Mid-Year Update on State and Federal Pay Transparency Laws

At the beginning of the year, Berkshire’s Compensation Services Team published a round-up of pay transparency laws to watch in the New Year. Now, squarely six months into 2024, the push for pay transparency continues to grow steadily, and this is a trend we expect to see continue.

Federal Contractors and EO 14069

Many states and local jurisdictions already prohibit employers from seeking or using prior salary history information, although the specific prohibitions vary by jurisdiction as we discuss below. But indications are, this type of enforcement may soon be made a requirement at the national level. In early 2024, as part of Executive Order 14069, the White House proposed a rule that would amend the current Federal Acquisition Regulatory standards to prohibit federal contractors from requesting job applicants' salary history and require contractors to disclose compensation rates in job advertisements for certain positions (as well as disclosing key benefits). The public comment period for the rule ended on April 1, 2024.

State Law Requirements

State and local jurisdictions have been creating a patchwork of pay transparency requirements for several years now. The exact rules around pay transparency vary between states, and some states have expanded their regulations to underscore the importance of transparency and pay equity.

Initial State Requirements Focused on Pay Disclosure Upon Request or At Interview/Offer

The pay transparency trend started with several states requiring employers to disclose salary range information if an applicant or employee asked, or at later stages of the selection process. These states include California, Colorado, Connecticut, Maryland, Nevada, New York, Rhode Island and Washington (and, as you will see below, several of these states have already amended their laws to require greater disclosure).

For example, Nevada requires employers to provide the wage range to job applicants who have completed an interview—even without the applicant’s request. Employees in Nevada need to submit a request to view their salary range.

Connecticut requires employers to provide salary information upon a job applicant’s request or, if the applicant doesn’t request it, by the time the company extends an offer of compensation. State law also requires disclosure to employees when they are hired, change roles, or if the employee requests it.

Colorado Is First To Require Pay Disclosure on Job Listings

The next big step in pay transparency was to require salary disclosure on job postings, with the state of Colorado being the first state to add this requirement.

In Colorado, pay equity governance has been a top priority. As a result of the Equal Pay for Equal Work Act, which was enacted in January of 2021, an employer recruiting for a job, remote or otherwise, must post the wage range for the role, including a general description of other compensation available for the role, such as bonus structures or commission. Furthermore, employers must include a description of benefits in each job posting.

All Colorado-based businesses—even businesses with a single employee—must include expected salary ranges and benefits in all job postings. This empowers applicants with a better understanding of their market value and allows them to come prepared to discuss their compensation with more information at their disposal.

Since Colorado passed this requirement, several other states have passed similar salary disclosure requirements.

Other States Quickly Join In

In December 2022, New York State Governor Kathy Hochul signed into law a new Pay Transparency Law that requires all employers with at least 4 employees to provide the minimum and maximum salary or hourly rate in every job posting. New York City and Ithaca, NY also require employers to include “good faith" estimates of salary ranges on job advertisements.

On January 1^st, 2023, California joined those states requiring pay disclosure when Bill 1162, which requires that employers with 15 or more employees disclose their pay ranges in job postings, went into effect. The State of Washington also began requiring employers with 15 or more employees to include “wage or salary range, and general description of all benefits and other compensation to be offered to a hired applicant on job postings” as of January 1, 2023.

Later in 2023, Hawaii took pay transparency up a notch, passing a law that requires employers to include the salary range as part of their job advertisements. And Washington. D.C., effective June 30, 2024, requires employers to list good faith estimates of the minimum and maximum salary on job advertisements. Employers must also disclose benefits before an interview, and they must post notice of employee rights.

Maryland, Illinois, and Minnesota, and Vermont were the most recent states to join this bunch, with their salary disclosure requirements going into effect on October 1, 2024, for MD, January 1, 2025, for IL and MN and July 1, 2025 for Vermont.

States Considering New Requirements

As is evident, the landscape of pay transparency is evolving rapidly and increased transparency is likely to be implemented in states across the country in the coming year -- even if not mandated federally just yet.

Currently 10 states are considering new requirements:

1. Alaska
2. Kentucky
3. Maine
4. Massachusetts
5. Missouri
6. Montana
7. New Jersey
8. Oregon
9. Virginia
10. West Virginia

Looking Ahead: What to Consider

If your company is looking to get ahead of the regulatory curve – or even just ensure compliance with state requirements – it would be wise to begin exploring how transparent your own salary disclosure policies are. As you’re starting out, some key questions to ask include:

• What are the pay transparency requirements in the states where your company does business?
• If using third-party recruiting, what is your plan to ensure their practices are aligned with your compensation policies and the regulations that apply to your company?
• Is your commitment to transparency solely going to be driven by compliance, or are you seeking to develop a comprehensive strategy that weaves transparency into your daily operations?
• Are you ready for the questions about your organization’s pay practices that are inevitable with increased pay transparency?

As always, Berkshire’s Compensation Services team is here to support you as you begin to chart a path toward compliance, retention, and growth. We can help you design or refine a compensation structure, benchmark your roles against market data to evaluate external equity, and conduct a pay audit to root out and help you resolve any pay inequities by race, gender, or other protected basis. You can learn more about our services here.

Stay tuned – and sign up for Berkshire’s Compensation Newsletter – as we continue to report on the federal and state-level developments as they relate to pay transparency and the evolving landscape of pay compliance.