Navigating Pay Transparency and Salary History Laws: A Guide for Employers
As pay equity initiatives gain momentum across the U.S., employers must stay informed about evolving regulations concerning pay transparency and salary history inquiries.
These laws aim to reduce wage disparities and promote fairness in compensation practices.
1. Prohibiting Pay Secrecy Policies
Under Section 7 of the National Labor Relations Act (NLRA), employees have the right to discuss wages and working conditions. Consequently, employers should avoid implementing policies that restrict such discussions, as they may violate federal law. Additionally, 21 states and the District of Columbia have enacted laws explicitly prohibiting employers from banning employees from discussing their wages .
2. Mandating Pay Range Disclosures
Several states and local jurisdictions require employers to disclose pay ranges to applicants and employees.
These requirements vary by jurisdiction.
California: Employers must provide pay scale information to applicants upon request and include pay ranges in job postings for employers with 15 or more employees.
Colorado: Job postings must disclose compensation rates, including salary or hourly wages, and a general description of benefits.
Connecticut: Employers must provide wage ranges to applicants upon request or before extending an offer.
New York City: Employers with four or more employees must include salary ranges in job advertisements.
Employers should consult local laws to ensure compliance with specific disclosure requirements.
3. Restricting Salary History Inquiries:
To prevent perpetuating wage disparities, many jurisdictions have enacted laws restricting employers from:
Inquiring about an applicant's salary history. These laws typically prohibit:
Using salary history to determine compensation offers.
Employers should review their hiring practices to ensure they do not solicit or rely on salary history information during the recruitment process.
Best Practices for Employers:
Review and Update Policies: Ensure company policies comply with federal, state, and local laws regarding pay discussions, salary disclosures, and history inquiries.
Train Hiring Personnel: Educate HR staff and hiring managers on permissible practices concerning compensation discussions and inquiries.
Audit Compensation Practices: Regularly assess pay structures to identify and address potential disparities.
Stay Informed: Monitor legislative developments to remain compliant with evolving pay transparency and equity laws.
By proactively adapting to these regulations, employers can foster a more equitable workplace and mitigate legal risks.