Journal of Urgent Care Medicine

Practice Management

What Urgent Care Operators Need to Know About Pay Transparency

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Urgent Message: As a rising percentage of jurisdictions require disclosure of salary ranges to current and/or prospective employees, urgent care leaders must achieve compliance with pay transparency laws.

Alan A. Ayers, MBA, MAcc

California, New York, Washington, and Rhode Island are among the latest states to add salary range transparency laws to their books.[1] As of this writing, eight states have enacted such laws, with at least 15 more considering legislation on this topic, including Illinois, Georgia, and South Dakota.[2]  Multiple cities and counties ranging from Cincinnati, Ohio, to Westchester County, New York, also have local ordinances requiring pay transparency.

Pay transparency means an employer provides general information about workers’ compensation.2 Employers should be aware of this trend and their obligations to comply with new legislation.

More than 25% of the U.S. labor force is now covered by salary transparency legislation, according to an estimate by the National Women’s Law Center.[3] Norms are shifting nationwide, and indeed.com found that nearly half (roughly 45%) of all advertisements for work in the United States now carry a pay range disclosure. This is an increase from less than 20% before the pandemic.[4]

Background

On June 10, 1963, President John F. Kennedy signed the Equal Pay Act of 1963[5] into law, declaring that this was a “first step” toward eradicating wage inequality between the sexes.[6]

This federal law is proscriptive. As such, it bans sex-based wage differentials but does not impose any affirmative obligations on employers.[7] Specifically, the act bans sex-based pay discrimination only where employees can demonstrate they are being paid wages that are lower than wages paid to employees of the opposite sex who are performing “equal work on jobs the performance of which requires equal skill, effort, and responsibility, and which are performed under similar working conditions” in the same establishment.7

However, House Rep. Eleanor Holmes Norton (D-DC) has introduced three pay transparency bills to Congress since 2019. If passed, her Pay Equity for All Act[8] could further address gender and race pay gaps by making it illegal for employers to ask job applicants about their salary history and generally prohibits employers from relying on the wage history of prospective employees when considering them for employment or determining their wages.8

Interestingly, even though pay transparency is not yet required in the most states, the notion is gaining momentum. The Society of Human Resource Management data released on Equal Pay Day, March 14, 2023, shows that, among more than 1,300 human resources professionals surveyed, 42% of their organizations or more operate in a location that requires job postings to include pay ranges.8 The survey data also shows that more than 2 in 3 human resource professionals say that, even when pay transparency is not required by law, their organizations still will list starting pay in job postings.[9]

What Pay Transparency Means for Employers and Employees

Lawmakers have enacted pay transparency laws in an attempt to help reduce gender and racial wage gaps. Women working full time in the United States are paid about 84% as much as men, according to the Department of Labor.[10] Moreover, Black, Hispanic, and Native American workers earn 73 to 77 cents for every dollar earned by White workers. Experts say that requiring employers to set out their salary ranges helps to demystify a job search.4

The details of when and where the salary range must be shared vary in each state, county, or city. Typically, this information must be provided upon request, in the job posting, and after an interview. Employees may file complaints for an employer or prospective employer’s failure to comply with local or state department of labor offices.

Employers

Pay transparency laws are jurisdictionally specific, but some of the common requirements include the following:

  • Employers are required to disclose wage rates and salary ranges upon request by a job candidate or employee
  • Employers are required to file annual reports that disclose salary and wage compensation to a state or local agency
  • Employers must list pay ranges internally to existing employees and externally in job postings
  • Employers who violate pay transparency laws are subject to a fine and must rectify the violation2,[11]

Salary range transparency can benefits employers in a significant way.1 A study found that including salary information in job postings reduced recruiting costs by lowering postings’ cost per click.[12] In addition, upfront information about salary helps employers recruit talent: A recent survey found that 4 out of 5 applicants would likely stop “applying for the given profession” if a job posting did not contain salary information.[13]

Employees

Studies show that if employees know how their salary compares to that of their colleagues, it may motivate them to work harder to prove their worth.[14] If workers learned their managers earned more than they expected, they worked harder because they then saw an avenue toward career advancement.14

Examples

As part of the general trend toward recognizing the importance of transparency in strengthening wage equality overall, these laws require employers to disclose salary ranges to job applicants—in job postings, during the hiring process, or upon request. Here are some specific examples.

California

In September 2022, the California legislature passed Senate Bill 1162.[15] The bill amended an existing law and expanded on previous employee pay data reporting obligations. As of January 1, 2023, employers with 15 or more employees must disclose the “salary or hourly wage range that the employer reasonably expects to pay for the position” in any job posting and disclose the pay scale to a current employee who requests to see the pay scale for their current position.15 In addition, the new law requires businesses with more than 100 employees to report more detailed information to the state on what they pay employees, breaking down the pay by job category, sex, race, and ethnicity.[16]

Illinois

Illinois Governor J.B. Pritzker signed into law a pay transparency bill that will mandate employers in the state with at least 15 employees to include in job postings the “pay scale and benefits” that employers reasonably believe they will pay for the positions.[17] The law will apply to jobs performed at least in part in Illinois as well as jobs where the employee will report to a supervisor, office, or other work site in Illinois. This law will go into effect on January 1, 2025.[18]

Virginia

On April 22, 2020, the state General Assembly passed a new pay transparency law that prohibits employers from discharging or otherwise retaliating against an employee for discussing wages or compensation with another employee.[19] The statute provides, in pertinent part:

No employer shall discharge from employment or take other retaliatory action against an employee because the employee (i) inquired about or discussed with, or disclosed to, another employee any information about either the employee’s own wages or other compensation or about any other employee’s wages or other compensation or (ii) filed a complaint with the Department alleging a violation of this section.19

Specifically excluded from this provision, however, are the following:

Employees who have access to the compensation information of other employees or applicants for employment as part of their essential job functions who disclose the pay of other employees or applicants to individuals who do not otherwise have access to compensation information, unless the disclosure is (a) in response to a formal complaint or charge, (b) in furtherance of an investigation, proceeding, hearing, or action, including an investigation conducted by the employer, or (c) consistent with a legal duty to furnish information.19

New York City

The New York City Council amended a law that requires employers to publish good faith salary ranges in any advertisement for a job, promotion, or transfer.[20] The law’s effective date was delayed until November 1, 2022.[21] The pay transparency law does not apply to positions that can’t or won’t be performed, at least in part, in New York City. However, the amendment doesn’t address remote work, but additional guidance on the issue is expected from the NYC Commission on Human Rights.[22] In addition, the amendment creates a limited private right of action.22

Employers’ advertisements for positions must state the minimum and maximum annual salary or hourly wage for the position.22 The law currently applies to all NYC employers that employ four or more people. However, the guidance makes clear that there is no obligation to advertise opportunities—including internal opportunities—and provides specifically that salary postings are not required for opportunities that are not advertised. It also notes that the law does not prohibit employers from hiring without using an advertisement or require employers to create an advertisement to hire.[23]

Takeaway

In a recent but limited study examining Colorado’s pay transparency law, researchers found that after its passage, the state’s labor force participation rate increased compared with the labor force participation rate of nearby Utah, which has “similar demographics and economic characteristics.”[24]

In addition to understanding the pay transparency laws in their area, employers should consider a regular pay scale audit to help pinpoint areas of pay inequality. However, prior to analyzing the data, employers should determine their pay audit goals and frequency and consult with legal counsel.

References

Author Affiliations: Alan A. Ayers, MBA, MAcc is President of Experity Consulting and is Senior Editor of The Journal of Urgent Care Medicine. The author has no relevant financial relationships with any commercial interests.

What Urgent Care Operators Need to Know About Pay Transparency
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