A growing wave of state legislation seeking to force businesses to disclose salary ranges in job ads has expanded into Illinois, New Jersey, and more states this year, as business groups find mixed success in minimizing the risk of private civil lawsuits against employers that fail to comply.
The measures now advancing in several Democratic-majority legislatures are similar to laws that recently took effect in California, New York City, and Washington state, after Colorado first implemented the job-ad mandate in 2021. A statewide New York law also is set to take effect in September.
Given these laws’ growth in major US business hubs, multi-state employers face increasing pressure to establish and publicize salary ranges nationwide rather than complying on a place-by-place basis. Some large corporations including
Supporters of the state measures say they’re designed to help close the wage gap for women and workers of color. Aside from pay range, some mandate a description of employee benefits in job postings. A few go a step further to require that employers also provide current employees a pay range for their position upon request or at least once annually.
When job applicants have more information about the pay range they can expect, they’re better able to negotiate for fair pay and avoid having pay discrimination follow them from one job to the next, said Illinois state Rep. Mary Beth Canty (D). She’s sponsoring a pay transparency bill (HB 3129) that won Illinois House approval March 24 and now awaits a Senate committee hearing.
Pay transparency will not only help employees, but also employers by avoiding the wasted time of interviewing applicants whose salary expectations exceed what the company will pay, Canty said.
“We’re going to see this take on more of a national scale,” she said in a phone interview, noting the legislative efforts coinciding with employers’ moves toward advertising pay ranges even where it isn’t required. “A lot of companies are already doing this.”
Nearly half of ads on the job site Indeed include salary ranges, up from 18% three years ago, the company said in data released March 14.
The Hawaii Senate also passed a bill (SB 1057) March 7 requiring salary information in job ads. Similar measures are pending in Maine, Maryland, Massachusetts, Oregon, and Washington, D.C.
Private Right of Action
But business groups and Republican lawmakers are reluctant to see the mandates spread too far and too fast, largely because some of the new laws and pending bills allow job-seekers or employees to sue businesses that don’t follow the pay transparency rules, the details of which vary notably from place to place.
The California and Washington pay transparency laws that took effect Jan. 1 both allow civil lawsuits against employers that fail to follow the job posting requirements, unlike Colorado where enforcement is handled solely by the state labor department. The New York City law that took effect Nov. 1 allows employees to sue their current employer for violations, but job seekers are limited to pursuing complaints through the city’s human rights commission.
Proposals advancing in Connecticut (HB 6273) and Illinois this year also include a private right of action, although they could be revised as they work their way through the legislatures. The Connecticut legislature’s labor committee approved that state’s proposal March 23, setting it up for a House floor vote.
Including a private right of action seems a risky policy choice for a requirement such as this, where a state agency imposing penalties could work more effectively, said Amory McAndrew, an attorney with Hoguet Newman Regal & Kenney LLP in New York City.
The disparities in how different states are crafting their pay transparency laws may also present challenges.
“In one jurisdiction, a company might feel OK about the risks and liabilities, because there’s maybe more limited enforcement,” said Nicholas Chandler, an attorney with Alston & Bird LLP. “But there’s going to be other jurisdictions where you could have more exposure.”
That’s complicated by the “open question” of the extent to which various laws apply to out-of-state companies advertising remote jobs that could be performed in a state with a pay disclosure law in place, Chandler added.
Broader Efforts
In New Jersey, where a pay transparency bill got an initial Assembly labor committee hearing March 23, business groups were able to convince the bill sponsor to remove language on the possibility of enforcement by civil litigation.
The initial version (A3937) could have opened “a Pandora’s box of civil claims,” Alexis Bailey, vice president at the New Jersey Business & Industry Association, told the committee. As it was written, it was “really a little bit undefined on what an aggrieved person would be,” she said, raising the concern businesses could be sued by any job seekers who see their ads online.
The bill sponsor, Assemblyman Paul Moriarty (D), acknowledged the concerns and said he’s filing an amendment to remove the private right of action. He said he’s hopeful enforcement via the state labor department—with the help of individuals submitting complaints to the department—would accomplish the goals of the legislation.
It’s always struck him as a “big waste of time” for both employees and businesses to go through the application and interview process only to find they’re “miles apart in terms of their expectations,” he said by phone.
Other state legislative efforts have successfully mandated more disclosures around the hiring process. Though they haven’t demanded pay ranges in job postings, Maryland, Nevada, and Rhode Island require that employers provide salary information to job applicants at certain points in the hiring process.
Roughly 20 states also ban employers from requiring a job applicant to provide their salary history in an another attempt to close gender and racial pay gaps.
“If a woman is just moving from one position to the next, then her prior salary can affect the next salary,” McAndrew said, adding that the pay transparency measures and the bans on salary history inquiries “work together nicely, I would say.”
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