On October 1, Maryland will join a growing number of jurisdictions that mandate and enforce "wage range transparency" in employment advertisements. The new law will require employers of any size to disclose "wage ranges" for, and other information about, open job positions in internal and external job postings where a prospective employee would physically perform any work within Maryland. This is in addition to, and somewhat in tension with, existing Maryland law that prohibits employers from requesting or using a job applicant's wage history to make hiring choices. Several other jurisdictions, such as Washington, D.C. and California, have similar laws that likely inspired Maryland's.
Definitions
Maryland's new wage transparency law defines "wage ranges" as the minimum and maximum hour rate or salary for a position that is set in good faith by reference to:
- Any applicable pay scale;
- Any previously determined minimum and maximum hourly rate or salary;
- The minimum and maximum hourly rate or salary of an individual holding a comparable position at the time the job was posted; or
- The budgeted amount for the position.
"Posting" is defined as a solicitation intended to recruit applicants for a specific available position and even applies to recruitment done for an employer by a third party.
Transparency Requirements
Maryland's law will require employers to, for every job posting, disclose the minimum and maximum salary in good faith, provide a general description of job benefits, and discuss other compensation offered. This will apply to both internal and external job postings for any position where the applicant would work—even in part—in Maryland. In cases where there is no posting for a position at all, employers will be required to disclose wage ranges to job applicants before any negotiation about compensation is held, and at any other time upon an applicant's request.
Use of Employee Wage Histories
Although employers will be required to disclose wage ranges for posted positions, Maryland does not impose a reciprocal requirement on job applicants. In fact, employers are prohibited from requesting job applicants' wage histories; and even if an applicant proactively discloses his or her wage history, employers cannot use that information to make hiring decisions. Prospective employees may voluntarily disclose their wage histories at any time, but the employer can only use them after it has made an initial offer and then only for the purpose of negotiating a higher rate of pay than initially offered. Employers are prohibited from retaliating against, or refusing to interview, hire, or employ a prospective employee—or now refusing to promote or transfer an existing employee—because he or she exercised rights under the wage transparency laws.
Compliance and Recordkeeping
Employers can ensure compliance with the new law by completing a form that will be issued by the Maryland Department of Labor and including it in each job posting. Employers are required to keep wage transparency records for at least 3 years after a position is filled, or if the position was not filled 3 years after it was initially posted.
Enforcement and Penalties
If an employer violates this law, Maryland's Commissioner of Labor and Industry is required to issue an order compelling compliance and may, in the Commissioner's discretion, issue a warning letter (first offense) and civil penalties of up to $300 (second offense) or $600 (third offense) per affected applicant or employee. For even a single errant job posting that is not a first offense, this could potentially result in tens of thousands of dollars of penalties. In assessing civil penalties, the Commissioner is required to consider the gravity of the violation, the size of the business, the employer's good faith, and the employer's history of violations of the law. There is no private right of enforcement.
Takeaways for Employers
Maryland's new transparency law will certainly require employers to make substantial changes to their hiring procedures, including immediate adjustments to existing job postings that remain open as of October 1. Employers will need to train recruiting and HR staff to derive in good faith wage ranges, disclose them for every posted job, and keep records of compliance for years. And employers that use third-party recruiting firms will need to ensure those firms also follow the law or risk penalties for those firms' noncompliance. A robust compliance environment will be necessary to avoid potentially large civil penalties and reputational harm. This is particularly true for employers that are based outside of Maryland but seek to employ individuals within Maryland, even on a remote or part-time basis.
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