What are Pay Transparency Laws?

Inc. is calling 2022 the Year of Pay Transparency. And for good reason.

Pay transparency laws are popping up in state legislatures and city councils across the country. Household employers should be attentive to this trend as pay transparency may affect how they post their job openings and how they talk about pay and pay history during the hiring process.

Pay transparency is not new, covers a range of pay information, and is becoming more widespread. Here’s what families with household help need to know.

What does pay transparency mean?

Pay transparency includes:

• Prohibiting employers from discussing pay history with prospective employees during recruitment
• Providing employees with salary ranges when changing jobs within an organization
• Stipulating the salary range for a posted position at a specified point during the hiring process
• Disclosing pay ranges in job postings

Candidates may also request a pay range, ask about benefits information during the hiring process, and refuse to disclose their prior pay rates with a potential employer.

Why is pay transparency gaining in popularity?

For states and cities enacting pay transparency laws, they are hoping to create pay equity with the goal of ending gender and racial wealth gaps in the U.S.

Some companies voluntarily provide salary information. Embracing pay transparency may result in an easier time finding and retaining workers and shows employees they value equity and inclusion.

How does pay transparency impact household employment?

Do families with household help like nannies, senior caregivers, and housekeepers really need to worry about pay transparency?

The answer is yes.

Especially when it comes to disclosing pay ranges in job postings, which seems to be where pay transparency is leading next.

More and more states and cities are requiring – or are considering mandates for – employers to provide job candidates with clear salary information.

What is New York City’s pay transparency law?

On November 1, 2022, New York City will start requiring covered employers who advertise jobs to be performed in the city to include “good faith” estimates of a salary range or hourly wage in job postings.

This new law amends the New York City Human Rights Law.

Employers that have four or more employees or one or more domestic workers are covered by the law.

The pay range must include a minimum and maximum amount. You would not be able to post a job with “$25/hour and up” or “maximum $40,000/year.”

You could hire without posting a job advertisement and you are not required to create a posting in order to hire someone.

Other compensation and benefits, such as paid time off, health insurance, retirement plans, overtime pay, and bonuses, may be omitted from postings.

The law only applies to jobs performed within New York City. For example, a household employer in the city who hires someone to work at a second home in Connecticut would not need to follow the city’s pay transparency law. However, they may need to follow similar pay transparency laws in Connecticut.

The New York City Commission on Human Rights may investigate complaints of violations. Employers found to have violated the law may be liable for monetary damages and civil penalties of up to $250,000.

What other states have pay transparency laws?

Many other states and a few cities have some type of pay transparency law on the books whether they mandate employers to disclose the pay range for a position asked for by a candidate, require pay ranges to be listed in job postings, or include salary history bans.

Here is a synopsis of states that require employers to provide salary ranges and pay transparency laws by state:

Washington State and Rhode Island have laws going into effect in 2023.

Massachusetts; South Carolina; Tennessee; and Washington, D.C. are said to be considering pay transparency laws.

What should I do as a household employer?

Household employers are encouraged to review the pay transparency laws in their state and/or city. Some may not pertain to families with household help. For example, California’s new pay transparency law only applies to businesses with 15 or more employees. However, if the law does include household employers, it’s recommended that families follow the requirements to avoid possible penalties for non-compliance. Any questions or advice about pay transparency laws should be directed to an attorney.

GTM can help

In addition to nanny tax and payroll administration, GTM Payroll offers HR consulting for household employers. A PHR-certified human resources professional can assist with proper employment practices including personnel management, compliance and administration, insurance, and employee benefits. This service is in addition to a nanny tax and payroll plan. Call (800) 929-9213 to learn more or get started.

Also, EasyPay® HR Platinum – created exclusively for high-net-worth families and led by a PHR-certified HR professional – can help mitigate your risks and give you peace of mind knowing your household employment is being managed for you … the right way. This service provides guidance for onboarding new employees; a review of HR practices, job descriptions, offer letters, handbooks, and work agreements; an audit of benefit offerings including paid time off and mandated paid family and sick leave; and assistance with offboarding employees. Call (800) 929-9213 to learn more or get started. Or set a time to talk with a household employment expert at your convenience.

Hiring a nanny?

Download Your Guide to Hiring a Nanny. In this guide, we lay out the steps on how to hire a nanny the right way and maintain a strong relationship with your employee.

The information provided does not, and is not intended to, constitute legal advice. All information is for general informational purposes only. Readers should contact an attorney to obtain advice with respect to any legal matter.