Pay transparency laws are popping up across the country, forcing employers to comply with a patchwork of new, untested regulations. One aspect of these new laws that has caused employers to stumble is the requirement that job postings contain clear information regarding pay scales.
Requirements by Jurisdiction1
California
California employers were previously required to provide pay scale information upon request. Now, however, employers with 15 or more employees must affirmatively include pay scale information in their job postings. It does not matter where the company’s workforce resides, as long as one employee resides in California, the employer must comply with the mandate. The requirement even applies to positions that can and may be performed remotely. Further, the requirement still applies even when the employer is posting positions on third-party websites or through third-party services. The law defines “pay scale” as the “salary or hourly range that the employer reasonably expects to pay for the open position.” Cal. Lab. Code §432.3. Nevertheless, bonuses, tips, and other benefits are not included in this definition. Job postings that do not provide the pay scale but instead have hyperlinks to other sites with that information do not comply with the law.
Colorado
Employers with at least one employee residing in Colorado must disclose the compensation range and a general description of all benefits and incentives (e.g., bonus) for the job advertised. This requirement applies to all postings for jobs that could be performed in Colorado. If the job is remote or could be performed in Colorado, employers may not exclude Colorado applicants in order to avoid this posting requirement. Employers may, in the end, pay more or less than the posted range. Unlike California, Colorado permits employers to include links in the job posting to other websites that contain the relevant pay information. Employers that violate this (and other job posting) requirements may be subject to fines between $500 and $10,000 per violation.
Connecticut
Since 2021, employers with at least one employee in Connecticut have been required to provide pay scales to job applicants upon request or to employees upon receipt of their offer of employment or promotion. If the employer is itself located in Connecticut, this requirement extends to employees who are not located within the state. The law defines pay scale to mean the “range of wages an employer anticipates relying on when setting wages for a position, and may include reference to 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.”
However, Connecticut is currently considering a bill that would expand this requirement, making it mandatory to include this information in every job posting.
Massachusetts
House Docket 2814 is currently making its way through the Massachusetts legislature and is expected to become law. The bill requires employers with 15 or more employees in the Commonwealth to disclose the pay range for each posted position. “Pay range” means the “annual salary range or hourly wage range or other compensation that the employer reasonably and in good faith expects to pay for such position at that time.” Significantly, the term “other compensation” is not defined. Accordingly, it is unclear whether or to what extent employers must also include information regarding bonuses, commissions, or equity, among other forms of payment. If the bill passes, violations will expose employers to warnings and financial penalties.
Jersey City, New Jersey
Enacted in 2022, Ordinance No. 22-045 requires employers with 5 or more employees within Jersey City to include in each posting a minimum and a maximum pay amount for the advertised position. The range should extend from the lowest to the highest salary or hourly wage that the employer in good “faith believes at the time of the posting it would pay for the advertised job, promotion, or transfer opportunity.” Notably, independent contractors engaged by the employer on the date the job advertisement is posted will count towards the 5-employee threshold.
New York City
As of Nov. 1, 2022, employers with 4 or more employees are required to include a position’s minimum and maximum salary or hourly wage in any job posting. Much like its Jersey City counterpart, the range that must be posted extends from “lowest to the highest salary the employer in good faith believes at the time of the posting it would pay for the advertised job, promotion or transfer opportunity.” The ordinance applies to any position that could be filled by a candidate who resides in New York City or any position that could be performed at least in part in New York City.
New York State
Effective September of this year, covered employers will be obligated to the minimum and maximum annual salary or hourly range of compensation that the employer in good faith believes to be accurate at the time of the posting. However, the law does not require employers include additional information regarding other forms of compensation, including bonuses, benefits, or equity. Notably, the law also requires employers to include the job description for the position, if one exists. Covered employers include those with 4 or more employees in New York. Further, the law applies to any position that is either performed in the State or that reports to a supervisor, office, or other worksite in New York (even if the position itself is performed in a non-remote location outside of the State). Violations may subject employers to civil penalties up to $3,000.
Washington State
The State of Washington has had pay disclosure requirements since 2019. However, starting in January of this year, employers have now been obligated to include pay data in their public job postings. Specifically, any employer with 15 or more employees, at least one of which resides in Washington, must disclose the wage scale for a position in the job posting. The law applies only to jobs that may be performed in Washington or that are remote. However, like Colorado, Washington has made it clear that employers cannot circumvent the requirement for remote positions by stating that they will not consider Washington applicants. With respect to pay, the law requires employers to include information of the most reasonable and genuinely expected pay range, including all benefits.
Practical Considerations
These requirements raise numerous complex questions concerning employers’ efforts to attract and retain talent.
One of the most common concerns involves the relative merits of posting broad pay ranges. On one hand, posting a broad range gives employers flexibility to fix pay within a specific role. This is incredibly valuable if the role is defined to include individuals at various levels of experience, if the employer has found it necessary to significantly adjust pay for that role given extenuating circumstances (e.g., pandemic, tight labor market), or if the role itself is broad or has changing duties. On the other hand, posting broad pay ranges may make it less likely that top talent will apply, may send the wrong message regarding likely pay for most applicants, or may draw potential scrutiny from administrative agencies.
Another common concern is how to best describe a particular role given the employer’s (a) current workforce, (b) competitors, and (c) willingness to pay. As an example, suppose two employers post an opening for a position titled “manager.” Suppose, further, that the two positions have very different primary duties, require very different expertise, and therefore have very different pay scales. A candidate looking to apply for a “manager” position may see the two postings and choose to apply only for the position with the higher scale, not realizing that the jobs are materially different.
A third issue on employers’ minds is a matter of proof. How can they best position themselves to demonstrate that the pay ranges in their postings accurately reflect the pay for that position? This is particularly true when pay is so heavily influenced by particular circumstances. For example, should a California employer pay the same wage to someone who lives in San Francisco and to someone who, performing the same role, lives in rural Idaho? Arguably, location and cost of living matters. But this is just one of a myriad variables that come into play, and employers are finding it difficult to ensure all of that information and the decision-making process is properly documented.
Unfortunately, there is not a one-size-fits-all answer to these questions. In deciding the best course, each employer must take a hard look at its competition, the structure of its workforce , and the labor market for the position advertised. That said here are some suggested tips:
- Look at what your competitors are paying. Of course, this has always been an important business consideration, but it is even more critical now that individuals can compare potential employers prior to even applying.
- Be particularly mindful of how you describe a position in a job posting. Some jurisdictions require that you include a full job description. But for those that don’t, consider describing the position in unique ways that allow you to explain potential discrepancies with your competitors’ pay scales.
- Consider how you describe other forms of compensation in the job post. In the jurisdictions that do not require inclusion of such information, it may nonetheless be beneficial to add it to the post. This is especially true for employers that may offer lower base compensation but make up for it in other ways.
- If you currently have many roles that are broadly defined, consider restructuring your workforce to create narrower roles. Attempting to hire an engineer with one year of experience and an engineer with five years’ experience under the same catch-all title may prove even more difficult given these new laws.
- Regularly audit pay levels for positions. For each requisition and hire, be sure to document why you believe the new employee’s pay is commensurate with the pay scale.
- Devote time to deciding where a job can and should be performed. Determining that a job can or should only be performed in a specific jurisdiction will make compliance easier.
- Keep an eye out for legal developments in this area. As you can see, new laws and ordinances are popping up frequently.
[1] This is not an exhaustive list of all the jurisdictions that have job posting requirements. We included only: (a) jurisdictions with a large number of employers and employees and (b) jurisdictions that are soon to pass bills or have already enacted laws requiring wage information in job postings open to the general public. For instance, we did not include information for Ithaca, New York, which has a posting requirement. By way of another example, we did not include information for Nevada, which requires employers to provide pay ranges to applicants after the first interview.
