Executive Summary: Washington, D.C. and Maryland recently enacted pay transparency and wage history laws. In passing these laws, the two jurisdictions join a growing number of states including California, Colorado, Illinois, New York, and Washington in an effort to address pay disparity in the workplace.
WASHINGTON, D.C.
Washington, D.C. published DC Act 25-367 on March 5, 2024. The Act amends the Wage Transparency Act of 2014 and prohibits screening potential employees based on wage history or requesting wage history, expands on the current prohibition of employer policies and procedures that require employees to refrain from discussing their wages, requires employers to provide minimum and maximum pay ranges, and requires employers to disclose health benefits to prospective employees before the first interview. The Act applies to any employer that has at least one employee working in D.C.
The Act went into effect on June 30, 2024.
Pay range, Healthcare Benefits Disclosure, and Wage History Requirements
The Act requires employers to include the minimum and maximum projected salary or hourly wage in all job postings. The minimum and maximum provided must be that which the employer “in good faith” believes would be the actual range for the posted position. Notably, this requirement applies to external job postings as well as promotions and transfers for internal candidates.
Employers are also required to disclose the existence of health benefits to prospective employees “before the first interview.” If the employer fails to make such disclosures, a prospective employee can request the pay range or benefit information, and an employer would be required to disclose.
- Employers cannot screen job applicants based on wage history.
- Employers must post a notice in the workplace notifying employees of their rights under this law in a “conspicuous place in at least one location where employees congregate.”
This Act also prohibits employers from screening prospective employees based on their wage history. As such, an employer may not ask an applicant or the applicant’s previous employers questions related to their previous salary or hourly wage during the interview process or require that an applicant’s wage history satisfy the minimum or maximum salary or hourly wage range. The Act is silent on whether an employer can ask a prospective employee what their salary expectations are.
Enforcement:
The Act does not provide a private right of action for employees, but the attorney general has the authority to investigate violations and to bring civil actions against an employer or seek remedies on behalf of individuals or the public. If found to be in violation, an employer may be subject to civil fines ranging from $1,000 - $20,000 per occurrence.
MARYLAND
On April 25, 2024, Maryland Governor Moore signed Senate Bill 525/HB 649. The law applies to all employers (or persons who act directly or indirectly with an employee on behalf of another employer) that engage “in a business, industry, profession, trade, or other enterprise in” Maryland. There is no minimum employee requirement for coverage under this law.
The amendment takes effect on October 1, 2024.
Pay Transparency and Record Keeping Requirements
The amendment requires employers to include wage ranges in internal and external postings for positions that will be physically performed, at least in part, in the state of Maryland. Employers must set the wage range in “good faith.” Under the new law, “wage range” is defined as 1) the minimum and maximum hourly rate or salary set by reference to any applicable pay scale, 2) any previously determined minimum and maximum hourly rate or salary for the position, 3) the minimum and maximum hourly rate or salary of any individual holding a comparable position at the time of posting, or 4) the budgeted amount for the position.
Employers can comply with this requirement by using a state-provided form that will presumably be available by October 1, 2024.
Along with the requirement to provide a good faith wage range, employers are also required to disclose: a “general description of benefits” and “any other compensation offered for the position.” Where no public or internal job posting is made for a given position, the employer must disclose the three components identified above to applicants: (i) before any discussion of compensation with the applicant; or (ii) at any other time upon the applicant’s request. As with D.C., the Act is silent on whether an employer can ask a prospective employee what their salary expectations are.
Employers will be required to maintain records of employee wages, job classifications, and other conditions of employment for at least 3 years after a position is filled, or if the position is not filled, for at least 3 years after the position was initially posted.
Enforcement
The Act does not provide for private right of action for employees or applicants. Instead, the Maryland Department of Labor is authorized to impose the following penalties:
- First violation: issue an order compelling compliance with the law.
- Second violation: at the Maryland DOL’s discretion, employers may be assessed a civil penalty of up to $300 for each employee or applicant for employment for whom the employer is not in compliance.
- For each subsequent violation within three years, the amount of the civil penalty may increase up to $600.