The year 2023 marks a significant shift in the legal landscape of the United States, with lawmakers across the country turning their attention to social inequities and ways to address them. The conversation around pay equity and transparency has taken center stage, reflecting the nation's growing concern for wage equality and negotiation empowerment. This commitment has spurred new legislation to combat the pervasive gender pay gap, which continues to disadvantage women and minority communities in the labor market.
The issue of wage inequality is no stranger to the American workforce. In 2021, data suggested that women only earned 83 cents to a dollar earned by men for full-time, year-round work. This disparity was even more stark for women of color, with Latinas and Black women earning just 61 and 67 cents for every dollar that white, non-Hispanic men made. Such statistics underscore the urgent need for a more transparent and fair pay system.
Proposed Legislation
The concept of pay transparency has found support in several states. Since Colorado's pioneering efforts in 2019, a wave of pay transparency laws has swept across Maryland, Connecticut, Nevada, Rhode Island, Washington, California, and New York. Other states, including Illinois, Maine, Massachusetts, New Jersey, and Oregon, are in the throes of debating their own pay transparency bills. The aim? To foster a more transparent and equitable job market.
Illinois
Illinois is proposing to modify its Equal Pay Act to make employers accountable for third-party failures to include pay scale and benefits in job postings. The bill also mandates employers to inform all current employees of any promotional opportunities on the same day the position becomes available. A pay transparency law, proposing that employees must be informed of advancement opportunities prior to any promotion decisions, is also under consideration in Chicago.
Massachusetts, New Jersey, and Oregon Job Postings
In Massachusetts, Bill H.1849 requires employers with at least 15 employees to include pay ranges in job advertisements. Employees would also have the right to know pay ranges for their current jobs upon request. On the other hand, New Jersey’s proposed legislation (Bill A4285), covers salary disclosure, supplemental compensation, benefits, and retirement plans in job postings. Meanwhile, Oregon seeks to ban job advertisements without pay range disclosure and mandates employers to provide pay range information to employees annually.
Washington D.C., and Connecticut
Washington, D.C., and Connecticut are pushing to fortify their existing pay equity laws. Washington D.C.’s Bill 25-26 extends to promotions or transfer opportunities, whereas Connecticut’s Bill 5243 mandates employers to disclose salary ranges in all job postings.
Hawaii
Hawaii has passed a pay transparency bill (SB 1057) this legislative season. The law requires job listings to disclose hourly pay rates or salaries and amends the state’s equal pay protections. The new law will come into effect on January 1, 2024, although there are several exemptions, including businesses with fewer than 50 employees and certain public employee positions.
How Employers Should Prepare
DISA Global Solutions does not report salary, therefore when building and implementing a background screening policy, employers should address the following:
- Compliance: Employers must stay up-to-date on any new laws to avoid penalties or legal issues. This compliance could involve adjusting their recruitment processes, updating their HR systems, or modifying their existing pay structures.
- Transparency in Job Postings: Some state laws require employers to be transparent about the pay range in their job postings. This requirement means employers must disclose salary information upfront, which could involve a significant shift in their recruitment strategy and practices.
- Equal Opportunity Promotions: Some legislation, like the proposed law in Illinois, will require employers to notify all current employees about promotional opportunities on the same day they become available. Employers will need to ensure they have efficient internal communication mechanisms in place to meet this requirement.
- Record-Keeping: Some states require employers to keep records of the pay scale and benefits for positions. This requirement means employers will need to invest in robust record-keeping systems and processes, ensuring they can produce these records when necessary.
- Salary Negotiations: By providing prospective employees with pay range information, these laws could shift the dynamics of salary negotiations. Candidates will be more informed and may be more likely to negotiate their salaries. Employers should be prepared for this shift and ensure their HR teams are equipped to handle these negotiations in a fair and transparent manner.
- Impact on Smaller Businesses: Some of the legislation exempts smaller businesses with fewer than fifty employees. These smaller businesses will need to stay informed about the specific requirements of their state's laws to know if and how they are affected.
- Culture and Perception: Implementing pay transparency could also have significant cultural implications for businesses. It can lead to a perception of fairness and inclusivity, enhancing a company's reputation and help attract and retain top talent.
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About DISA Global Solutions
Founded in 1986, DISA is the industry-leading provider of employee screening and compliance services. Headquartered in Houston, with more than 35 offices throughout the U.S. and Canada, DISA’s comprehensive scope of services includes drug and alcohol testing, background screening, occupational health, and transportation compliance. DISA assists employers in making informed staffing decisions while building a culture of safety in their workplace.