New Pay Transparency Laws

Business professionals discussing pay increases in a meeting

Written by Brandon Wright

Applied Business Solutions

March 21, 2023

As a multi-state employer, it’s essential to stay informed about new pay transparency laws that may impact your business. With the changing landscape of pay transparency, it’s more important than ever to understand your obligations and take action to comply.

Recent years have seen a significant shift in pay transparency laws in the United States, affecting a growing number of employers. In the past, employers had no obligation to disclose pay information or discuss compensation during salary negotiations. However, as many states and localities have enacted laws banning employer inquiries about prior pay, the landscape has changed.

Now, new pay transparency laws have emerged in several states, including Colorado, California, Washington, and New York City. These laws require employers to disclose specific types of compensation information about advertised job opportunities, including pay range, bonuses, commissions, and health insurance. Additionally, some states require employers to provide compensation ranges to job applicants upon request or automatically when making a job offer.

It’s essential for multi-state employers to understand how these laws apply to their business. Even if you only have one remote employee working in a jurisdiction, you may still have obligations under pay transparency laws. Failure to comply can result in significant civil penalties or private lawsuits, with some jurisdictions imposing penalties of up to $250,000 per violation.

To comply with pay transparency laws, employers should take the following steps:

1. Consult with counsel to determine if you are covered by one or more state or local pay transparency laws. It’s crucial to remember that you may have obligations under some of these laws, even with only one remote employee working in the jurisdiction.

2. Determine how you will comply with pay transparency requirements. Will you comply only in specific jurisdictions where a pay transparency law applies, or will you take a uniform approach and disclose pay ranges in all job postings nationwide?

3. Consider conducting an internal pay equity review or other evaluation of compensation to identify any inconsistencies that may create employee morale issues or potential legal exposure.

4. Consider an external pay study to ensure that your compensation practices are competitive in the market.

While complying with pay transparency laws may present challenges for employers, there are also potential benefits. Pay transparency can help promote pay equity, increase employee trust and engagement, and attract top talent. By proactively addressing pay transparency requirements, multi-state employers can help protect their business while also creating a more equitable and transparent workplace.

As a multi-state employer, it’s critical to stay informed about new pay transparency laws and take action to comply. By working with legal counsel, conducting an internal review of compensation, and considering external pay studies, employers can navigate these changes and ensure that their business is in compliance with current laws. At Applied Business Solutions, we are committed to helping our clients stay informed and compliant with changing regulations.

Applied Business Solutions clients can reach out to their HR teams for assistance in understanding if they must meet any pay transparency requirements or not. Our teams can also offer guidance on all the ways they can update their current processes in order to remain compliant.

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Applied Business Solutions has 75+ years of combined Payroll, Insurance and Human Resources experience with companies ranging from 1 to 2,500 employees.