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Understanding how pay transparency laws could impact your company

Employers 03.17.2023 2 MIN

Several states and localities have passed pay transparency laws to try and close pay gaps and achieve pay equity. While the provisions of different laws vary, at a minimum they require employers to include salary ranges in job postings.

Employers are increasingly seeking guidance from legal counsel to determine whether they’re subject to these laws (based on their location and/or where work could be performed) and what they need to do to comply. Many of the companies we work with are starting with a pay equity analysis. These often include a review of pay structure, job architecture, compensation guidelines and overall policies and practices.

Key Takeaways

Pay equity laws have already been enacted in California, Colorado, Connecticut, Maryland, Nevada, New York City, Rhode Island and Washington. More of these laws are being discussed in state capitals across the country. 

While each law has its own unique requirements, they are all similar in their intent. Companies that operate in multiple jurisdictions (or offer remote work) are left with an unenviable choice: develop either state-by-state or blanket policies. 

We’re seeing a number of companies adopt a uniform strategy to reduce their administrative burden and avoid the complicated patchwork of laws. In practice, that’s meant listing salary ranges on all U.S. job postings, regardless of whether the disclosure is legally required.

A review of the existing legislation makes it clear why a state-by-state policy quickly becomes complicated:

  • While the Colorado law covers any person or entity employing at least one employee in the state, the New York City law covers employers with four or more employees or one or more domestic workers, where at least one works in the city.
  • Some laws apply only to new job openings, but Colorado requires employers to notify employees of any promotion opportunities before a decision is made.
  • California’s law requires employers to provide, at an employee’s request, the pay scale for their current position.
  • Colorado’s Department of Labor ruled that companies can’t skirt these laws by including language in postings along the lines of “this job can be performed anywhere other than Colorado.”
  • New York City’s Commission on Human Rights may assess penalties of up to $250,000 for the first violation of their law that isn’t cured withing 30 days, and all subsequent violations.

Read the latest Insights from our Compensation & Benefits Policy Research team for more information.

If you would like to connect with one of our technical specialists about how these laws may impact your company, reach out to your Goldman Sachs Ayco contact or fill out the contact us form on our website.