Maryland Governor Wes Moore signed a new law which increases the scope of the pay transparency laws current in effect in Maryland.
Below is a list of frequently asked questions and answers regarding the new law.
When does the new law take effect?
Answer: October 1, 2024.
Does the new law apply to all employers?
Answer: The new law defines an “employer” broadly. Specifically, it defines “employer” as a person engaged in a business, industry, profession, trade, or other enterprise in the state of Maryland, and also includes a “person who acts directly or indirectly in the interest of another employer with an employee.”
What exactly does the new law require?
Answer: The law requires that employers disclose the “wage range”, which is the minimum and maximum hourly rate or minimum and maximum salary for a position, in each public or internal posting as well as a general description of benefits and any other compensation offered for a particular position.
What must the wage range be based upon?
Answer: The wage range for a position must be established in good faith based upon the following criteria:
- Any applicable pay scale;
- Any previously determined minimum and maximum hourly rate or minimum and maximum salary for the position;
- The minimum and maximum hourly rate or minimum and maximum salary of an individual holding a comparable position at the time of the posting; or
- The budgeted amount for the position.
Does the new law only apply to positions that are posted outside of the company?
Answer: No, the new law applies to internal job postings as well.
Does the new law apply to promotions and transfers?
Answer: Yes.
Does the new law require that employers disclose any other type of relevant information to employees?
Answer: Yes, as noted, it requires that employers provide a general description of benefits and any other compensation offered for the position.
How broadly does the law apply?
Answer: In order for the new law to apply, the position must be for work physically performed, at least in part, in the state of Maryland.
How does the new law define “posting”?
Answer: It defines “posting” as “a solicitation intended to recruit an applicant for a specific available position, including recruitment done directly by an employer or indirectly through a third party.
Are there record keeping requirements?
Answer: Yes, employers must keep a record of compliance for each position for a period of at least three years after the position is filled, or if the position is not filled, from when the position was initially posted.
Can individuals sue under the new law?
Answer: Employees and applicants do not have a private right of action under the new law. Instead, the Maryland Commissioner of Labor and Industry has the sole authority to enforce the law. If the Commissioner determines that an employer has violated the law, it shall issue an order compelling compliance and (i) in its discretion for a first violation, may issue a letter to the employer compelling compliance; (ii) for a second violation, assess a civil penalty of up to $300 for each employee or applicant for employment for whom the employer is not in compliance; and (iii) for each subsequent violation, assess a civil penalty of up to $600 for each employee or applicant for whom the employer is not in compliance. In determining the amount of the penalty, if assessed, the Commissioner will consider (1) the gravity of the violation; (2) the size of the employer’s business; (3) the employer’s good faith; and (4) the employer’s history of violations of the law.
Does the new law apply to third parties, such as recruiting firms?
Answer: The law, as noted, includes indirect recruitment through a third party. If an employer uses a third party recruiting firm, then the law requires the recruiting firm to include the disclosures described above.
Does the new law apply to employees who work remotely?
Answer: Yes, provided that the position will be for work physically performed, at least in part, in Maryland.
What steps should employers take in light of the new law?
Answer:
- Train managers on the new law, and specifically the requirements regarding wage ranges and the restrictions about asking about wage history;
- Review all internal and external job postings and advertisements to ensure that they contain the required wage range and benefit information;
- Review hiring processes, and specifically interview procedures, to ensure that the prohibitions about wage history are followed in job postings and job advertisements;
- Centralize decisions made with respect to the creation of salary range requirements;
- Ensure that there is a “good faith” basis for the wage ranges established;
- Employers who are subject to pay transparency laws in more than one jurisdiction should ensure that their policies and procedures satisfy all applicable laws; and
- Explore whether there is insurance for violations of the new law.
For more information, contact Marc at mrengel@lerchearly.com or 301-657-0184.
