What Small Business Owners Need to Know About Wage Transparency Laws
Seven states have wage transparency laws on the books, with New York set to become the eighth this fall. Wage transparency laws require employers to let people know the pay range they’re offering for any given position. In some states, this means you need to list a pay range for every position you advertise. In other states, you only need to provide a pay range when it’s requested.
To avoid running afoul of wage transparency laws, you’ll need to know what the requirements are in your state. Here’s a rundown.
Which States Have Salary Transparency Laws?
The following states have some form of wage transparency law on the books. We’ll go over the basic requirements in each state:
California
Businesses with at least 15 employees (at least one of whom is physically located in California) must include a pay scale anytime they post a job. Employees who work for a company of any size can ask for and receive their job’s pay scale.
Colorado
Employers must list a specific salary or pay range in job postings. The postings should also include a “general description” of employee benefits like healthcare, retirement benefits, and paid time off. If bonuses and commissions are part of the job, those must be listed as well.
Employers must also keep records of job descriptions and pay rate history for each employee as long as they work there, and then for an additional two years after the employment ends.
Connecticut
Employers must provide a wage range to any applicant or current employee who requests it. The pay range should include any applicable bonuses or commissions.
Maryland
Employers must provide a wage range to any applicant who requests it.
Nevada
Employers must provide a wage range to any applicant who receives a job interview. They must also provide a wage range to any employee who requests it, as well as any employee who has applied for, interviewed for, or been offered a promotion or transfer.
New York
New York’s wage transparency law will go into effect September 17th, 2023, but here’s what you need to know. Businesses with at least four employees must include pay ranges in both external and internal job postings. The law applies to jobs that will be physically performed in the state, as well as to remote jobs where an out-of-state employee reports to a supervisor, office, or other work site located in New York. Businesses in New York City, Ithaca, or Westchester County also need to comply with local wage transparency laws.
Rhode Island
Employers must provide a pay range to any applicant or current employee who requests it. Upon hiring a new employee, employers must provide a pay range for that specific job. Employers must also provide a pay range to any employee moving into a new position within the company.
Washington
Businesses with at least 15 employees must list a pay range in every job posting, or when an employee who has been offered an internal transfer requests it. The job posting must also include a list of benefits like health insurance, paid time off, and other compensation.
Cities and Counties With Wage Transparency Laws
The following municipalities have enacted their own wage transparency laws.
Cincinnati, Ohio
Employers must provide a pay range to an applicant who requests it, but only after a conditional job offer has been made.
Ithaca, New York
Every business with at least four employees must include a salary range in job postings.
Jersey City, New Jersey
Businesses with at least five employees or independent contractors must list a salary range and benefits in job postings.
New York City, New York
All employers with four or more employees or at least one domestic worker must include a good faith salary range for every job, promotion, and transfer opportunity posted.
Toledo, Ohio
Businesses with 15 or more employees must provide a pay scale when making a job offer.
Westchester County, New York
Businesses based in the county with four or more employees must list a salary range for jobs performed in whole or in part in the county. The Westchester County law has specific language stating it will become void on September 17, 2023, when the state law goes into effect. Otherwise, the state law doesn’t preempt any city laws that already exist.
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What are the Benefits of Wage Transparency Laws?
For employees and job applicants, the benefits of wage transparency laws are obvious: they give additional information about a job. If someone is already working at a job and they find out they’re at the bottom of the pay scale, they may be able to negotiate a raise. And if an applicant finds out that a job they’re interested in doesn’t pay as much as they were hoping, they can decide to look elsewhere.
Wage transparency laws also mean employers are more likely to get a pool of applicants willing to work for the posted salary range. Imagine the following scenario: an applicant applies for a job, and the employer likes their resume. The two sides go through a couple of interviews, and only then does the applicant bring up their salary expectations. The employer can’t offer the range the applicant is seeking, so both sides end up frustrated and feeling like they’ve wasted their time.
When done right, wage transparency laws can make the hiring process more efficient all the way around.
What happens if an employer violates a wage transparency law?
If a company violates wage transparency laws, it doesn’t mean the employer who created the job posting is going to jail. But the company can be fined for each infraction. That means if the company is regularly violating wage transparency laws in their state, they may owe the state thousands of dollars in fines.
Are Wage Transparency Laws the Same as Salary History Bans?
Wage transparency and salary history bans are not the same. Salary history bans prohibit employers from asking an applicant what salary they made at prior jobs. If an applicant volunteers that information, salary history laws prohibit employers from using that information to determine a new hire’s pay.
In general, salary history bans are more common than wage transparency laws. There are currently 16 states with salary history bans that apply to all employers.
Want to learn more about employee requirements? Check out our guide to federal requirements for employers.
