Pay transparency law has unique requirement, employment attorney explains
Pay transparency legislation continues to sweep the United States.
In November, a new law will go into effect in which New York City-based employers will have to include the minimum and maximum starting salary for any advertised job, promotion or transfer opportunity. (The in-effect date has been delayed from April.) Similar laws went into effect last year in Connecticut, Nevada and Colorado.
The latter is what we’re discussing here because Colorado’s Division of Labor Standards and Statistics (DLSS) has introduced an unheard-of twist with its accompanying regulatory guidance to the Equal Pay for Equal Work Act.
These new rules require employers to list compensation, benefits and other financials within job posts and ads not only for Colorado-specific companies or positions, but also to all multi-state employers posting remote work roles that could be filled by a Coloradoan if the employer already has an employee in Colorado.
“If you have 10,000 employees and one works in Denver, then the rule applies to you,” Joe Schmitt, a labor and employment attorney at Minneapolis-based law firm Nilan Johnson Lewis, told HRD. “Furthermore, the Colorado department has said you can’t in your posting say, ‘individuals from Colorado can’t apply.’ Colorado has said that’s a preference for where the person is from. The position is still covered because it could be performed in Colorado. The fact that you’re trying to exclude Colorado doesn’t mean it’s not covered.”
As employees demand flexibility and autonomy, companies are having no choice but to grant fully remote or at least hybrid work schedules. More than one-third (35%) of workers believe location flexibility to be the primary deciding factor to accept their last job offer, above those who said that total compensation was the defining factor, according to recent data from Gusto, a San Francisco-based HR tech firm.
Additionally, nearly half of workers (48%) said that the ability to work from home some or all of the time would be a major or the most important factor in determining whether to accept a job offer in the future. Gusto data shows that being a fully remote worker correlates to a 9%-13% decrease in the odds of quitting within three months of hire, meaning less expenditures for the business in attracting, onboarding and retaining new talent.
With many employers now permitting employees to “work from anywhere,” companies are facing a bevy of new legal challenges and complexities due to tax and immigration laws, as well as hiring regulations. Schmitt says it’s prudent for employers to comply with the Colorado statute by posting the pay range and general benefits for remote positions. If not, employers risk being fined between $500 and $10,000 for each violation.
“This provides more reason for employers to get in front of pay equity,” Schmitt says. “The whole purpose behind this is so more employees will know that there is pay inequity and they’ll be more likely to bring charges of discrimination with the Equal Employment Opportunity Commission (EEOC) or state agency or to call a lawyer to commence a claim. The best way to get ahead is to proactively do a pay equity audit and address any things causing pay disparity. Identify and remediate any root causes of pay inequity.”
Naturally, California was ahead of the curve, becoming the first in the country to ban employers from asking applicants about their salary history. Under the Equal Pay Act, employers are also required to disclose the pay range for a job if an applicant asks for it after an initial interview.
The trend is sure to continue in 2023 and beyond, with similar bills under consideration in South Carolina and Massachusetts. Starting in January 2023, the Rhode Island Equal Pay Law will require employers to provide candidates pay range information during interviews upon request. Plus, employers must disclose the range for a role before they discuss compensation, when an employee moves into a new position and whenever a current employee asks.
Schmitt says that blue states like Oregon, Washington, California, Minnesota, New York, Connecticut and Massachusetts, among others, will continue to push for increased pay transparency. “When Trump went into office, blue states started decentralizing employment law requirements,” Schmitt says. “Legislation will continue to develop, and employers need to stay on top of it.”