Editor's Note
Pay Transparency Across State Lines
Pay transparency laws now cover a majority of US workers. This is because states with lots of people have passed pay transparency laws, not because a majority of states have pay transparency.
The reality is that populous states like California, New York, New Jersey, Illinois, and Massachusetts can effectively change employer practices nationally. So can less populated states like Colorado, who has been on the leading edge of pay equity and the regulation of AI in employment. When one state does the heavy lifting to craft the law and roll it out, it's easier for others to follow.
California has the most employee friendly employment laws in the country. While employers sometimes complain or make fun of California, California's public policy against noncompete agreements is one of the big reasons why Silicon Valley exists. And the San Francisco Bay Area tech hub continues to thrive despite housing shortages and a crazy cost of living.
I tell employers that if you follow California law, you are probably compliant wherever else you have employees. Compliance is always the floor, not the ceiling. Employers are always free to do more.
This is especially true with pay transparency. Sure, you can try to keep up with each state's specific requirements regarding when and at what level of detail the employer must reveal the pay for the role. Or you can just adopt the most transparent practice required by any state and know that you're good.
One of the advantages of remote work is that the employer can recruit from all over the US and even the world (although scheduling meetings across time zones can be brutal). Instead of worrying about what laws might apply, just post the pay in the job ad, give a realistic pay range based on actual facts, discuss pay early in the recruiting process and find the right person for the work. It will save everyone time and effort.
Compliance doesn't always have to be complicated. When it comes to pay transparency, pick the broadest law and follow it (hint, it's usually California). You have better things to do.
- Heather Bussing
According to recent study by the U.S. Bureau of Labor Statistics, 1 in 5 workers teleworked or worked from home for pay, with a variety of consumer polls indicating up to 90% of individuals in the workforce would prefer the option to work from home (at least in part). This demand for remote work, in conjunction with difficulty hiring in smaller local labor pools, has led employers to search for qualified applicants beyond state lines. However, employers must be cognizant that hiring remote employees in other jurisdictions may impact their business and employment practices.
A big factor for multi-jurisdictional employers is complying with various pay transparency legislation in other states. Pay transparency laws are state (and sometimes municipal) level legislation that may require employers to disclose compensation-related information regarding job positions to applicants and potentially current employees. Pay transparency legislation varies widely state-by-state, which can create confusion regarding what needs to be disclosed, when, and whether the law is even applicable to specific employers. This patchwork of rapidly accruing laws requires that employers pay heed to even one remote employee working in a different state. For example:
- In Colorado, employers with at least one employee working in the state must disclose the following in job postings, including for jobs that can be done remotely from the state: salary range, general description of any bonuses, commissions, or other forms of compensation, a general description of all benefits offered, the application deadline, and how to apply, among requiring additional notice internally for promotion opportunities. Colorado remains one of the most rigorous states regarding pay transparency rules. The Colorado DOL has published an interpretive guide that explains the law’s requirements.
- The California Equal Pay Act requires that employers with 15 or more workers, with at least one working in California, or third parties posting jobs on behalf of the employer, disclose salary ranges in job postings, including for jobs that can be done remotely from the state. Additionally, California’s pay transparency law update expanded state pay data reporting requirements, which include employee sex, race, and ethnicity information.
- New York’s statute requires employers with four or more workers to provide a range of pay for all advertised job, promotion, or transfer opportunities that will be physically performed, at least in part, in New York state, as well as opportunities performed outside of the state that report to a supervisor or office in New York state. All advertised opportunities are required to include a job description in addition to a range of pay, except when the job title clearly conveys the duties for the job. Further, New York City has its own similar pay transparency regulations, which apply to employers with at least one employee working in NYC.
- Effective as of October 1, 2024, Maryland employers must include salary and benefits information in both internal and external job postings, keeping records of compliance for a minimum of three years. This law applies to a posting for any position where work will be physically performed – at least in part – within the state, with the provided example that “if the job is for remote work for a company headquartered in Pennsylvania, but advertises seeking workers based in Maryland, this law applies.”
States are continuing to implement pay transparency requirements into 2025. For example, if New Jersey’s governor signs Senate Bill 2310 into law, as expected, that law will go into effect on the first day of the seventh month from the date of signature. Likewise, Illinois will require employers with 15 or more employees who recruit for positions performed at least in part in Illinois, or that report to a supervisor in that state, to disclose salary ranges and a general description of benefits and other compensation starting on January 1, 2025.
One practical measure for HR personnel scrambling to comply with multiple and potentially differing state-level pay transparency regulations, or companies considering hiring across state lines, is to endeavor to comply with the most stringent of applicable state regulations in which an employee of the company performs work, or where the company is recruiting new hires. In doing so, we recommend considering the following:
- Tracking threshold numbers, especially if legislation applies once a certain number of employees residing in a state triggers requirements;
- Being aware of what information or language is needed in external job openings (e.g., salary ranges);
- Understanding what information needs to be communicated internally – and when – about potential opportunities, such as promotions and openings; and
- Ensuring any recruiting or staffing companies you may work with are aware of applicable state rules and what can or should be communicated to potential recruits or applicants as it applies to pay transparency.
Remote hiring and pay transparency rules are trends that appear to be here to stay.
