Wage Disclosure Laws: A Rising Trend

Wage Disclosure Laws: A Rising Trend

As a way of promoting equal pay in the workplace, both state and local governments are starting to enact laws pertaining to pay equity. However, in recent years, pay equity has evolved to take on a new meaning. In certain jurisdictions, pay equity is not strictly about making sure marginalized groups are being paid fairly.

While that is part of the purpose of wage disclosure laws, they are also starting to encompass the prevention of employers inquiring about prior salaries earned by job applicants and current employees.

Along with that, states and localities alike have started passing new laws that require employers to disclose wages and salary-specific information when speaking with job applicants and current employees, though the specifics of these disclosures vary from one location to the next.

Depending on the jurisdiction, employers will need to disclose wage information either when requested by applicants and employees or when they arrive at a certain point in the hiring process as set forth by a location-based mandate.

Jurisdictions that have wage disclosure laws

There are approximately nine jurisdictions with rules regarding wage disclosure. The situation changes rapidly, so business owners are encouraged to keep an eye on updates as they arise.

The specifics of wage disclosure laws

Wage disclosure laws will vary from one jurisdiction to the next, but many of these laws include sentiments similar to the following:

  • Pay information usually has to be disclosed to applicants or employees, if not both.
  • Employers must offer up a range that depicts the wage or pay potential for a position. While some states do define a wage or pay range, other states do not do so. If a state does not define a wage or pay range by law, employers might need to disclose the minimum salary or wage expectation.
  • Information regarding pay may need to be disclosed as part of job postings, but it may be required after applicants sit for an interview or prior to discussing compensation with any job candidates. Other times at which this information might be required to be disclosed could be before offering the job to a candidate, upon the request of employees, when a change regarding the employee’s position is implemented or after the employee either earns a promotion or has the opportunity to transfer.
  • The dates at which point wage disclosures are put into effect will typically vary by jurisdiction, but as of the time this article is being written, the majority of wage disclosure laws are currently in effect.
  • There may be penalties for employers that do not comply with the wage disclosure laws applicable in the area in which the business is located. For instance, in Colorado, civil penalties range from a minimum of $500 to a maximum of $10,000 per violation. Alternatively, in Nevada, penalties can amount to $5,000 per violation.

Failure to adhere to the wage disclosure laws that are in place in a certain jurisdiction may constitute an illegal discriminatory practice. For example, in New York City, the failure to obey NYC’s wage disclosure law is an illegal and discriminatory practice under human rights laws in NYC.

Civil fines for illegal discriminatory practices in NYC can reach heights of upwards of $125,000 per violation, though penalties in NYC can be as lofty as $250,000 per willful violation.

What to do if your business is affected by wage disclosure laws

If your business is subject to wage disclosure laws, consider the following plans of action:

  • Obtain legal advice to make sure you are properly interpreting wage disclosure laws and applying the requirements to your business operations.
  • Use reliable data when establishing hourly and salary ranges.
  • Formally incorporate applicable wage disclosure requirements as part of your company’s recruiting and hiring processes.
  • Ensure that your company’s hiring managers understand their roles when it comes to complying with wage disclosure laws.
  • Monitor current applicable wage disclosure laws.
  • Stay aware of new developments.

If your business is not held liable to wage disclosure laws, it is still wise to keep an eye out for potential laws of this nature to be unveiled in the future, seeing as several jurisdictions have similar legislation in the works. Wage disclosure laws could be coming to your area soon, so always be mindful of this possibility.

Original content by © IndustryNewsletters. All Rights Reserved. This information is provided with the understanding that Payroll Partners is not rendering legal, human resources, or other professional advice or service. Professional advice on specific issues should be sought from a lawyer, HR consultant or other professional.