PAY TRANSPARENCY CONTINUES TO GAIN MOMENTUM IN 2024

Focus on pay transparency is showing no signs of slowing down. The pay transparency movement, which started with a couple of states, continues to steadily spread across the country and is now a focus at the federal level. PEOs and their clients must remain vigilant of current and proposed laws and developing trends.

In recognition of the 15th anniversary of the Lilly Ledbetter Fair Pay Act, the Biden Administration released a proposal that would require federal contractors to post expected salary ranges in its job postings along with prohibiting contractors from using a job applicant’s prior salary history when setting pay. Though the Federal Acquisition Regulation (FAR) Rule will not be finalized until sometime after public comments are due April 1, the requirement to post salary ranges will likely remain in the final Rule. Continuing with this trend of pay transparency at the federal level in 2023, a bill was introduced in the U.S. Congress that would require all employers, not just federal contractors and those subject to state transparency laws, to post expected salary ranges on job postings.

The pay transparency movement started with the states, though, and many states have been joining the movement. The various state law requirements vary, which makes compliance for PEOs and their clients with a nationwide footprint a tall order – and may make a federal requirement a welcome development. Many recent pay transparency laws require employers to publicly disclose salary information in their job postings. For instance, D.C.’s law (which will take effect June 30, 2024) requires all D.C. employers with at least one employee to include a good-faith wage range and benefits description in their postings for open job positions. D.C. followed Colorado (the first state to require pay range disclosure) in this respect. Massachusetts has a similar bill pending in its state legislature for employers with at least 25 employees. Five states — California, Hawaii, Illinois, New York, and Washington — passed or enacted laws of this nature in 2023; more are bubbling up in legislative committees. The trend likely will continue through the end of 2024 and beyond. Michigan has also introduced pay transparency bills that would compel employers to provide wage histories of similarly situated employees for the past three years upon employee request and to maintain detailed job descriptions for each job, including salary information. Under the Michigan bill, any revisions to those job descriptions would have to be approved by a current employee in the position.

Some states are passing laws aiming to achieve transparency through means other than job postings. For instance, Illinois followed California’s lead and passed a law that would require employers with at least 100 employees within the state to submit employee-level pay data to the state via an online portal. Illinois employees can request anonymized data for the pay rates of employees in their job title within the employer and county where the employee works. California requires companies with a presence in Colorado to annually submit an aggregated pay data report, which the state uses to publish information at a state level regarding pay ranges within the Equal Employment Opportunity Commission’s (EEOC) EEO Categories.

Some jurisdictions are requiring transparency beyond pay ranges as well. Effective as of Jan. 1, 2024, Colorado’s pay transparency law not only requires employers to post job opportunities, but also to include application deadlines in postings, notify all employees who are subject to a defined career progression plan of potentially available pay increases, and provide post-selection notification to employees who did not receive increases or promotions.

Recent laws and proposals also signal higher risks for employers’ noncompliance. D.C.’s new law, like New York’s and California’s, empowers its attorney general to investigate violations, enforce the law, and seek damages on behalf of the public. Washington State’s law affords workers’ a private right of action against noncompliant employers. Dozens of lawsuits, including some class actions, have already been initiated against Washington employers for failing to disclose a wage range in job postings.

Additionally, the EEOC is considering moves to re-introduce pay data into its annual EEO-1 report filing requirements.

As the pay transparency movement continues to grow in 2024, PEOs and their clients with employees in multiple states and localities, must determine whether they need to create a patchwork approach to compliance or adopt a nationwide pay transparency policy that complies with every applicable law. With new laws rolling out all the time, PEOs and their clients must continue to pay strict attention to ensure they do not get caught unaware and risk monetary liability for violations.

This article is designed to give general and timely information about the subjects covered. It is not intended as legal advice or assistance with individual problems. Readers should consult competent counsel of their own choosing about how the matters relate to their own affairs.