This October, one thing scarier than ghosts and goblins is the growing wave of pay transparency laws creeping across the country, threatening to unearth compensation secrets long kept buried. Federal legislation, which died in previous years, has been resurrected and looms over the country. Though the federal legislation appears destined to rest once more in its House committee grave, over a dozen states have enacted legislation to burn non-compliant employers at the stake. Utah appears to be safe for private employers – at least for now. By the end, readers will understand the national trend that may affect multistate employers and those with remote workers, some laws Utah employers must comply with, and why Utah employers should not fear pay transparency laws if they come.
The National Pay Transparency Movement — A Frightening Trend
The pay transparency laws discussed in this blog refer to those laws that require wage, wage range, and/or other compensation structure disclosures in external job postings and internal promotions and transfers.
Over the last six years, these laws have been increasingly enacted and proposed. The federal Salary Transparency Act has been introduced in the House three times.[1] The Salary Transparency Act seeks to amend the Fair Labor Standards Act to require that all employers disclose the wage or wage range for employment opportunities or risk penalties and private actions. While the federal legislation has not been successful yet, many states have enacted similar pay transparency laws.
In this year alone, five states’ pay transparency laws became effective, and about a dozen more states proposed similar laws. The following jurisdictions have pay transparency laws: California, Colorado, Connecticut, D.C., Hawaii, Illinois, Maryland, Massachusetts, Minnesota, Nevada, New Jersey, New York, Rhode Island, Vermont, and Washington. Even more cities and counties across the nation have implemented pay transparency laws in recent years.
These pay transparency laws have significant variation in application and requirements. Some differences involve who is covered by the law, the timing and circumstances for disclosures, application to internal or external opportunities, what must be disclosed to whom, reporting requirements, and possible penalties and liability. The claws of some pay transparency laws have reached Utah through multistate employers, out of state recruitment efforts, and remote work. For example, Illinois’ laws may apply to Utah postings if the employee will report to a supervisor or office in Illinois. Additionally, New Jersey’s law can apply to certain employers who take applications for employment within New Jersey, where the job would allow the applicant to perform work remotely from New Jersey.[2] A Utah employer with 25 remote workers that permanently relocate into Massachusetts may also be subject to Massachusetts’ pay transparency laws and required to disclose pay information upon request.
Utah’s Legal Landscape: No Transparent Ghouls Yet — But Dangers Are Lurking
Utah has not jumped on the recent pay transparency law trend. There are no Utah requirements that private employers list wages or wage ranges in internal or external job postings. While Utah private employers are not required to unmask pay ranges yet, Utah has targeted the underlying public policy concerns identified to justify pay transparency laws.
Many proponents of pay transparency laws assert the disclosure requirements help reduce wage gaps based on gender, race, or other legally protected characteristics. The Utah Antidiscrimination Act prohibits discrimination in matters of compensation when employees have substantially equal experience, responsibilities, and skill. Utah employers are also subject to similar federal requirements prohibiting discriminatory pay based on protected characteristics, including those from the Equal Pay Act and Title VII. Even the appearance of an unlawful wage gap or violation of the current requirements can be a nightmare for Utah employers.
Pay transparency laws are also meant to ensure workplaces are fair and equitable. Utah employers must be clear with employees about pay rates and details at the time of hiring and prior to any changes. [3] Additionally, the National Labor Relations Act protects most private-sector employees in Utah by prohibiting employers from both banning pay discussions and retaliating against workers who engage in them. There is not much preventing Utah employees from uncovering unfair or inequitable pay details through voluntary communications amongst themselves. It is entirely reasonable to expect some blowback, resistance, or employee turnover when they discover pay practices that are even seemingly unfair.
Some research and surveys have identified possible negative consequences associated with strict pay transparency laws, including a decrease in average wages and an increase in job-seeking behavior. [4] Only time will tell if Utah gets on the pay transparency law bandwagon to supplement existing laws.
Why Utah Employers Shouldn’t Fear Pay Transparency Laws
There is a decent amount of competition in the Utah labor markets, especially in certain areas of Utah. Relying on legal minimums in a competitive market rarely brings in the talent an employer desires. Even without a legal mandate, many employers use various pay transparency law requirements as a tool to bring on desired applicants, foster trust in the workplace, and avoid the appearance of unlawful conduct.
Various research and surveys indicate that job postings with pay and pay ranges make a company more competitive.[5] If the expected pay or pay range is not included in a job posting, many potential qualified applicants will not even apply for the job. As a result, many Utah employers include expected pay ranges in their job postings. This simple inclusion could satisfy a more lenient pay transparency law resembling Hawaii’s law.[6]
Other research shows that a lack of transparency about compensation packages and internal opportunity can lead to increased turnover and loss of talent in the workplace. Building trust and loyalty by showing employees that there are no hidden “skeletons” may be one of the best potions for retention and morale.
Prudent Utah employers are already implementing policies and practices to demonstrate good-faith compliance with the law and avoid unlawful pay gaps and practices. If any employer is suffering a legal scare or haunted by policy compliance and best practices, consult a Salt Lake City employment lawyer for guidance.
Conclusion: Don’t Let Pay Secrecy Haunt Your Business
[1] https://www.congress.gov/bill/117th-congress/house-bill/6850/text; https://www.congress.gov/bill/118th-congress/house-bill/1599/text; https://www.congress.gov/bill/119th-congress/house-bill/2007/text.
[2] https://www.nj.gov/labor/myworkrights/wages/pay-transparency/
[3] Utah Code Ann. § 34-28-4
[4] https://www.nber.org/papers/w28903?utm_source=chatgpt.com; https://www.globenewswire.com/news-release/2023/06/01/2680401/0/en/New-Payscale-Research-Reveals-Top-Drivers-Behind-Employee-Turnover-and-the-Impact-of-Pay-Transparency.html
[6] https://labor.hawaii.gov/hcrc/3767-2/; Haw. Rev. Stat. Ann. § 378-2.8.