This article is written by Jessica Nguyen, General Counsel of PayScale.
As the General Counsel of PayScale, naturally, I pay close attention to laws intended to further pay equity. PayScale is based in Washington so I was excited to learn that on May 9, 2019, Washington became the ninth state to join the salary history ban train.
Like other salary history ban laws, Washington’s new law prohibits an employer from asking for the salary history of an applicant from the applicant’s current or former employer. Employers are also prohibited from requiring that an applicant’s prior salary history “meet certain criteria” (a phrase which is not clearly defined). But, an employer would be permitted to confirm an applicant’s salary history: (1) if the applicant voluntarily discloses their salary history; or (2) after the employer has negotiated and made an offer of employment with compensation to the applicant.
The more interesting requirement under this law is the pay scale disclosure requirement to both applicants and existing employees making an internal transfer. Under this requirement, if requested, employers with 15 or more employees are required to disclose the minimum wage or salary range: (1) to the applicant for a position if the applicant has been offered that position; and (2) to an existing employee for a new position or promotion if such employee is offered the new position or promotion. If no range exists, the employer must provide a minimum wage or salary expectation prior to posting the position, making a position transfer, or making a promotion.
Having 15 or more employees is a low threshold. There are many small and medium sized businesses in Washington that are likely not aware of these upcoming legal requirements and do not have the tools and resources to develop these pay ranges to comply with these requirements.
Now, more than ever, employers, regardless of size and industry, should create and possess salary structures and ranges. Here at PayScale, we can help you do that.
HR and finance professionals are aware of the return on investment PayScale’s products provide, through a reduction in turnover and accelerating the hiring process.
Legal professionals should also be aware that PayScale’s products provide value to an organization by helping with legal compliance (such as this new law) and by mitigating the risks of legal actions (and the resulting financial costs and damages).
In short, if your legal team is not aware of PayScale’s products and its value to your organization, they should.
For example, under Washington’s new law, individuals are allowed to bring a private right of action and seek compensatory and statutory damages and their attorneys’ fees and costs. If you’ve ever been involved in litigation, you know that litigation is expensive and consumes a lot of time and resources. Simply responding to and settling a meritless claim can cost your organization anywhere from $20,000 to $100,000 or more (per claim).
Washington employers should plan to review and adjust their hiring and compensation policies and practices to conform to Washington’s new law, and train their managers and HR teams accordingly. At PayScale, we offer the tools and services to help you get this done.