Illinois and who is required to submit an annual EEO-1 report to the EEOC will be required to submit a formal application to the Illinois Department of Labor to obtain an equal pay registration certificate.

Employers are expected to include in that application their most recently filed EEO-1 form, along with a complete list of employees working during the last calendar year, separated by gender, race and ethnicity, as well as the employee’s starting date, county where work is performed and wages were paid for the previous year.

Also required with the application is a signed Equal Pay Compliance Statement attesting to the employer’s compliance with all applicable civil rights laws and the specific requirements of the Illinois law in respect to equity in average pay or corrections to achieve equity; equitable access to job classifications, and opportunities for retention and promotion; and how wages and benefit are evaluated and disparities corrected by the employer.

In the application, the employer also must show the average compensation for female and minority employees is not consistently below the average compensation—as determined by U.S. Department of Labor (DOL) regulations—for its male and non-minority employees within each of the major job categories that are included in EEOC’s EEO-1 form.

Employers authorized to operate in Illinois after March 31, 2021, must submit the application within the first three years of operation, but no sooner than Jan. 1, 2024. Those authorized to operate in Illinois on or before March 31, 2021, must file their application between March 24, 2022, and March 23, 2024. If employers with multiple locations within the state are only required to submit one application for the registration certification.

“Employers should take note of the pay transparency requirements now in place in a variety of jurisdictions and develop plans to identify compensation ranges for open positions and ensure compliance with applicable laws,” urge Burger-Weiser and Holtzman. “These laws will significantly impact both employers’ recruiting strategies and employee retention.”

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