Maryland Passes Pay Transparency Law

On April 25^th, Maryland Governor Wes Moore signed SB525 into law making Maryland the newest state to join in on requiring employers to disclose wage information. This law will go into effect on October 1, 2024, and applies to all employers, regardless of size. The pay transparency requirements of this law are built on the existing requirements that prohibit requesting and relying on salary history information.

Pay Transparency:

The law requires that employers disclose in each public or internal posting for each position, which is at least in part physically performed in Maryland, the wage range and a general description of benefits and any other compensation offered for the position. Wage range is defined as “the minimum and maximum hourly rate or minimum and maximum salary for a position, set in good faith by reference to

1. any applicable pay scale,
2. any previously determined minimum and maximum hourly rate or minimum and maximum salary for the position,
3. the minimum and maximum hourly or minimum and maximum salary of an individual holding a comparable position at the time of the positing, or
4. the budged amount for the position.”

The new law does not specifically define how much information employers will need to provide about benefits and other compensation. However, the Commissioner of Labor and Industry will develop a form that employers may complete and include in each posting. This is a unique approach in the growing patchwork of state pay transparency laws.

Finally, if a public or internal posting was not made available to an applicant, then the employer must disclose this information before a discussion of compensation is held with the applicant, and at any other time on request of the applicant.

Record Keeping:

Employers are required to keep a record of compliance with the law for 3 years after either the position is filled, or if the position is not filled, then 3 years from when the position was initially posted.

Penalty:

The Commissioner will determine whether an employer has violated the law and will consider the gravity of the violation, the size of the business, the employer’s good faith, and the employer’s history of violations when determining the penalty. If the Commissioner determines that an employer has violated this law, the commission shall issue an order compelling compliance, and may:

1. For a first violation, issue a letter to the employer compelling compliance
2. For a second violation, assess a civil penalty of up to $300 for each employee or applicant for employment for whom the employer is not in compliance, or

For each subsequent violation, assess a civil penalty up to $600 for each employee or applicant for employment for whom the employer is not in compliance if the violation occurred within 3 years after previous determination that a violation had occurred. The bill does not provide a private right of action for applicants or employees who believe an employer has failed to comply with the pay transparency requirements.

Next Steps:

As Maryland employers navigate these legislative changes, it’s important that they take proactive measures to ensure compliance. As wage ranges are posted, employees will begin to identify their pay range placement and will be able to see how competitors pay. It’s recommended that employers thoroughly evaluate their compensation systems to ensure fairness and conduct market benchmarking to remain competitive in attracting and retaining top talent. For employers without a compensation structure, this is a great time to start creating one. Berkshire can help employers conduct a market analysis and create a customized compensation structure.