Pay Transparency Laws are a hot topic in HR and legal departments nationwide, as evidenced by the many questions received during the webinar we co-hosted with Littler on the subject. It is clear that while there are still some open questions around enforcement, trends and strategies around simplifying compliance are starting to emerge.
Trends Point Toward More Reporting
Following a state-by-state review of laws currently in effect and their requirements, webinar co-host Jennifer Harpole, Shareholder from Littler, cited a survey from AON showing the shift toward pay disclosure. Nearly half of companies surveyed plan to disclose pay ranges only when required, and nearly one in three plan to disclose salaries nationwide regardless of laws. Considering zero companies were disclosing pay ranges prior to 2021, this represents a seismic shift in behaviors and attitudes.
The legislation may have moved the needle on employers disclosing pay ranges in postings as opposed to relegating it to the hiring process, but early adopters of this legislation, namely California, NYC and WA, have already said that the laws don’t go far enough, and are expected to add new requirements soon to their existing pay transparency laws. At least 6 new states have introduced new bills, and more will likely follow.
Best Practices
Simplify. Consider adding pay ranges to all job postings to ensure compliance nationwide. It is administratively easier to use just one job posting template for all jurisdictions, including remote roles. If your company uses staffing agencies, coordinate with them on pay ranges for each position and format in advance, factoring in both the highest and the lowest geographic costs of living into each pay range. Download the webinar slide deck for a compliant job posting example.
Know Your Headcount. In California, entities of 100 or more employees with one or more employees based in California or assigned to a California establishment (i.e., remote workers reporting to an entity in California) must provide pay data to the State. New this year is the requirement that companies that use labor contractors and have 100 or more temporary employees with at least one employee residing in California or reporting to a California establishment must also report their pay data to the State.
Determine if You Are or Have “Labor Contractors.” Labor contractors are defined in California as an individual or entity that supplies, either with or without a contract, a client employer with workers to perform labor within the client employer’s usual course of business. For example a medical device manufacturer may engage a labor contractor to provide janitorial staff, but if that is the only labor contractor they use, they may not have to comply with California’s law since janitorial services are not considered part of the medical device manufacturer's usual course of business. For more, see Eastridge Chief Legal Officer Erin Medina’s blog for additional pitfalls to avoid in pay transparency law compliance in California.
Be Proactive With Your Staffing Agencies. You might not be aware of the full extent of your temporary workforce, particularly if you have multiple labor contractors. For this reason, it’s best to be proactive and find out as soon as you can if you have that one permanent or temporary employee that makes your company subject to California’s pay data reporting requirements.
Handle Remote Roles With Care. Using a nationwide job posting template helps ensure that all job postings are compliant regardless of the hiring geography. The trend is generally toward including pay ranges in remote jobs, however companies have attempted to exclude states with pay transparency laws. This happened in Colorado, and generated a lot of negative media attention for the employer, which led state regulators to issue new guidance that employers need a legitimate business reason for excluding states with pay transparency laws for remote roles. Acceptable reasons include time zone requirements, being within driving distance of an office, or if minimum wage is too high in states that have these requirements.
Avoid Penalties. We are still waiting to see how penalties will play out. All have enforcement through a State regulatory agency charged with enforcing the statute. There are grace periods for compliance for NYC and California, which means there will be an opportunity to fix things. With fines ranging from $100-$10,000 per violation, things can add up quickly if many job postings are not in compliance. Private rights of action are applicable in certain jurisdictions, in which applicants or employees can sue employers over job posting noncompliance. To avoid this, it’s best to be proactive, start the compliance and reporting process as soon as you can, and err on the side of inclusion of information where possible to avoid noncompliance issues.
To view the recording and to download webinar resources, please click here.
