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States Push for Pay Equity and Transparency Laws

A growing number of states have passed pay equity laws giving employees new rights to request wage information and openly discuss and disclose their wages with other employees and the public.  Some of these states include California, Colorado, Connecticut, Maryland, Nevada, New York, Rhode Island, and Washington.  Other states and localities have now enacted pay transparency laws requiring employers to proactively disclose pay ranges for positions (e.g., as part of a job posting or as part of internal communications around a promotion). 

For example, Colorado’s Equal Pay for Equal Work Act (the “Colorado Equal Pay Act”) went into effect on January 1, 2021, and applies to any entity employing at least one employee working in Colorado.  Notably, this includes remote employees working in Colorado for entities operating in other states.  The Colorado Equal Pay Act prohibits employers from paying employees of different genders (or gender plus another protected class) lesser wages for substantially similar work.  The Colorado Equal Pay Act also prohibits employers from asking about applicants’ salary history and retaliating against applicants who refuse to disclose such information.  Moreover, it prohibits any restriction on employees discussing their compensation with other employees. 

While other states have passed similar laws, the Colorado Equal Pay Act differs in two main ways from the previous pay equity laws.  First, it affirmatively requires employers to post the compensation ranges and the general benefits offered for each position in their job postings.  This requirement applies to all jobs tied to a location in Colorado and for remote jobs.  Second, it requires employers to announce all promotional opportunities to all Colorado employees prior to making a promotion decision.  Such announcements cannot be made to “qualified” employees only.  The Colorado Equal Pay Act sets hefty fines on employers that violate these requirements.

Given the rapid increase in remote work, employers soon took issue with these new obligations.  A number of employers began including language in remote-work postings restricting remote work performed exclusively in Colorado.  The Colorado Department of Labor and Employment cracked down quickly on this supposed loophole.  It issued interpretive guidance stating that such a disclaimer was an “illegal practice” and would also be subject to enforcement and penalties for violation of the Colorado Equal Pay Act.  Accordingly, at present, any employer with at least one employee in Colorado may be subject to the Colorado Equal Pay Act for all of its remote-work postings.

Similarly, New York City has a new pay transparency law (the “NYC Law”) that will require employers to provide minimum and maximum salary ranges for any position located within New York City (or for any position that could be performed remotely from New York City).  The NYC Law goes into effect on November 1, 2022, and applies to both hourly and salaried positions.  It originally included a private right of action for any applicant to bring a lawsuit against a prospective employer for defective postings, but the NYC Law has been amended to only allow current employees to bring such actions.

Washington has likewise passed a new pay transparency law, the Washington Equal Pay and Opportunity Act (“EPOA”), which tracks portions of the Colorado Equal Pay Act and the NYC Law.  The EPOA requires affirmative disclosure of compensation and benefits information in job postings.  The EPOA differs from Colorado’s law, and is more similar to New York City’s law, insofar as it does not require announcements of such information in internal promotion opportunities.  The EPOA goes into effect on January 1, 2023, and there are still a number of open questions about its implementation, including whether it will cover remote positions that can be performed other states, and exactly what compensation and benefits information must be included in postings.

These are just examples of three jurisdictions with new affirmative pay disclosure obligations.  Others exist and it is increasingly likely that more jurisdictions will follow suit.  Employers (especially multi-state employers and employers with large remote populations) should start preparing to develop compliant salary range information and consider the best ways to comply with these new laws.

Honigman will continue to monitor the shifting national landscape and provide informational updates.  Please contact your relationship attorney or one of Honigman’s Wage and Hour Matters team members if you have specific questions.

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