While new pay data reporting requirements in California and Illinois have grabbed pay equity headlines, we are seeing a groundswell in another type of pay transparency requirements: mandatory pay disclosures to applicants, current employees, or both.
Pay range disclosure laws go beyond the host of state laws that came online several years ago and establish employees’ rights to request information, disclose, and discuss their own wages. Rather, these laws obligate employers to affirmatively (and sometimes proactively) disclose the pay range for a given position under specific circumstances. Employers in nine jurisdictions and counting are subject to such requirements: California, Colorado, Connecticut, Maryland, Nevada, Rhode Island, and Washington, as well as Ohio cities Toledo and Cincinnati. At present, another nine states have similar bills pending.
Key features of these laws – including the first-of-its-kind requirement in Colorado – are discussed below, though employers are encouraged to review the unique features of particular relevant laws since details can vary from place to place.
- What must be disclosed? Laws generally require the disclosure of the “wage range” or “pay scale” for a particular position. Not all laws define the term, but several states (including Connecticut) specify that employers must disclose the range of salary or wages the employer anticipates relying on in setting wages. Connecticut’s law notes that this amount can be construed as “any applicable pay scale, previously determined range of wages for the position, actual range of wages for those employees currently holding comparable positions, or the employer’s budgeted amount for the position.”
- To whom? The pay range generally needs to be disclosed only to a particular applicant to an open position. Several laws (including those in Connecticut, Nevada, Rhode Island, and Washington) further specify that the disclosure requirement applies not only to applicants for new jobs, but also to internal applicants for promotion or transfer and/or to certain other current employees.
- When? Most laws currently on the books require employers to provide the pay range in response to a request after an applicant has interviewed or applied, though some jurisdictions (such as Washington) require the disclosure only after a post-offer request has been made. However, several newer laws – including in Connecticut, Nevada, and Rhode Island – require the employer to affirmatively make a pay range disclosure in certain situations independent of any request. For example, Connecticut requires a disclosure at the time of the offer, and both Connecticut and Rhode Island require a disclosure upon hire or a change in position. Nevada requires an affirmative disclosure when an applicant has completed an interview or applied for, interviewed for, or been offered a promotion or transfer.
Colorado’s Unique Requirements
Most of the mandatory pay disclosure laws require individualized disclosure to a particular individual under particular circumstances. However, Colorado this year pioneered a broad, affirmative pay posting requirement that requires wage disclosures in job postings for positions that are physically located or could (through a remote work arrangement) be performed in Colorado. It remains to be seen whether this broader requirement will catch on; similar bills are currently pending in other states, including New York and Alaska.
Colorado’s law goes a step further in requiring employers to notify current Colorado-based employees of “promotional opportunities” at the company, and has issued (and recently updated) detailed guidance outlining the state’s view of what compliance entails. Thus far, no other states appear to be considering this particular requirement.
Employers may face numerous practical challenges complying with this host of new laws, particularly where they operate across jurisdictions whose laws vary. In developing their pay disclosure processes, employers should consider partnering with experienced legal counsel who are well-versed in the nuances of these new pay transparency and related pay equity laws in order to preserve privilege and to better navigate the risks associated with affirmative pay disclosures.