Washington State’s New Pay Transparency Law

Wage disclosure laws designed to promote pay equity are on the rise in the U.S. Approximately fourteen states and localities, including California, Colorado, New York City, and Washington State, have passed laws with varying requirements relating to the disclosure of anticipated compensation for posted positions.

Washington State’s new pay transparency law, which went into effect on January 1, 2023, has particularly broad requirements for job postings. The law impacts most employers advertising remote positions that could be performed in Washington and requires job postings to include salary and benefits information. Given that many employers around the country now employ fully remote workforces and open positions can be filled by individuals living and working anywhere, the scope of Washington’s law should be carefully reviewed by employers who advertise for open positions nationwide.

 In December 2022, the Washington State Department of Labor & Industries (DLI) issued Administrative Policy guidance interpreting the jurisdiction of the new law broadly. According to the guidance, the law applies if an employer of 15 or more employees either (i) has at least one employee based in Washington State, (ii) engages in business in the state, or (iii) recruits for jobs that could be performed by a Washington-based employee. This description of the law’s jurisdictional reach is significant because, unlike other pay disclosure laws such as those in Colorado and New York City where an employer must have at least one employee in the state or locality to come within a pay transparency law’s coverage, the DLI has determined that an employer does not need to have any employees present in Washington to fall within the state law’s purview. As noted in the guidance, the law’s job posting requirements will not apply if an advertised position will be performed completely outside of Washington, but the “out-of-state exception must be applied narrowly.” Further, an employer cannot avoid disclosing wage and salary information requirements by indicating within a posting that the employer will not accept Washington applicants.

The statute provides that covered employers must disclose in each posting for each job opening the wage scale or salary range, and a general description of all of the benefits and other compensation to be offered to the hired applicant, as follows:

Wage Information Required – The salary range disclosed should provide an applicant with the employer’s “most reasonable and genuinely expected range of compensation for the job.” The wage scale or salary range cannot be open-ended, and if there is a starting range, the starting range and general range for the position must be included.

Benefits Information Required – Washington requires employers to provide a general description of benefits for the position, including “healthcare benefits, retirement benefits, any benefits permitting paid days off (including more generous paid sick leave accruals, parental leave and paid time off or vacation benefits), and any other fringe benefits that must be reported for federal tax purposes.” Posting requirements per DLI guidance include the following:

(i) Retirement Plans – If the employer offers retirement plan options, it should list the options in the job posting (for example, 401(k), employer-funded plan, deferred compensation, etc.)

(ii) PTO or Vacation – If the employer offers PTO or vacation as part of its benefits, the employer should provide the number of days or hours a new hire would receive (i.e., 10 days per year, 8 hours per month, etc.)

(iii) Paid Holidays – If the employer offers paid holidays, list the total number of paid holidays offered.

(iv) Sick Leave – If an employer offers more generous sick leave than required under state law or local ordinance, it should provide the number of hours per month or year offered.

Other Compensation – According to DLI guidance, employers should also include information about “other compensation” that will be offered to a hired applicant. “Other compensation” has been interpreted to include bonuses, commissions, profit-sharing, stock options or other forms of compensation that would be offered to the hired applicant in addition to their established pay. The Administrative Policy guidance includes the following example: “Hired applicant will be able to purchase company stock, receive annual bonuses, and can participate in profit sharing.” Additionally, if the position is commission-eligible, the DLI expects that an employer should include the rate or range of rates to be offered, for example, “Commission-based salesperson – 5-8% of net sale price per unit.” The DLI has not offered any further guidance on commission disclosure requirements.

Employers interested in reading the DLI’s guidance can find it here. For more information on best practices for complying with Washington’s pay transparency and other pay disclosure laws, please contact Outside GC to speak with a member of our employment law team.

Lorna Hebert              [email protected]        (617) 512-8401
Trish Lantzy                [email protected]        (804) 683-1737
Margaret Scheele      [email protected]    (703) 408-4718

Lorna Hebert (New England team) is an employment, labor, higher education, and litigation attorney with nearly 30 years of experience handling a broad range of complex employment and labor matters. Lorna advises clients on a wide range of employment matters, including workplace investigations, dispute resolution, hiring, performance management, discipline, terminations, reorganizations,  accommodations, employee benefits, wage and hour issues,  discrimination claims, policies and procedures, and training.

Patricia Lantzy (Washington D.C. team) is a labor and employment attorney with almost 30 years of experience. Trish works with a wide range of clients, from individual executives and small businesses to the Fortune 500, on employment-related issues across the employee lifecycle, including recruiting, hiring, workplace harmony and leave issues, performance and discipline/discharge, corporate reorganizations and reductions in force.

Margaret Scheele (Washington D.C. team) is an employment law attorney with more than 30 years of experience. Margaret has represented a range of clients in a variety of industries, including aviation, food service, telecommunications, health care, and government contracting. Her practice includes the full range of advice and counseling work that arises within the employment context, including most recently COVID-related matters.