Update Regarding Pay Transparency Laws
Continuing a trend, pay transparency bills have been introduced in legislatures across the country. As we reported on here, California (effective Jan. 1, 2023), Illinois (effective Mar. 23, 2023), New York (effective Sept. 17, 2023), Rhode Island (effective Jan. 1, 2023), and Washington (effective Jan. 1, 2023) have all passed pay transparency laws that either have already become effective or are scheduled to become effective this year. Now, five other states and the District of Columbia are looking to join their ranks. Additionally, in March 2023, federal pay transparency legislation was introduced in the U.S. House of Representatives that would apply nationwide.
Pay Transparency Laws
As a reminder, pay transparency laws usually require that an employer disclose the pay or salary ranges of an available position on job postings for that position. While the topic of pay or salary disclosure is a common theme, individual laws differ as to which employers are subject to the requirements of the law, which people are entitled to the disclosure (e.g., applicants and/or current employees), and what must be disclosed (e.g., other forms of compensation and employee benefits).
Pending Pay Transparency Legislation
Currently, pay transparency bills are pending in the U.S. House of Representatives (H.R. 1599); Connecticut (Proposed H.B. No. 5243); Massachusetts (H.1849); Michigan (HB 4406) (SB 142); New Jersey (A3937) (S3663); Oregon (SB925); and Washington, D.C. (B25-0194).
The federal U.S. House of Representatives bill would amend the Fair Labor Standards Act (“FLSA”) and require employers to disclose the wage or wage range in the public or internal posting of an employment opportunity. This would include the range of wages or salaries and other forms of compensation reasonably expected to be offered for the employment opportunity. This would apply to employees of enterprises that have an annual gross volume of sales made or business done totaling $500,000.00 or more, and to employees individually covered by the FLSA because they are engaged in interstate commerce or in the production of goods for commerce. Given that the U.S. House of Representatives is currently controlled by a Republican majority, it is unlikely that this legislation will pass.
Connecticut first enacted a pay transparency law in 2021. The law requires employers to disclosure to applicants and employees the salary ranges for their positions. The newly proposed bill would expand the current mandate and require employers to disclosure salary ranges in all job postings.
The Massachusetts bill would require employers with 15 or more employees in Massachusetts to disclose a pay range for all job postings, including new positions, promotions, and transfers. The pay range would include the annual salary, hourly wage range, or other compensation that the employer reasonably and in good faith expects to pay for the posted position. It is widely anticipated that the Massachusetts bill will be passed this year.
Michigan currently has two pay transparency bills pending: HB 4406 and SB 142. HB 4406 would require employers to provide employees, within 30 days of their request, with wage information for similarly situated employees covering a period of not more than three (3) years before the date of the request. Employers would be permitted to redact the names of similarly situated employees, but would be required to provide information about the sex and seniority of the similarly situated employees. Wage information would include not just salary and hourly wage information but also bonus pay, overtime pay, and other forms of compensation provided by the employer. SB 142 would require that employers with more than 5 employees create and maintain a job description for each position that must include the salary information for that position. Employers would be required to make the job description available to a job applicant during the recruitment, hiring, or promotion process and to any employee upon request.
In New Jersey, identical bills have been introduced in the Assembly and the Senate. These bills would require that employers disclose for each job opening the hourly wage or salary, or a range of the compensation, and a general description of all of the benefits and other compensation to be offered to the hired applicant.
The Oregon bill would require employers to disclose in job posting the pay range and general description of the employment benefits associated with the employment, promotion, or transfer opportunity.
Last month, both Hawaii (SB1057) and Illinois (HB3129) passed pay transparency bills and sent them to their governors’ offices for signature. It is widely anticipated that the bills will be signed. The Hawaii bill would require employers to disclose on job listings the hourly rate or salary range that reasonably reflects the actual expected compensation. The Illinois bill would require a salary range to be listed on all job postings as well as information on any other form of compensation, such as bonuses, and a description of other employee benefits.
Additionally, while it differs from the types of pay transparency laws concerning job postings listed above, South Carolina (HB4212) currently has a pay equity bill pending in its legislature that addresses pay secrecy in the workplace. If enacted, it would make it unlawful for an employer to prohibit employees from discussing their wages or wages of other employees. Of note, the National Labor Relations Act (“NLRA”) entitles employees of covered employers to discuss, among other things, their wages and wages of their coworkers. More information on the rights of employees to discuss their wages under the NLRA can be found here.
As pay transparency laws continue to gain popularity across the country, employers – especially those doing business in multiple jurisdictions – need to stay aware of the changing landscape. We will continue to monitor the progress of these bills and report on any updates. If you have any questions about pay transparency laws, feel free to contact one of Honigman’s Labor and Employment Attorneys here.