Pay Disclosure Requirements Proliferate Across The Country

Individual Disclosures

In the first category, California and Maryland require employers to provide the pay scale to applicants upon reasonable request. The cities of Cincinnati and Toledo, Ohio, and the state of Washington all require employers to disclose the pay scale to candidates after a conditional offer of employment. In 2021, Connecticut, Nevada, and Rhode Island built on those requirements to mandate not only disclosure upon request, but also proactive disclosure of the pay scale to applicants at various times and even upon transfer or promotion of existing employees.

Pay Reporting

California and Illinois (beginning in 2023) also require private sector employers to file annual compensation reports (and other states require such filings of state contractors).

Disclosures In Job Postings

In the last category, Colorado has probably the most aggressive law in that it requires employers to include on each job posting the pay and benefits for the position. New York City has most recently followed suit and, beginning in May 2022, will require employers to post pay on internal and external job postings.

Considerations for Compliance

To comply with these various requirements, employers need to consider which laws apply, what information must be disclosed, when must it be disclosed, and what steps may be required to implement a compliance program.

First and foremost, employers need to know which laws may apply. Especially in this age of increased remote work, employers based in states without pay disclosure requirements may become subject to the laws by hiring remote employees in states with disclosure laws. For example, Colorado’s pay disclosure law applies to employers with even one remote worker in Colorado. Some of the laws would apply to employers entirely outside the state that are recruiting candiNearly as fundamental, employers must identify wage rates or pay ranges for their jobs. These terms are not defined in all of the laws. It may not be terribly challenging to identify the pay rate for a particular candidate who is requesting the information (or even to whom an employer is required to proactively disclose the pay). In those cases, employers will have information about the factors that typically impact pay, such as the candidate’s experience, location, and qualifications. However, under Colorado and soon New York City law, identifying the pay range is more challenging. Those states require the disclosure in the job posting, when the employer may be considering a broad range of experience, various locations, or other factors which might impact pay.

Employers may also need to consider the employee relations and equity issues that may arise among current employees in response to these pay disclosures. Especially in the current market where many employers are competing for top talent, current employees may see what dates to work remotely in the covered state.

Nearly as fundamental, employers must identify wage rates or pay ranges for their jobs. These terms are not defined in all of the laws. It may not be terribly challenging to identify the pay rate for a particular candidate who is requesting the information (or even to whom an employer is required to proactively disclose the pay). In those cases, employers will have information about the factors that typically impact pay, such as the candidate’s experience, location, and qualifications. However, under Colorado and soon New York City law, identifying the pay range is more challenging. Those states require the disclosure in the job posting, when the employer may be considering a broad range of experience, various locations, or other factors which might impact pay.

Employers may also need to consider the employee relations and equity issues that may arise among current employees in response to these pay disclosures. Especially in the current market where many employers are competing for top talent, current employees may see what wage rate the company is offering for new hires into similar roles. Employers may benefit from conducting proactive, privileged pay equity analyses to anticipate legal claims or employee relations challenges that may arise in connection with increased pay transparency.

Employers may also need to take steps to effectively implement pay disclosures. For example, many Colorado employers are establishing web pages to link in job postings which list all the benefits they offer. Employers may also want to engage in training for recruiters and hiring managers to educate them on pay disclosure requirements and the company’s processes for compliance. For example, hiring managers, who may particularly want to entice a candidate to join the company, may be inclined to disclose a higher pay range. To ensure consistency, it may be helpful to designate a particular person or role who will consistently respond to all pay disclosure requests. Employers may also need to consider the information system requirements to compile the required reports in California or Illinois.

Finally, employers operating in multiple jurisdictions need to consider whether they prefer to adopt different practices for those states that have disclosure requirements. A patchwork approach can create administrative burdens and could be viewed negatively by employees in jurisdictions without legal requirements. However, a consistent approach would mean complying with the law of the most demanding state in which the employer operates.

If the final months of 2021 are any indication, it is likely that we will continue to see more pay disclosure laws across the country.