Pay Transparency Law Takes Big Step Forward – here’s what that means for employers

New Jersey moved closer to becoming the 11th state to enact a pay transparency law on Sept. 26, when the General Assembly passed A4151/S2310, which would require certain New Jersey employers to disclose their hourly wage or annual salary pay ranges and general benefit information for each job posting/advertisement. The bill would also require employers to make “reasonable efforts” to advise current employees of promotional opportunities within their organization.

If signed into law by Gov. Phil Murphy within 45 days of the Assembly vote, as expected, New Jersey would join California, Colorado, Hawaii, New York, Washington State, Washington, D.C. and several citifies that already mandate salary and wage range information in their job opening postings. Similar mandates are scheduled to become law and take effect in the near future in Illinois, Maryland, Massachusetts, Minnesota and Vermont.

The bill will go into effect on the first day of the 7th month following the date Murphy’s signs it into law. Here’s a breakdown of what that means.

Broad Definition of a Covered Employer: The bill defines covered employers broadly as “any person, company, corporation, firm, labor organization, or association with 10 or more employees over 20 calendar weeks and does business, employs persons or takes applications for employment within the State.” The bill also applies to the state, county and municipal entity employers. It is important to note that the bill does not require that any of the 10 employees, constituting the minimum for the bill’s applicability, must actually work in New Jersey. Additionally, the vague language of the bill does not require that if an employer “takes applications for employment within the State,” the applications must be for a New Jersey-based position. Due to the bill’s ambiguous language, it is possible that the bill may also apply to any New York, Pennsylvania or Delaware-based positions if the applications are collected within the state of New Jersey.

The bill does not apply to job postings by temporary service and/or consulting firms (registered with the Division of Consumer Affairs) that are used to identify qualified applicants for potential future job openings, e.g., positions that do not yet exist at the time of the job posting. However, once there is a specific job opening for which they are recruiting, the temporary service or consulting firm must provide the pay and benefit information during “the time of interview or hire.”

Requirements for postings about new jobs and transfer opportunities: The bill requires that for each (internal and external) posting for a new job or a transfer opportunity, a covered employer must disclose the hourly wage, annual salary, or range of the hourly wage or annual salary, as well as a general description of benefits and other compensation for which a candidate for the open position would be eligible. However, the bill provides a covered employer with a degree of flexibility by allowing it to increase the wages, benefits, and/or other compensation listed in the posting at the time it extends an offer to a candidate.

“Reasonable efforts” to announce promotional opportunities: A covered employer is required to make “reasonable efforts” to announce, post, or otherwise inform current employees in an affected department or departments of the employer’s business, of promotional opportunities (whether advertised internally or externally) prior to making a promotion decision. Pursuant to the bill, a “promotion” requires both a change in job title and an increase in compensation.

The bill creates exceptions to the notice requirement for a promotion of a current employee based on years of experience or performance, as well as a promotion on an emergent basis due to an unforeseen event.

Penalties: The bill explains that each new or transfer opportunity where an employer does not include in the job position, the wage/salary range information, general description of eligible benefits and/or other potential compensation, will constitute a single violation of the bill, regardless of the number of listings or forums that advertise the individual open position/transfer opportunity. Similarly, each time that an employer fails to announce, post or otherwise make known one opportunity for promotion (not otherwise excluded from the bill’s applicability as noted above) will be considered a violation of the bill regardless of whether the single promotional opportunity is posted in multiple forums.

An employer that does not comply with the bill’s requirements is subject to a civil penalty of up to $300 for the first violation and $600 for each subsequent violation.

The Commissioner of the Department of Labor and Workforce Development is empowered with the authority to enforce the bill and pursue the listed corresponding penalties. This means that applicants and employees do not have a private right of action to enforce the bill’s provisions against employers.

The bill’s relationship to other municipal transparency laws: The bill does not supersede, nor does it replace more onerous municipal pay transparency laws like Jersey City’s Ordinance 22-045. In Jersey City, an entity with five or more employees (inclusive of independent contractors), is required to include in advertisements or notices for any new positions, transfer or promotional opportunity, the minimum and maximum wage/salary range that the employer, in good faith, believes that it would pay for the advertised job, transfer or promotional opportunity.

The penalty for non-compliance with the Jersey City Law is a fine of up to $2,000.

Bottom line: How should employers Prepare? As Murphy is expected to sign the bill into law in the near future, employers with operations in New Jersey should inform their recruiting and human resources teams of the new requirements. Employers should also determine and document their hourly and salary ranges for each position using existing or benchmarking data, so they are ready to include their good-faith determinations on ranges in their job postings and promotional opportunity announcements.

For questions or assistance in helping your organization comply with the new Bill, please contact Paul H. Mazer, Esq., a Partner in the firm's Employment Law Practice Group, via email here.