Washington’s Department of Labor & Industries (LNI) released the final version of its Administrative Policy on the Equal Pay and Opportunities Act to guide employers on the new pay transparency requirements that became effective January 1, 2023.

This policy gives insight into how LNI will interpret, apply, and enforce the new law. Courts can also consider this policy in lawsuits involving the new law. While the new policy provides helpful, clear examples of the language expected for job postings, it also leaves some questions unanswered.

Is there a grace period or other remedy for employers unable to fully comply with all the law’s new requirements by January 1, 2023?

Unfortunately, the final policy does not mention any grace period or other preliminary options to help employers working to comply with the rules by the new year. Instead, the differences between the final version (issued November 30, 2022) and the prior draft version (issued August 22, 2022) appear to be primarily clerical, rather than substantive.

Which employers must comply with this law?

According to LNI’s administrative policy, the law applies to “employers with 15 or more employees, engaging in any business, industry, profession, or activity in Washington.” The 15-employee threshold “includes employers that do not have a physical presence in Washington, if the employer has one or more Washington-based employees.”

Does the new law cover postings for remote jobs?

Yes. The law’s requirements apply to jobs that could be performed in whole or in part in Washington.

Would a note in the job postings that Washington residents will not be considered for the job satisfy the requirements?

The guidance clearly rejects this option as a way to avoid compliance with the law. However, employers are not required to comply with the law for jobs “to be performed entirely outside of Washington” and for “jobs tied to worksites physically located entirely outside of Washington, for example, waitstaff at restaurant locations in other states.” Printed, hard copy postings distributed outside the state do not need to include the salary and other disclosures.

Must pay and benefit information be provided to employees offered a transfer or promotion?

Yes, but only if the employee requests it.

What pay information is required on a job posting?

Each posting must include “the wage scale or salary range and a general description of all the benefits and other compensation for a specific available position to be offered to the hired applicant.”

What if the employer has not established a wage scale or salary range?

One should be created prior to publishing the posting.

What if an employer has a starting rate or range versus a final rate or range?

Both ranges should be included with an explanation that one is the starting range.

What if an employer has a job position with multiple levels and each level has a different pay range?

The range or scale per level must be specified.

While the administrative policy may seem straightforward, it can be difficult to apply in certain circumstances. Employers are encouraged to consult with their Jackson Lewis attorney regarding any questions.

The long-awaited regulations from the Illinois Department of Labor (IDOL) governing the amendments to the Illinois Equal Pay Act (IEPA) were published, further clarifying the practical implications of obtaining an equal pay registration certificate under the IEPA.

Background

The 2021 amendments to Section 11 of the IEPA require businesses with at least 100 individuals employed in the State of Illinois to obtain an equal pay registration certificate certifying compliance with the Act from the IDOL.

The amendments set forth various requirements for applying for the certificate, including:

(1) A $150 filing fee;

(2) A “wage records” list of all employees who worked for the business in the past calendar year, categorized by gender and race/ethnicity, including a copy of the business’ most recently filed EEO-1 report; and

(3) A statement signed by an officer of the business making several affirmations of compliance.

After a lengthy public comment period to the IDOL’s May 20, 2022, proposed regulations, the final regulations were published on January 6, 2023. Unfortunately, while the regulations offer some clarity on the IDOL’s expectations, many ambiguities remain for businesses subject to the IEPA. Some key highlights from the regulations are summarized below.

Clarification on Enrollment Requirements

The regulations clarify that all business that were authorized to transact business in Illinois on or before March 23, 2021, must submit an online enrollment form notifying the IDOL that the business is subject to the equal pay registration certificate requirement and provide contact information for the business. A business that becomes authorized to transact business in Illinois on or after March 24, 2021, is required thereafter to submit an enrollment form to the IDOL by January 1 of the calendar year following the year the business became authorized to transact business in Illinois.

Definition of “Employee”

Understanding who meets the definition of an Illinois employee is important in determining whether a company meets the 100-Illinois-employee threshold requiring it to certify. The regulations borrow from the Illinois Income Tax Act and define “employee” as any person performing a service for a business:

whose base of operations, or if there is no base of operations, the place from which the service is directed or controlled, is located within the State of Illinois; or whose base of operations or the place from which the service is directed or controlled is not in any state in which some part of the service is performed, but the individual’s residence is in the State of Illinois.

With many employees still working remotely, employers will have to closely examine work assignments to determine whether an employee should be counted and included in the determination of whether they employ the requisite number of employees in the State of Illinois.

Requirements for “Wage Records”

The regulations require that the “wage records” included in the application consist of a list of all employees during the payroll year (January 1 through December 31) immediately preceding the application due date, separated by gender, race, and ethnicity categories in a text-searchable, sortable Microsoft Excel file or comma-separated values file format, as well as any other information required by the IDOL on the application form.

For purposes of this report, wages “shall be reported by either the mean hourly wage (for employees paid hourly wages) or annual mean wage (for salaried employees).” This departs from the language of the IEPA, which requires the “wage records” list also include information regarding the county in which each employee works, the date each employee started working for the business, and the “total wages as defined by Section 2 of the Illinois Wage Payment and Collection Act paid to each employee during the past calendar year, rounded to the nearest $100” (i.e., not the mean hourly or annual mean wage for each employee).

Definition of “Average Compensation”

As part of the compliance statement, businesses must certify that the average compensation for its female and minority employees is not consistently below the average compensation for its male and non-minority employees within each of the major EEO-1 categories.

The regulations define “average compensation” as the average wages for a specific occupation in the State of Illinois as determined by the most recent U.S. Bureau of Labor Statistics State Occupational Employment and Wage Estimates publication.

Definition of “Compliance”

As part of the process to obtain an equal pay registration certificate from the IDOL, a business must submit a statement signed by an officer of the business certifying compliance with several equal pay statutes.

The regulations define “compliance” to mean, as of the date of application or recertification, the business:

(1) Has not had any final non-appealable adverse judgment or administrative ruling entered against it in the previous two years under Title VII of the Civil Rights Act of 1964, the Illinois Human Rights Act, the Equal Wage Act, or the Equal Pay Act of 2003; or

(2) Has corrected any final and non-appealable adverse judgment or administrative ruling entered against it under Title VII of the Civil Rights Acts of 1964, the Illinois Human Rights Act, the Equal Wage Act, or the Equal Pay Act of 2003.

If a business has had a qualifying civil judgment or administrative finding and has since corrected such adverse finding, the business must submit a copy of the adverse civil judgment or administrative finding with the corrective measures that were undertaken by the employer.

Timing of IDOL Decision

The regulations establish that within 45 calendar days after receipt of an application, the IDOL will issue to the business its equal pay registration certificate or a Statement of Rejection notifying the business of the reasons the application was rejected.

The regulations also reconfirm that a business will have 30 calendar days from the date it receives the Statement of Rejection to cure application deficiencies. They also outline an appeals process that may be initiated by a business within 14 calendar days of receiving a Statement of Rejection.

Assignment of Filing Dates

The IDOL will assign every business a date by which it must submit its application for the certificate. Each business will receive at least 120 calendar days’ notice of the filing date. Thereafter, the business must obtain a new certificate every two years after the initial due date, unless the business has fewer than 100 employees on December 31 of the year immediately preceding the filing year.

Duty to Revise Erroneous, Incomplete Application

The regulations require businesses to submit revised applications if it is later discovered that incorrect or incomplete information was submitted in an application.

The revised application should include the correct or complete information, along with a letter identifying the information that was amended.

A business that makes a correction will not be subject to penalties if the incorrect or incomplete information was provided in good faith and without knowledge that such information was incorrect or incomplete.

Employee Requests for Data

The regulations detail the process by which current employees of a business may request anonymized data regarding that employee’s own job classification or title and the pay for that title or classification.

A request for data must be submitted in writing to the IDOL. It must include the employee’s name, date of hire, job title or classification, the dates for which the data is being requested, a signed affidavit swearing that the employee holds the specified job title at that business, and evidence that the employee currently holds the specified job title at that business. Upon request, and if in the possession of the IDOL, the IDOL will provide current and historical data from no more than 10 years prior to the date of the request to a requesting employee, based on the data timeframe specified in the request for employees working in the same county as the requestor.

Looking Ahead

Although the regulations provide clarity on some aspects of the equal pay registration certificate and application process, several ambiguities remain that will likely need further statutory clarification or additional guidance from the IDOL. Some of these ambiguities include how and where businesses should enroll with the IDOL, the appropriate definition of “wages” for purposes of the wage records submission, and what data must be provided to IDOL as part of the application.

Further clarity also will be required on how the IDOL expects businesses to calculate the “average compensation” for the compliance statement, given the new definition contained in the regulations confusingly references U.S. Bureau of Labor Statistics State Occupational Employment and Wage Estimates publication data, which is reported by Standard Occupational Classification rather than by the separately established EEO-1 job categories or by gender, race, or ethnicity demographics.

The IDOL is expected to revise its FAQs to incorporate and address the adopted regulations and, perhaps, resolve the outstanding questions and concerns.

For more information about the IEPA’s certification requirements and the impact of the IDOL’s regulations, please contact a Jackson Lewis attorney.

The California Department of Industrial Relations has issued new FAQs to clarify its interpretation of California’s new pay transparency requirements.

Among other updates, the new FAQs provide additional guidance on:

  • Coverage. Employers with at least 15 employees – and at least one employee in California – must include the pay scale on job postings beginning January 1, 2023.
  • Counting of employees. When evaluating if an employer has at least 15 employees, the employer would count any individual performing any kind of compensable work for the employer who is not a bona fide independent contractor as an employee, including salaried executives, part-time workers, minors, and new hires.
  • “Pay scale” definition. Consistent with the text of the statute, the term “pay scale” only requires disclosure of the salary or hourly wage range the employer reasonably expects to pay for the position – and not other types of compensation or benefits. But the pay scale must include piece rate or commission wages.
  • Postings that require pay scale disclosures. An employer must include the pay scale in job postings for roles that may be filled in California, either in-person or remotely.
  • Use of links for disclosures. An employer may not link to the salary range in an electronic posting or include a QR code in a paper posting that will take an applicant to the salary information – it must be stated in the posting itself.
  • Record retention. An employer must keep records of a job title and wage rate history for each employee throughout their employment, plus three years after. The records must be open to inspection by the Labor Commissioner to determine whether there is still a pattern of wage discrepancy.
  • Penalties. Pay transparency violations may be subject to civil penalties of no less than $100 and no more than $10,000 per violation.

With this new guidance in place, employers should review current job postings and begin making updates by January 1, 2023, to ensure compliance with California’s pay transparency requirements.

Please contact a Jackson Lewis attorney for any questions on compliance with pay transparency laws and preparatory steps to take as such laws are expected to continue to spread.

Effective September 17, 2023, covered employers in New York State will have pay transparency obligations related to job advertisements under legislative bill S.9427-A/A.10477. Governor Kathy Hochul signed the bill on December 21, 2022.

New York joins other states like California and Washington in enacting pay transparency requirements in 2022. The passage also complicates compliance for New York employers that have several local ordinances to comply with, including the New York City ordinance requiring pay transparency. Read more.

Effective November 1, 2022, covered New York City employers will need to comply with the New York City pay transparency law. This legislation requires disclosure of salary ranges in advertisements, rather than offer letters or upon request from applicants or employees. The city law is like enactments in other jurisdictions, such as California, Colorado, and Washington. (See, for example, California Expands Pay Transparency and Reporting Obligations and Washington Updates Guidance On 2023 Pay Transparency Requirements.) Read more.

Washington State’s Employment Security Department recently released a draft administrative policy with updated guidance on the modified pay transparency requirements beginning January 1, 2023. This draft policy aims to clarify issues raised by stakeholders in the feedback process for the development of the final administrative policy. The draft policy gives some new insight on several important topics. Read more.

On September 27, 2022, California Governor Gavin Newsom signed Senate Bill (SB) 1162, which requires certain employers to provide more pay transparency on pay scales and expands pay data reporting obligations for other employers. The new obligations take effect on January 1, 2023. Previously, under California law, employers had to provide an applicant with the pay scale for a position upon reasonable request. But beginning January 1, 2023, California employers with 15 or more employees must include in any job posting the pay scale for a position. Read more.

Westchester County’s salary transparency law, amending the local Human Rights Law, is set to take effect November 6, 2022. The County law will require employers (with at least four employees), employment agencies, and labor organizations to include a minimum or maximum salary for a job, promotion, or transfer opportunity in the job posting or advertisement.

The job posting covers any type of communication that is written or printed, whether electronic or hard copy, relating to a particular position for which an employer or employment agency is recruiting and accepting applications. The salary posting requirement will not apply to general “Help Wanted” solicitations not specifying a position that are affixed to an employer’s worksite or place of employment.

Recognizing the possibility of remote work and clarity relating to geographic scope, the law specifically applies to positions that are required to be performed, in whole or in part, in Westchester County, whether in person, in the field, or remotely.

Westchester County’s ordinance is much like the New York City Wage Transparency Law (eff. November 1, 2022), particularly relating to the definition of range of compensation as “the lowest to highest salary the employer in good faith belief at the time of the posting it would pay” for the position.

The law includes specific statutory “preemption” language if New York State enacts a similar law with the same or substantially similar language. Further guidance from the County would be needed if New York adopts similar legislation.

What does this mean? Pay transparency is coming to Westchester County and surrounding areas sooner than one may anticipate, so take steps now to get ready. Promoting salary disclosure already is becoming part of management’s and C-suite’s conversation in so many ways as companies look to build a culture of trust and transparency, as well as promote DEI initiatives.

With the number of pay transparency laws on the rise, now is the time to prepare. Some vendors are beginning to routinely include salary ranges on job site postings to prepare for the patchwork of new laws. Other organizations have voluntarily chosen to make pay transparency part of their culture and have voluntarily disclosed salaries for positions posted on their job board.

Stay tuned as we continue to monitor these new developments, including new laws that are being passed. Please ask your Jackson Lewis attorney if you have any questions or need legal advice in this area.

A bill to increase pay transparency in California steps closer to becoming law.

Senate Bill 1162, introduced in February and with some amendments since its initial form, passed the Assembly Appropriations Committee on August 11. Only a few steps are left before it could become law this legislative session: (1) a full Assembly vote; (2) reconciliation with the Senate; and (3) the governor’s signature.

SB 1162 continues to focus on enhanced pay transparency. In its current form, the bill requires employers with at least 15 employees to include the position’s pay scale in any job posting, including those posted through a third party. This reflects larger pay transparency trends nationally, including the requirements in Colorado, New York City, and Washington. The California bill also requires employers to provide the pay scale for a position to applicants and employees upon request.

The bill no longer requires employers to provide employees notice of job opportunities before they are filled. This requirement has required significant process changes for employers in Colorado.

The bill also expands the pay data reporting obligations for California employers. Currently, California employers must submit to the Department of Fair Employment and Housing (now, the Civil Rights Department) a pay data report tabulating (A) the number of employees within each establishment (B) by race, ethnicity, and sex within each (C) job category (for example, Professionals, Technicians, Laborers, and Service Workers) (D) who earned within each of 12 specific pay band during the prior year.

If the current version bill passes, employers also will have to:

  1. Report the median and mean hourly rate for each combination of race, ethnicity, and sex for each job category; and
  2. Submit a separate pay data report for employees hired through labor contractors (i.e., covering temporary staffing agencies) that also discloses the “ownership names of all labor contractors used to supply employees.”

An employer that fails to submit these required reports could be subject to penalties of $100 per employee (or $200 per person for repeat failures).

In short, this bill (if passed) will force employers to face any pay gaps and diversity gaps in their workforces. While pay gaps may be addressed with pay adjustments and strong, fair compensation systems, gaps in diversity can require long-term planning with a concerted external and internal DEI strategy. Identifying and understanding these gaps — and their causes — may also help avoid situations in which discriminatory bias or other unlawful actions can create legal risk.

If you have any questions about SB 1162 or how to evaluate pay, diversity, or opportunity gaps in your organization, please contact a Jackson Lewis attorney.

As the 2022 NILG National Conference was coming to a close, the EEOC released the long-awaited National Academy of Sciences report on the EEOC’s Pay Data Collection Completed in 2020. The study, titled Evaluation of Compensation Data Collected Through the EEO-1 Form, is a dense read at over 275 pages. The report found however, that the process of collection, as well as the actual data to be collected had flaws. The report also recommends the EEOC embark in a trial to field test the process if it decides to roll out a nationwide data collection tool. Read more.