U.S. Legislation That May Impact Background Screening In 2023: Part Three – Pay Transparency Laws Address Wage Equality And Negotiation Empowerment
In part three of his series on 2023 background screening legislation, HireRight Associate General Counsel Alonzo Martinez discusses pay equity and salary transparency laws across the U.S.
This article was originally published in Forbes on June 8, 2023.
As the 2023 legislative season wanes, lawmakers continue to debate issues addressing social inequities. In part one of this series, we focused on the emergence of clean slate legislation addressing the long-term impacts inhibiting employment for job candidates with criminal histories. In part two, we covered the quickly evolving landscape of pro-marijuana legislation in the U.S. and its implications for employers. In the final part of the series, we look at the momentum set by pay equity laws fostering the emergence of pay transparency laws in 2023 aimed at addressing the gender pay gap.
According to recent statistics, gender pay disparities persist in the workforce, with women, particularly women of color, facing significant wage gaps. In 2021, women working full time, year-round, earned only 83 cents for every dollar earned by men, while all women working earned 77 cents for every dollar earned by men. These disparities were even more pronounced for Latinas and Black women, who made 61 and 67 cents for every dollar white, non-Hispanic men earned. For lawmakers, these figures highlight the urgent need for measures that address gender pay inequality and promote wage transparency.
Pay equity and salary transparency laws aim to tackle these disparities by providing employees with access to salary data and requiring employers to disclose salary ranges. By arming workers with information and promoting transparency, these laws seek to empower individuals to negotiate fair compensation and contribute to closing the gender pay gap.
Several states have welcomed the concept of pay transparency, enacting laws to ensure employees and job applicants have access to salary information. Colorado led the charge in May 2019, followed by Maryland, Connecticut, Nevada, Rhode Island, Washington, California, and New York.
While some states have already implemented pay transparency laws, others are considering similar legislation. Lawmakers in Illinois, Chicago, Maine, Massachusetts, New Jersey, and Oregon are currently debating pay transparency bills. Each state’s proposed legislation contains specific provisions to promote transparency and fairness in the job market.
For example, Illinois seeks to amend its Equal Pay Act by holding employers liable for third-party failures to include pay scale and benefits in job postings. Employers would also be required to inform all current employees of any promotion opportunities no later than the same calendar day the position becomes available. The bill also includes a record-keeping provision requiring employers to make and preserve records documenting a position’s pay scale and benefits. Chicago has also proposed a pay transparency law requiring employees to be notified of promotion opportunities before making a promotion decision.
different pay transparency requirements on employers based on size. Employers with 10 or more employees must include pay ranges in job postings, while employers with fewer than 10 employees must provide job applicants’ pay information on request. The bill also requires an employer to maintain a record of each position title and the payment history of each employee for the duration of the employee’s employment with the employer and for three years after the termination of employment with the employer.
A bill in Massachusetts requires pay ranges in job advertisements for employers with 15 or more employees. Upon request, employees would also be entitled to learn pay ranges for their current jobs. New Jersey’s proposed law covers salary disclosure, supplemental compensation, benefits, and retirement plans in job postings. Oregon prohibits job advertisements without pay range disclosure and requires employers to provide pay range information to employees annually.
Washington, D.C., and Connecticut lawmakers have also introduced legislation to strengthen their pay equity laws. Washington D.C.’s bill would apply to promotions or transfer opportunities. Connecticut’s bill would require employers to disclose salary ranges in all job postings.
Employers should be aware of one new pay transparency law already passed this legislative season. The Hawaii legislature approved a pay transparency bill requiring disclosure of hourly pay rates or salaries in job listings and amending the state’s equal pay protections. The Hawaii bill includes several exemptions. Employers with less than fifty employees are not subject to the bill. Salary disclosures are also not required for internal transfers, promotions, or public employee positions subject to collective bargaining. Governor Green has signed the bill, which will become effective on January 1, 2024.
By embracing pay transparency, states aim to narrow the gender and racial wage gaps, empower job applicants during the hiring process, and foster a fair and inclusive work environment. These laws provide employees the information they need to negotiate their salaries effectively, leveling the playing field for women and minorities. Additionally, pay transparency benefits employers by reducing recruiting costs and attracting qualified candidates.
As the legislative trend toward pay equity and transparency continues, employers must monitor the impact of these laws and identify best practices for implementation and enforcement. Ultimately, pay transparency laws are not just a matter of compliance but a step towards building a more equitable and inclusive society where individuals are valued for their skills and contributions, regardless of their gender or race.
Release Date: June 15, 2023
Alonzo Martinez is Associate General Counsel at HireRight. Mr. Martinez is responsible for monitoring and advising on key legislative and regulatory developments globally affecting HireRight’s service delivery. His work is focused on ensuring HireRight’s performance as a consumer reporting agency and data processor complies with relevant legal, regulatory, and data furnisher requirements. Mr. Martinez obtained his Juris Doctorate from the University of Colorado, and is licensed by the Supreme Court of the State of Colorado. He is a member of the Colorado Bar Association Employment Law Division, the Association of Corporate Counsel, and the Professional Background Screening Association.