Pay Transparency - What's New for 2023
by Sheri Bender
California originally banned employers from asking about salary history in 2018. Then Colorado was the first state to pass a pay transparency law in 2019. The initial intention of these initiatives was to reduce the gap between earnings of men and women.
Fast forward to 2023 and 1 in 5 Americans live in states that require employers to disclose salaries in job postings. Some business owners and HR professionals may be a little squeamish when thinking of pulling back the curtain on pay information. However, there are many positives to sharing pay in the beginning of the recruiting process.
Proponents of pay sharing believe it will help establish expectations early with candidates, reduce time in the hiring process, minimize bias, assist candidates in understanding if a position fits their salary expectations and, in some cases, current employees can gain an understanding of the organization’s overall pay practices and total rewards. Companies can also see how they compare in the job market without spending money on costly compensation surveys and can invest that back into the employees.
According to a Forbes article, 1 in 6 companies that shared salary information in job postings saw an increase in applicants. This is great news in times when recruiting has been so challenging.
The new state-specific laws have created a complicated situation for many employers. Especially those who regularly recruit in multiple states. Since so many employers were automatically thrust in to the virtual work situation almost two and a half years ago, many employees may have relocated to different states than they originally were hired. This potentially creates obligations and liabilities for companies in states the company has no physical work presence.
When a company is advertising for a position that could be performed by a remote worker in any state, it is important to ensure the job posting complies with the new pay transparency laws. This is why many organizations are opting to adapt and post full pay ranges (from low to high), and include all compensation and potential benefits an employee might be eligible for. This would ensure they are in compliance with Colorado state law.
Employers should also be aware that they cannot avoid these obligations by stipulating that people of a particular state are not eligible for an advertised role. Colorado's Department of Labor has considered such actions to be outside the intentions of the state’s law.
Many employers are re-evaluating their employment policies and return to the office plans. Some positions are not able to be performed 100% remotely, while some can (and perhaps are) performed fully-remote. It is not recommended that employers simply turn a blind eye and state “we are not going to hire employees from X, Y, Z states”.
While this change may seem daunting, employers can take steps to ensure they have flexibility while still complying with state and local job requirements.
If employers are certain their positions are not eligible for remote work and the current workforce is working in states that do not currently have pay transparency laws, the company may not need to post wage ranges on job postings. In this case, it will be important that the company continue to monitor employment law and remote work changes.
Employers may elect to evaluate their recruiting practices for all job postings and standardize their job postings to include wage ranges for all positions nationwide. According to a Pay Clarity Survey some 62% of US employers are considering disclosing pay rate information in future job listings, even in states that don’t currently require it. This is most efficient for employers that need to hire in CA, NY, or CO.
Also, companies that regularly hire in many states, may implement a policy of including a broad pay range, as long as those numbers are shared in good faith. This provides flexibility when it comes time for the compensation negotiations. Then, the salary range that a company offers the selected candidate could ultimately be based on a variety of factors, including geography and experience level.
Current Pay Transparency Guidelines as of January 1, 2023:
All employers with 15 or more employees, at least 1 located in CA. Required to provide applicants with the pay scale for a position upon request, including those posted by 3rd parties. Upon request, employers must also disclose pay ranges current employees for their current position. Employers must maintain job title and pay history records for each employee for the duration of employment plus three years after the end of employment.
CO employers with one or more employees must include salary compensation information and a general description of all employee benefits for all job postings and require a general description of any bonuses, commissions or other forms of compensation. Companies must share promotion opportunities, including pay and benefits, with existing employees.
Employers with one or more employees in CT must provide a wage range to current employees and applicants upon the receipt of whichever comes first either: (1) applicant's request or (2) the communication of an offer of employment.
Employers must provide the pay range for an employee’s position a change in the employee’s position or an employee’s request for a pay range.
Employers must provide the wage range for a position at the applicant's request, and employers are prohibited from refusing to interview or hire an applicant because they requested the wage range for the position.
Employers must provide the wage or salary range or rate of pay for a position to applicants who have completed an interview. They must also provide a pay range or rate to employees who have applied, interviewed or requested the information for a promotion or transfer.
Employers with 5 or more employees in Jersey City must disclose the minimum and maximum salary, or hourly wage, and benefits for each job, promotion or transfer opportunity. The range may extend from the lowest to the highest salary that the employer believes, in good faith, it would pay at the time of the posting.
Employers must disclose pay or pay range for all jobs, promotions and transfer opportunities that can or will be performed, at least in part, in the state. The range may extend from the lowest to the highest hourly wage or salary the employer believes, in good faith, at the time of the posting it would pay. The law does not cover advertisements for temporary employment at a temporary firm.
All Cincinnati and Toledo employers located within the city with 15 or more employees, including referral and employment agencies, (does not include any local, state or federal government except for the city), employers must provide the wage range for the position to job applicants upon request, provided the applicant has been given a conditional offer of employment. Toledo employers must provide the wage range for a position to job applicants.
Employers with one or more employees in RI must provide the wage range for a position to an applicant prior to discussing compensation.
Employers must provide the pay range both at the time of the employee’s hire, when the employee moves into the new position, and upon request throughout the course of employment.
Employers with 15 or more employees must disclose the wage scale or salary range and a general description of all of the benefits and other compensation to be offered to the hired applicant. Upon request of an employee offered an internal transfer to a new position or promotion, the employer must provide the wage scale or salary range for the employee's new position.