From coast to coast, new states are passing laws that require employers to implement clear pay transparency policies, such as providing specific salary ranges in their job postings.

These laws are an expansion of the federal Equal Pay Act – which requires equal pay for equal work among similarly-situated employees of different sexes – and are aimed at combating wage discrimination in all forms by closing pay gaps for supervisory and non-supervisory employees alike, particularly in underrepresented populations.

Colorado, Maryland, Nevada and Connecticut already have laws in effect that require employers to disclose salary and pay rate information to applicants according to specific criteria established by each state. Below is an overview of new salary transparency laws going into effect in New York, California and Rhode Island that every employer must know if you plan to hire, promote and/or transfer employees in these states.

New York City and New York State Pay Disclosure Laws:

Effective November 1, 2022, NYC employers with four or more employees must include a “good faith salary range” in all job postings for positions based in the City.

This new law, which is an amendment to the NYC Human Rights Law, requires salary transparency in all advertisements and postings for new positions, promotions and/or transfer opportunities, if the position will be filled by someone performing work in NYC.

Although employers are not required to use a written job posting for new positions, employers who do rely on a posting or advertisement must include the following for any position based in NYC:

• The minimum and maximum salary (or hourly rate) that the company believes in good faith will be paid for the position in question (i.e. what the company honestly believes it will pay to the successful applicant); and
• The range cannot be open ended (i.e. “ salary up to $60,000/year,” or “pay begins at $16.00/hour”).

These rules apply to both internal and external job opportunities, in any medium, whenever a job opportunity is publicized to a pool of potential applicants. Of course, a job posting can contain information about other compensation and benefits, which are not required as part of the law. This rule only relates to the base salary/hourly rate for the position.

In addition, the New York legislature has passed a pay transparency law that is pending before the Governor’s office, which the Governor is expected to sign in the coming weeks. If enacted, the law will go into effect some time in 2023, and will be similar to the NYC law, but with a few caveats. For example, the law will require both the compensation range for such job and the job description if a description exists. This law would also require employers to provide information about commission-based compensation for the same positions, as well as positions paid a salary or hourly wage.

California Pay Transparency Law

Governor Newsom recently approved Senate Bill 1162, which imposes new salary disclosure requirements for all job postings for California employees. Effective January 1, 2023:

• All employers with 15 or more employees must provide the pay scale for the position in any job posting. “Pay scale” includes the salary or hourly range that the employer reasonably expects to pay for the position.
• Employers with 15 or more employees, must follow the pay disclosure rule for internal and external postings, even when the employer uses third parties to announce or publish job positions;
• All employers must, upon reasonable request, provide the pay scale for the position in which an employee is currently employed, or the position which an applicant is seeking to apply for employment;
• Employers generally cannot rely on the salary history information of an applicant as a factor in determining whether to make an offer of employment, or what salary to offer an applicant. However, if an applicant voluntarily and without prompting discloses salary history information to a prospective employer, the law does not prohibit that employer from considering or relying on that voluntarily disclosed salary history information in determining the salary for that applicant;
• Employers may not request, verbally or in writing, any salary history information about an applicant for employment; and
• Employers must maintain records of the job title and wage rate history for each employee for their entire employment period, plus an additional three years after the employment ends for any reason.

The new law also requires that California employers with 100 or more employees submit on or before the second Wednesday of May 2023, and then annually thereafter, a pay data report containing certain statistics about their employees. This pay data report must include the number of employees by race, ethnicity and sex in each of the following categories:

• Executive or senior level officials and managers
• First or mid-level officials and managers
• Professionals
• Technicians
• Sales workers
• Administrative support workers
• Craft workers
• Operatives
• Laborers and helpers
• Service workers

Covered employers should be aware that while this pay data report may contain similar information to the federal EEO-1 report, this California report must be filed separately with California Civil Rights Department and must adhere to all California-specific criteria to be compliant.

Rhode Island Equal Pay Act

Last year, Rhode Island passed a new Pay Equity Act, which takes effect on January 1, 2023. This Act requires:

• Employers to disclose the wage range for a position or application of employment at any time this information is requested by the applicant or employee (including internal and external job postings); and
• Employers to provide both the minimum and maximum wages for the position in question.

This law also prohibits employers from inquiring about a job applicant’s current or prior wage rate or salary, or otherwise intentionally attempting to obtain information regarding prior compensation paid to any job applicant.

If an employer otherwise receives information about a job applicant’s current or prior salary history, the employer cannot rely on this information in making a hiring decision or setting wages that will be paid upon hire. However, like with the California law referenced above, if an applicant voluntarily tells a prospective employer about their current or prior wages, the employer can rely on this information to offer a higher wage rate than initially contemplated, and in doing so, can seek confirmation of the candidate’s wage information.

Next Steps

Employers who fail to comply with state-imposed salary transparency laws can be subject to steep penalties for each violation, as well as injunctive relief and other remedies. Employers and their hiring managers should carefully review any internal and external job postings (including positions for remote employees) to ensure compliance with these new laws.