Two recent developments in equal pay laws—salary range disclosure and pay data reporting—are forcing employers in certain jurisdictions to review their pay practices and begin addressing pay equity if they are not doing so routinely now.
Both New York City and California have pay range disclosure laws with rapidly approaching effective dates on November 1, 2022, and January 1, 2023, respectively. We expect laws like these to continue spreading, creating a patchwork compliance problem that will ultimately force multistate employers to adopt national strategies for compliance. This Insight discusses these equal pay trends, the upcoming requirements in New York City and California, and how employers can prepare as pay equity laws multiply around the nation.
Pay Range Disclosures
Pay transparency laws that require disclosure of salary ranges are not new. States such as California, Connecticut, Maryland, Nevada, Rhode Island, and Washington, and cities such as Cincinnati and Toledo, Ohio, have laws requiring employers to provide applicants and employees salary ranges at varying times, such as when requested, upon making an offer, or after an interview. The newest iteration of pay range disclosure laws, which requires employers to include salary ranges on job postings, pushes the envelope even further. This development is the fastest growing movement in equal pay law. Currently, Ithaca, New York, Jersey City, New Jersey, and Colorado have laws that require salary range disclosures on job postings. Jurisdictions with similar laws that will soon become effective include the states of California and Washington, New York City, and Westchester County, New York. Similar legislation is pending in New York State.
Pay Data Reporting
Another trend that has already spread globally and is now taking hold in the United States is pay data reporting laws. As we previously discussed, the Illinois Equal Pay Act was amended in 2021 to require employers with at least 100 employees in Illinois to file for an Equal Pay Registration Certificate. To obtain the certificate, Illinois employers must certify, among other items, that they are in compliance with applicable equal pay and anti-discrimination laws and that wage and benefit disparities are corrected when identified. Additionally, employers must file, among other items, a description of how the organization determines wages, employee demographical and pay information (including race, ethnicity, and gender), total wages paid during the previous calendar year, a copy of their EEO-1 report(s), and any other information the Illinois Department of Labor deems necessary to determine if pay equity exists among employees. California also recently expanded its existing pay data reporting requirements when Governor Newsom signed S.B. 1162 on September 27, 2022. Commissioner Keith Sonderling of the Equal Employment Opportunity Commission (EEOC) also recently announced that pay disclosure report EEO-1 Component 2 will be coming back at some point in the near future. This trend is expected to continue as various government, shareholder, and affinity group stakeholders seek more transparency.
New York City Developments
Similar to employers in Colorado, New York City employers with four or more employees (four nationwide with at least one in New York City) must include a pay range in all advertisements for jobs, promotions, and transfer opportunities for positions that will or could be performed in the city beginning on November 1, 2022. Employers must include the minimum and maximum annual salary or hourly wage that the employer in good faith believes at the time of the posting it would pay for the job, promotion, or transfer. Current guidance from the city clarifies that “salary” means base wages, but does not include other forms of compensation such as overtime pay and bonuses.
In California, H.B. 1162, which we previously described, becomes effective on January 1, 2023. Employers with 15 or more employees (15 nationwide with at least one in California) will be required to provide pay scale information for any posted position and provide such information for use when posting a job—even through a third party. The pay scale is defined as the salary or hourly wage range that the employer reasonably expects to pay for the position. Employers of all sizes will be required to provide current employees with pay scale information for their current position. The law also includes certain record-keeping requirements.
In addition, H.B. 1162 also expands on California’s pay data reporting requirements. Beginning in 2023, in addition to providing pay data on each employee’s job category, race, ethnicity, sex, hours worked, and pay band (which is already required under current law), employers will have to include median and mean hourly rates within each job category for each combination of race, ethnicity, and sex. H.B. 1162 also expands which employers must submit pay data reports. Employers in California with 100 or more employees (100 nationwide with at least one in California), regardless of whether they are required to file an EEO-1 report, will have to provide pay data. Additionally, employers with 100 or more employees hired through labor contractors, will have to submit pay data for those contracted workers.
What Employers Should Do Now
- Review upcoming job postings (including promotions and transfer opportunities), determine the pay range the organization would reasonably set for an applicant or employee in the given role, and revise job postings accordingly. Multistate employers should consider whether to continue the patchwork path to compliance or take a broader approach by providing pay range disclosures in all applicable locations.
- Review organizational structures, roles, pay practices and factors for determining compensation to ascertain appropriate and consistent pay ranges and practices on a systemic basis.
- Seriously consider conducting a pay equity audit to identify any pay issues before the new salary range disclosure laws are in place. But consult with legal counsel to understand the legal risks of doing so, make sure your organization is protecting the analysis, and be prepared to rectify any problems uncovered.
- Consult with legal counsel to determine the extent to which these pay transparency laws apply to any remote positions.
- Educate human resources staff and hiring managers on the latest compliance requirements and strategies for handling employee relations issues that will likely arise with greater pay transparency.
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 Pay range disclosure laws in Rhode Island and Washington will take effect January 1, 2023.
 Such as the U.K. Gender Pay Gap annual public disclosure.
 Generally, this would require employers with 100 employees to disclose aggregate pay data to the EEOC.