Everyone we talk to is struggling to hire new employees. Among other hiring challenges is the question of whether your job description should disclose the pay range for the position. As legal counsel, we’re not here to wade into the debate over whether it’s more equitable to disclose a pay range (it is*) or whether you’re in a better bargaining position if you require candidates to disclose first. But we do want to make small businesses and nonprofits aware of the changing legal landscape.
Increasingly, states and local governments are passing pay disclosure laws requiring employers to share either the minimum level of compensation for the position or a pay range.
While the specific requirements of pay disclosure laws vary from one jurisdiction to the next, there are a few common trends that we are increasingly seeing:
When must an employer disclose the pay range?
Some laws require the disclosure to be made in the job posting itself, while others allow employers to wait until an offer of employment is made. Some require the information to be disclosed only when the applicant asks, and laws vary regarding the timing of the applicant’s request and when such a request would trigger a disclosure requirement.
Which job postings require pay disclosure?
In addition to requiring pay disclosures for external job postings, many of these laws also apply to internal job postings and promotions. We’re even seeing some states require pay disclosures when your existing employees simply ask. (And while I won’t cover all of the legal reasons here, you really should stop telling your existing employees that they’re not allowed to discuss their pay with each other.)
What must be disclosed?
Some laws simply require a range of pay for the position in question. And what qualifies as a pay range varies from one jurisdiction to the next. It could be the pay range you determined when posting for the position, the actual amount you currently pay employees in similar positions, or even the amount you have budgeted for the position. At least one jurisdiction has gone so far as to require including information about benefits and other compensation (i.e., bonuses or commissions, health insurance, and retirement benefits, in the pay disclosure).
Where do these pay disclosure laws to apply?
Some states and localities are applying their disclosure laws to remote positions and/or out-of-state employers, particularly if the work will be performed in that jurisdiction or you just happen to have employees in that jurisdiction, regardless of where this particular job will be performed. (In case it’s not obvious, please don’t include in your job description, “Candidates from State X need not apply.”) Because of the hiring challenges, everyone is facing, more and more employers are conducting national searches for quality candidates. Or you may be dealing with a remote or even hybrid position where the candidate resides in a jurisdiction with pay disclosure laws. And frankly, if you post a job description on a well-known online job board, you have to assume that you are reaching at least some out-of-state candidates whose state or local laws might try to reach your business or nonprofit.
What about Ohio specifically?
Here in Ohio, we have not seen a statewide pay disclosure law (at least, as of the time of this writing). However, both Cincinnati and Toledo have passed local ordinances:
Cincinnati requires employers to provide a “pay scale” (which is undefined) for a position when a job applicant makes a reasonable request and has received a conditional offer of employment. The ordinance is currently limited to employers, including employment agencies, who are both located in and employ 15 or more employees in Cincinnati. Additionally, the applicant must be applying for employment to be performed in Cincinnati.
Toledo’s ordinance contains identical requirements to those in Cincinnati.
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As more jurisdictions consider pay disclosure laws, it is increasingly important that you consult with legal counsel about your business’s or nonprofit’s HR practices. In the meantime, we’ll continue to monitor changes in the law and how those changes may impact small businesses and nonprofit organizations.
*If you’re wondering why pay disclosure has turned into an equity issue: