What to Know About Pay Transparency and Pay History Laws in DC and MD
By David Sotolongo and Raabia Cheema
The Evolving Norms Around Employee Discussions about Compensation
There was once a day in which managers would say to employees, “don’t discuss your pay with your co-workers!” Or during job interviews, interviewers would ask candidates about their current compensation. Neither of those scenarios is likely to occur today ~ because rules, policies or questions regarding discussion and disclosure of individual compensation details are becoming increasingly regulated. Why? Because transparency about pay allows employees to accurately assess their own individual value in an organization and affirms the discipline of employer compensation philosophies that follow principles of market analysis and pay equity. Also, setting a new employee’s compensation based on their prior compensation disparately impacts those who have had a nonlinear career path (often women), and is inconsistent with the discipline of assigning pay based on market.
As explained below, new District of Columbia and Maryland state laws protect employees’ rights to discuss wages or other compensation. Each jurisdiction also has carve outs allowing employers to prohibit employees with access to information regarding the wages of other employees in the course of their work—such as human resources employees—from improperly divulging such information.
Notably, such discussions among non-supervisory employees were already protected by the National Labor Relations Act. These new laws essentially expand upon that federal law by also protecting supervisory employees’ discussions about their compensation.
1. The District of Columbia
In January 2024, the District of Columbia amended the Wage Transparency Act of 2014 (the Act) to expand the protections and benefits afforded to employees and job applicants regarding pay transparency and pay history. The Act’s amendments take effect on June 30, 2024.
DC employers will now be required to “provide the minimum and maximum projected salary or hourly pay in all job listings and position descriptions advertised,” and “disclose to prospective employees the existence of healthcare benefits that employees may receive before the first interview.” This Act applies not only to external job postings, but also to internally posted promotion or transfer opportunities.
Additionally, DC employers will be prohibited from:
Screening prospective employees based on their wage history, including by requiring a prospective employee's wage history to satisfy minimum or maximum criteria;
Requesting or requiring a prospective employee to disclose wage history information as a condition of being interviewed or continuing to be considered for an offer of employment; or
Seeking a prospective employee's wage history from a prior employer.
The Act also requires that DC employers “post a notice in its workplace notifying employees of their rights under this [Act],” which must “be posted in a conspicuous place in at least one location where employees congregate.” As of the posting of this article, it does not appear that any DC government agency has yet created a poster for employers to use in complying with this notice requirement. (For example, see posters created by the DC Department of Employment Services and the DC Office of Human Rights). We have reached out to the DC Department of Employment Services for clarification.
Although no private right of action exists under the Act, the DC Attorney General may bring civil actions against employers on behalf of individuals or the public. The DC Attorney General may seek both injunctive and compensatory relief, including reasonable attorneys’ fees and “statutory penalties equal to any administrative penalties provided by law.” Those administrative penalties are as follows: a $1,000 fine for the first violation, a $5,000 fine for the second violation, and a $20,000 fine for each subsequent violation. Notably, these fine amounts are required by the Act; they are not simply fines “up to” those amounts.
2. Maryland
In April 2024, Maryland amended its law regarding wage range transparency (the “Law”), which will also require businesses to include a pay range in job postings. The Law takes effect October 1, 2024.
Currently, the Law only requires that employers provide job applicants “the wage range for the position for which the applicant applied” upon request. Beginning in October 2024, however, employers must disclose, in each public or internal job posting that will be performed “even in part” in Maryland: (1) the wage range for the position, (2) a general description of benefits, and (3) any other compensation offered for a position. The law defines “job postings” as any “solicitation intended to recruit applicants for a specific available position, including recruitment done directly by an employer or indirectly through a third party.” If a job isn’t posted, then the employer must provide any applicant with the above information prior to any discussion of compensation with the applicant or at any other time upon the applicant’s request. Additionally, employers may not retaliate against any applicant for employment if the applicant did not provide wage history or otherwise exercised any rights under the newly enacted law.
The “wage range” for a position (i.e., the minimum and maximum hourly rate or salary) must be set by the employer “in good faith by reference, to:
any applicable pay scale;
any previously determined [wage range];
the [wage range] of an individual holding a comparable position at the time of the posting; or
the [employer’s] budgeted amount for the position.”
Employers are required to keep a record of compliance of employee wages, job classifications, and other conditions of employment for at least three years after the position is filled. If a position is not filled, then employers are required to keep the above records for at least three years after the position was initially posted.
As it currently stands, the Law also prohibits employers from requesting or relying upon an applicant’s pay history when considering the applicant for employment. Only after an initial offer of employment is made—with the offered compensation stated—may the employer ask the applicant to voluntarily disclose their wage history. If such wage history is voluntarily given, then the employer may confirm that information, and use it to offer the applicant a higher level of compensation—except if providing the applicant the higher compensation would create an unlawful pay differential based on protected characteristics.1
The Law also protects all employees’ rights to discuss their own or their coworkers’ wages, except that “an employee who has access to the wage information of other employees as a part of [their] essential job functions” is not protected when they improperly divulge the wages of other employees.
The Law does not provide a private right of action to employees or applicants; it will be enforced by the Maryland Department of Labor (“MDOL”). If the MDOL determines that an employer has violated the wage transparency part of the Law, it will issue an order compelling compliance. For a second violation, the employer may be assessed a civil penalty up to $300 for each applicant or employee for whom the employer is not in compliance. For each subsequent violation, the MDOL will assess a civil penalty of up to $600 for each employee or applicant for whom the employer is not in compliance if the violation occurs within 3 years of a previous violation. However, violations of other aspects of the Law can lead to the MDOL seeking injunctive relief and damages.
Take Aways
Given the hefty penalties associated with violating the DC Wage Transparency Act, DC employers should immediately review job posting practices and policies to ensure compliance with the law. DC employers should also consider obtaining legal advice on complying with the notice requirement of the Act. Although the penalties associated with violating Maryland’s pay transparency law are less severe, employers should ensure compliance and avoid having to obtain legal counsel to respond to actions brought by the Maryland Department of Labor.
Notably, since the Maryland law explicitly applies to jobs performed “even in part” in Maryland, and the DC law arguably applies in the same fashion, employers who post a job to be performed in the DMV area that may be performed remotely even one day a week would be well advised to comply with both sets of laws when drafting job postings.
Although neither DC nor Maryland has yet issued guidance regarding compliance with these laws, New York state has issued guidance regarding its own pay transparency law, and some of that guidance may be helpful in understanding the DC and Maryland laws. For example, the NY guidance states that “Employers are not prohibited from offering a higher salary to an applicant whose qualifications exceed the employer’s original good faith expectations… [but] [e]mployers should not offer an applicant a lower compensation rate than what was indicated in the job posting.”
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