Recently, in the first of a series of articles focusing on companies’ online employment recruitment practices, we wrote about a company’s need to consider what states require an employer to include (or prohibit an employer from including) in a job application that is made available online to residents of states other than Massachusetts. Here, we will address another hot topic in employment law—pay transparency and potential liability for noncompliance with other states’ laws.
What Is Pay Transparency?
Several states, including Connecticut and New York, have passed laws that require employers to be transparent to applicants and potential applicants when advertising for a job opening. And many other states—including Massachusetts—have pay transparency legislation pending.
Making it more complicated for employers is the fact that states have different requirements when it comes to pay transparency, such as what must be disclosed, when disclosures must be made, and by what method. In general, however, pay transparency laws require employers to disclose salary ranges in job advertisements and/or during interviews. So, what happens when you post a job opening online?
Massachusetts Equal Pay Act
In 2018, Massachusetts enacted the Massachusetts Equal Pay Act (MEPA). MEPA was intended to reduce the risk of women being paid less than men only because they have been paid less in the past when there was little focus on pay equity. According to the U.S. Census Bureau, the median income for a man employed full-time in 1970 was $9,180 and $5,440 for a woman who worked full-time. If a woman applied for a new job in 1971, she likely would have been asked what she was earning. Based on the awareness of her earnings, the employer may have offered her a starting pay closer to what she was earning than it would need to offer to a male (who was already earning more) to accept the position. Thus, a pay disparity began that may have followed the female employee through her career.
MEPA was intended to level the playing field by prohibiting employers from compelling applicants to disclose their salary history. As a reminder, MEPA provides a defense for employers that conduct a good-faith self-evaluation of their pay practices once every three years. If it’s been longer than three years since your last pay equity audit, put that project at the top of your to-do list.
Massachusetts Pay Transparency
Pay transparency laws stem from similar concerns about pay disparity and are aimed at shrinking the wage gap between genders and races. Pay transparency laws make sure that applicants know what the going rate (or range) is for the position for all applicants, regardless of gender or membership in another protected classification.
Last fall, the Massachusetts Legislature passed a bill that would require employers with 25 or more employees to disclose the pay range when advertising or posting a position. The bill protects employees who request wage information from their employers. It also bars employers from discharging, retaliating, or discriminating against employees who exercise their rights under the Act.
Interestingly, the bill provides no private right of legal action. Instead, an employer’s first violation is punishable by a warning, a second offense by a $500 fine, and a third offense by up to a $1,000 fine. The bill hasn’t been signed into law yet, but it’s set to become effective one year after it is signed.
Other States’ Pay Transparency Laws
Pay transparency laws vary by state. States that have pay disparity laws include California, Colorado, Connecticut, Hawaii, Nevada, New York, Rhode Island, Washington, and the District of Columbia. Some states merely require publishing a salary range, while others require additional information such as benefit information and other compensation. Some states only require an employer to provide salary information upon request. Some states’ laws only apply to employers with a certain number of employees.
In some states, violations of pay transparency laws provide individuals with the right to sue the company that violated the law. Colorado has publicly disclosed fines against Lockheed Martin Corp. and X Corp. (formerly Twitter) for failing to provide a pay range in job advertisements. Adidas, Albertsons, and Home Depot were subject to class action lawsuits filed by applicants who alleged they applied to jobs that were advertised without the required pay information. New York City has taken the position that websites such as CareerBuilder and Monster, which advertise positions nationwide, violated its pay transparency laws. Other job search sites, such as Zip Recruiter, have also faced complaints. Thus, a company located in a state that doesn’t have a pay transparency law needs to consider other states’ laws when recruiting across state lines.
What Should Employers Do Now?
A large pool of applicants may be available to employers that advertise nationwide. That’s becoming more common as remote work becomes more acceptable. When advertising out-of-state, job postings must be compliant with other states’ law. You should keep apprised of existing and pending pay transparency laws to reduce your risk of unknowingly violating a pay transparency law.
Marylou Fabbo is a partner at the firm Skoler, Abbott & Presser, P.C., in Springfield, Massachusetts, and can be reached at mfabbo@skoler-abbott.com.