Pay Transparency Laws
While there are no federal pay transparency laws on the books, more states and localities are enacting these laws, leading to a compliance nightmare for companies recruiting across state lines. Pay transparency laws are laws that require companies to post salary ranges in job advertisements or tell candidates or applicants the salary range when asked in an effort to reduce pay disparity based on protected characteristics such as gender or race.
In our neck of the woods we have a pay transparency law in New Jersey going into effect on June 1, 2025. Employers affected by this NJ law is any employer (with 10+ employees) advertising in NJ, hiring workers from NJ, or that conducts any business in NJ. Realistically, this NJ law applies to businesses in Southeastern Pennsylvania, Delaware and New York (which has its own pay transparency law) as they are attracting candidates who live in NJ and can reasonably expect that NJ residents will complete applications while in NJ. Any other company seeking to recruit remote workers from any jurisdiction must also be mindful of this type of law.
The NJ pay transparency law has two key provisions:
It requires covered employers to post salary ranges and offered benefits and other indirect forms of compensation in all internal and external job postings, promotions, or internal transfers. While employers can exceed the posted salary and benefits at time of hire, they cannot offer anyone less than what they posted.
It requires employers to post any promotional opportunity internally within the applicable department prior to making any promotional decision (other than a promotion based solely on years of service). This means that companies cannot recruit new employees for a job unless current employees are made aware of the opportunity in time to apply for the position. For example, if a company has decided to create an “Assistant Director” position, they must post this job internally within the department in which the Assistant Director will work.
Employers who fail to comply with this law are subject to fines of up to $600 for each violation of the law.
Contact us to discuss your internal operations to determine if you need to modify your existing recruiting practices to comply with myriad state or local laws mandating pay transparency.
