In recent years, pay equity has become an important workplace concern, resulting in increased action from lawmakers and employers to address the issue.
Specifically, many state and local jurisdictions have introduced and passed a range of laws aimed at closing the wage gaps based on gender and race that still exist in many industries, including manufacturing.
In particular, laws focused on pay transparency have been on the rise, with over a dozen state and local jurisdictions passing such laws in the last few years. The motivation behind these laws is to close the wage gap by increasing transparency around compensation and pay ranges, which is in addition to laws requiring equal pay for equal work.
Pay transparency laws generally require employers to disclose salary information to current or prospective employees in certain circumstances. However, these laws vary among jurisdictions in terms of where, when, how and to whom the necessary disclosures must be made, and which specific information must be disclosed.
For example, three states—California, Rhode Island, and Washington—passed pay transparency laws that went into effect on January 1, 2023. New York State also recently passed a pay transparency law, which goes into effect in September of 2023.
The new laws in California, New York State and Washington include a requirement that covered employers must disclose in each job posting the wage or salary range for the position. The Rhode Island law requires employers to provide an applicant with the wage range for a position upon the applicant’s request and prior to discussing compensation. Rhode Island’s new law also requires employers to provide the wage range for employees’ positions at the time of hire, when an employee moves into a new position and, during the course of employment, upon an employee’s request.
In addition to pay disclosure requirements, employers should be aware of other pay transparency requirements. For example, some laws require that job postings include a job description, in addition to the wage or salary range. Additionally, several pay transparency laws contain notice and recordkeeping obligations. Employers may face a range of consequences for violations, including an investigation from their state’s labor commissioner, civil penalties and/or the ability to file a lawsuit in court. Therefore, understanding all obligations under these laws is critical for employers.
Several other states are considering implementing or revising pay transparency laws and may impose more stringent requirements in the coming years. For example, Connecticut has proposed legislation for its 2023 legislative session that will require employers to disclose salary ranges in all job postings, expanding on the current law that limits required disclosures.
As the U.S. labor market remains tight, manufacturers might be concerned about how these pay transparency laws will affect them. Will they be at a disadvantage in the hiring process because competing companies will have access to their pay information?
On the other hand, there may benefits to such laws. For example, job advertisements that include pay information may attract more and better-qualified applicants. Also, including information about pay up front may save employers time during the hiring process, as applicants will be able to make a more-informed decision about whether to apply.
Lastly, this information may also allow manufacturers to remain competitive or increase their competitiveness in salary and benefits, knowing what other companies are providing by comparison.
Employers should understand what laws apply to their business, which depends on where they employ workers, and be mindful that several laws apply to remote positions. California, Colorado, New York, New York City and Washington laws state or have been interpreted as stating that employers are required to include compensation information within a job posting if the job can or will be performed, at least in part, in the state.
For employers who have multistate workforces, it is important to have a compliance strategy that considers the employer’s preference for consistency across different states that maintain different requirements. Even employers that are not yet subject to any pay transparency laws might consider auditing their pay practices and establishing some guidelines for salary or hourly wage ranges for positions within their organizations. This might include evaluating compensation policies and practices—including starting pay, merit increases, promotions and incentive pay—with competent legal counsel.
Abby Warren is a partner at Robinson + Cole in its Labor, Employment, Benefits and Immigration group, where she represents employers in labor and employment matters. Kayla West was an associate at Robinson + Cole.
