Pay transparency laws for 2023: What employers need to know

On January 1, 2023, the “Pay Transparency for Pay Equity Act” will go into effect in California, adding the third-biggest state to a growing list of states and cities requiring full transparency when it comes to salary disclosure during the hiring process. With six other states and several cities and counties passing similar legislation, it’s clear that pay transparency will emerge as a hot-button issue for 2023; and that more laws in other states will follow. 

And these laws might be good for business – though many, many executives disagree. Being open about salary can build trust with prospective employees – which is important when only one-third of employees believe their pay is equitable. Proponents argue that transparency is also integral to an organization’s DEI goals, with open salary disclosure assuring the public that no one is paid more on less on the bases of race, gender, or sexual orientation.

However, with different states come different legislation, leaving business executives and hiring managers confused when it comes to adapting their hiring process to abide by local laws, especially if they employ/advertise to workers across multiple states. Here we give a breakdown of pay transparency laws per state, and everything you need to know to stay compliant:

California

The most recent state to pass legislation, starting in 2023 California will require companies with 15 employees or more to include the pay scale in both internal and external job postings as well as provide it to a job candidate upon request. Previously, organizations only had to provide this information upon the request of job candidates. This new regulation will impact roughly 200,000 companies and 19 million workers throughout the state. Technical violations of the pay scale requirements could result in penalties up to $10,000 per violation.

Additionally, the new law dictates that companies of 100 workers or more will be obliged to send annual reports on employees’ salaries to California’s Department of Fair Employment and Housing. Companies that don’t comply could receive fines of $100 per employee. 

Rhode Island

Rhode Island's pay equity act goes into effect on January 1, 2023. According to the new legislation, employers must provide candidates with salary ranges at the time of hire or at the time of application if requested by the applicant. Salary ranges must also be provided for any internal movement within the company.   

As part of this new act, employers also cannot ask an interviewee for their wage history or use a candidate’s wage history as a factor when determining whether they want to make a job offer. Should a company violate this salary history ban, employees are entitled to compensatory damages and special damages up to $10,000 in addition to reasonable attorneys’ fees. The Department of Labor & Training can also impose a penalty of up to $5,000 and order relief as necessary.

The backbone of this law is its pay discrimination provision. The law states that companies cannot pay their workers “at a wage rate less than the rate paid to employees of another race, or color, or religion, sex, sexual orientation, gender identity or expression, disability, age, or country of ancestral origin for comparable work.” Companies in violation of this are also liable to pay up to $10,000 in damages to employees.

Washington

The third state to pass a new wage transparency law for 2023, beginning on January 1, all businesses engaging in any business, industry, profession, or activity in Washington with more than 15 employees and at least one employee working in Washington, must provide a wage scale or salary range in every job posting. This applies to every job posting that recruits Washington-based employees, whether it is directly through the company or through a third party/recruiter.

Job postings will also need to include any types of benefits or other compensation for each position. Employers must disclose a salary range or wage scale and a general description of benefits and other compensation on postings for remote work that could be performed by a Washington-based employee. The law extends this requirement not just for external job candidates but also for internal employees looking to change positions. 

New York

New York's statewide law will go into effect September 2023, but the first American city to enact pay transparency legislation was New York City. The “NYC Human Rights Law” went into effect on November 1, 2022. Like the above laws, it requires businesses to list salary ranges on all job postings, promotions, and transfer opportunities. The legislation applies to all positions taking place wholly or partly in the city, regardless of whether the work is being done remotely, in an office, or in the field. 

In addition to New York City, the city of Ithaca, Albany County, and Westchester County have passed pay transparency laws. All require salary ranges in jobs postings for employers based in their jurisdiction with advertisements for jobs in those locations.

Colorado

Colorado’s “Equal Pay for Equal Work Act” went into effect on January 1, 2021 and gives employees the right to disclose their wage rate to coworkers without retaliation or discipline from the employee’s workplace. Employees who believe they have been wrongly discriminated against can make a complaint to the Office of Institutional Equity & Compliance (OIEC) and companies may be fined.

Similar to the above-mentioned laws, this act also requires businesses with at least one employee residing in the state to list salary ranges in job postings, as well as a general statement of the types of benefits and other compensation offered with the position, notify Colorado workers of potential advancement opportunities, and keep wage records for the duration of a worker’s employment period plus two years afterward.

Similar to Washington’s new law, Colorado’s salary and benefit statement requirements applies to job postings for remote jobs that could be performed by someone working in Colorado.

Connecticut

The “An Act Concerning the Disclosure of Salary Ranges” law has been in effect in Colorado since October 1, 2021. Signed into law to help combat the gender wage gap, the act prohibits employers from refusing to provide wage ranges to job candidates upon request and makes it obligatory to include wage ranges on every job offer made. Any violations can be brought by employees to court, and successful claimants can receive monetary damages paid by the company.

Maryland

The state’s “Equal Pay for Equal Work” law was amended in 2020 to include a ban on salary history requests by businesses. Amendments prohibit interviewers from asking candidates about their past wages, both directly and indirectly, and state that hiring decisions cannot be made based on salary history.

Once a job offer has been made, employers can use the salary history of an applicant to support higher offers. However, this information must be provided voluntarily by the prospective employee. The law also states that companies must provide salary ranges to applicants on request.

Nevada

One of the first states to pass legislation concerning pay transparency, current laws in Nevada prevent businesses from asking job candidates about their salary history both directly and indirectly. They do, however, allow interviewers to ask applicants about their salary expectations for the position during the hiring process. Salary history cannot be used by companies to determine job offers under the law and salary ranges must be given immediately following a candidate interview.

Jersey City, New Jersey

As the only location in New Jersey with a pay transparency law on the books, Jersey City requires salary ranges in job postings for job advertisements in those locations and applies to any employer doing business in the area. The requirements went into effect June 15, 2022, and are very similar to nearby New York jurisdictions, Ithaca and Westchester County.

With wage disparity continuing to dominate the headlines, your business needs to stay on top of local pay transparency laws. And if your company doesn’t reside in any of the above states, it pays to stay ahead of upcoming legislation that can affect your organization.

Contact us today to see how we can support your organization through these changing times.

This article is not meant to provide legal advice.  As is the case with any law or legal requirements, Companies should seek guidance from legal counsel.