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05/07/2024
Posted by: Altura Benefits in Insurance
States have been busy passing new pay and benefits transparency laws. For employers, this means you may need to disclose accurate pay and benefits information when placing jobs ads. It also means job seekers will have access to more detailed information – and their expectations may increase as a result.
The Center for America Progress (CAP) says multiple states have passed pay transparency laws in recent years to address the gender pay gap. As of 2023, eight states had enacted pay transparency laws: Washington, California, Nevada, Colorado, New York, Connecticut, Maryland, and Rhode Island. Additionally, at least 15 states are considering new legislation on pay transparency. Hawaii joined the ranks of states with pay transparency laws in 2024, according to HR Morning, and several cities have pay transparency laws. Forbes says Washington, D.C., has also recently passed amendments to its laws that will require employers to disclose compensation information.
Whereas all these laws require employers to disclose information about compensation during the hiring process, the details vary significantly. Many of the state laws apply to any company with at least one employee in the state, but some only apply to companies with at least four (New York), 15 (Washington and California), or 50 (Hawaii) employees. Maryland’s law applies to companies that are engaged in business in the state.
Precisely what and when employers need to disclose also varies. Most states require a wage or salary range. Colorado and Washington also require a general description of all benefits offered. Some states (Colorado, Washington, California, and New York) require this information in job ads, whereas other states require it later in the hiring process or upon request.
Employers that fail to comply with the new pay transparency laws may face expensive penalties. HR Morning says California and Colorado both have penalties of up to $10,000 per violation. Other states have smaller penalties. However, if a company is found guilty of multiple violations, the penalties may add up fast.
According to CAP, Utah has not passed and is not considering pay disclosure requirements, as of March 23, 2023. However, this does not mean that Utah will not consider pay disclosure requirements in the near future.
Additionally, some Utah employers may need to consider the laws of neighboring states, particularly Colorado and Nevada. Colorado’s law applies to employers with at least one employee in the state and requires job postings to include information on hourly or salary compensation as well as benefits and any other compensation offered.
Even if you don’t operate in a state with pay and benefits transparency laws, you may find that more job candidates are demanding this information upfront.
Many companies have employees in multiple states, meaning they need to comply with multiple pay transparency laws. The rise of remote work makes it even more likely that a company will have at least one employee located in a state with pay transparency requirements.
As a result, jobs ads that include salary ranges will become increasingly common, even in states that don’t require this. Job candidates will also get used to seeing this information. If an employer does not provide it, they might assume it’s because the compensation is not competitive.
In an SHRM survey, 42% of HR professionals said their organization operates in a location with pay transparency requirements and 67% said their companies voluntarily provide pay information at least some of the time, even when it’s not required. Although many organizations appear to be listing pay information to comply with new laws, 70% said it has led to more people applying for positions and 66% said it has increased the quality of applicants. Job applicants are also happy with the increased transparency – 82% of U.S. workers say they are more likely to consider applying to a job if the pay range is listed.
Although Colorado and Washington also require employers to include information about benefits, most states only require salary ranges. This does not mean employers should leave out benefits information.
Benefits are important to job seekers. In a Glassdoor survey, 60% respondents said they strongly consider perks and benefits before accepting a job offer and 80% said they prefer additional benefits over a pay increase. If you don’t include benefits information, job seekers may assume it’s because you don’t offer any benefits, which could keep them from applying.
And if you actually don’t offer any, you should think about adding some benefits. In addition to boosting your recruitment and retention efforts, employee benefits are a cost-effective, tax-advantaged way to increase total compensation.
In addition to new state-level pay transparency laws, employers need to comply with federal pay transparency requirements.
Employers sometimes discourage workers from discussing their pay with their coworkers. However, these policies may violate federal rules, especially if employers are retaliating against workers for discussing pay.
According to the Department of Labor, workers have the right to discuss, disclose, or inquire about their own pay and the pay of other employees or job applications. Employers may not discipline, harass, demote, terminate, deny employment, or discriminate against in any other way workers who exercise this right. This pay transparency rule covers salary or wages as well as bonuses, commissions, benefits, and other types of compensation.
Employers that flout this law may face regulatory action. In a recent case, the DOL says it has filed a complaint and motion seeking a temporary restraining order to prevent a pig farm from retaliating against two workers. According to the news release, the employer assigned cleaning duties outside of regular duties and tried to force the workers to sign a document forbidding them from discussing pay after they asked. The employer also threatened one worker with termination. Following this, the worker found a severed pig’s head in their workstation. During an investigation of the company, the DOL also found other violations and assessed penalties.
As more employers put salary and benefit information in their job ads, competition between employers will heat up. Even if your company is not legally required to disclose compensation information to job applicants, you may need to do so to attract top talent. Additionally, many states are considering new requirements. It’s highly likely that more pay transparency laws will pass in the coming years.
If your employee benefits package doesn’t stack up, now is the time to change that. Altura Benefits will help you craft a comprehensive benefits package that includes health insurance as well as dental, vision, life, disability, and long-term care insurance. We also provide compliance guidance and leverage technology to simplify benefits processes. Learn more.