New Maryland Pay Transparency Law

Maryland Poised to Continue Trend of Jurisdictions Mandating Pay Transparency in Job Postings

by Keniece Gray and Andrew Turnbull

at  Morrison & Foerster LLP

Maryland is seeking to become the latest jurisdiction to require companies to disclose pay in job postings. On March 29, 2024, the Maryland Senate approved House Bill 649, Labor and Employment – Equal Pay for Equal Work – Wage Range Transparency (“HB 649”). If signed by the Maryland governor, HB 649 would amend Maryland’s current pay transparency laws requiring employers, among other things, to provide applicants pay information upon request. Under HB 649, employers of any size will be required to:

• include in all public and internal job postings for any position that is performed, at least in part, in Maryland the wage range, general description of benefits, and any other compensation offered for the position;
• disclose the information above to any applicant that did not receive it both before discussing compensation with the applicant and when the applicant requests it; and
• keep records showing compliance with the pay transparency requirements for each position for at least three years after the position is filled, or, if the position is not filed, the date the position was initially posted.

If HB 649 is enacted, these new requirements would become effective on October 1, 2024. Maryland would also join the growing number of states and localities requiring pay transparency in job postings, including California, Colorado, D.C., Hawaii, Illinois, New York, and Washington, as well as the recent proposed rule seeking to require federal contractors to disclose pay information in job postings. Companies with jobs that can be performed, at least in part, in Maryland should review their pay transparency strategies and practices in light of this new development.

Background on Maryland’s Current Pay Transparency Requirements

In 2020, Maryland amended its Equal Pay law to add two requirements for companies.

• Salary History Ban: Employers are prohibited from seeking an applicant’s wage history, either directly from the applicant, an agent, or a current or former employer. The ban also prohibits employers from relying upon an applicant’s wage history in screening or considering the applicant for employment or determining wages for the applicant. Employers cannot retaliate against an applicant for not providing their wage history.
• Pay Range Upon Request: Employers are required to provide applicants, upon request, the wage range for the position for which the applicant applied.

The law allowed applicants to submit complaints to the Maryland Division of Labor and Industry to investigate and, if warranted, issue certain penalties and fines for noncompliance.

Coverage

HB 649 would apply to employers who engage “in a business, industry, profession, trade, or other enterprise in” Maryland, regardless of the number of employees it employs. Notably, HB 649 would only apply to positions that will be physically performed, at least in part, in Maryland. This is a departure from some state pay transparency laws, such as Colorado, California, Illinois, and New York, that apply to remote positions based outside the state under certain circumstances.

Job Posting Requirements

Employers would be required to disclose in all public or internal job postings for each covered position: (1) the wage range; (2) a general description of benefits; and (3) a general description of any other compensation offered for the position. If a public or internal posting was not made available for an applicant for the position, employers would be required to provide the applicant with the information both before a discussion is held with the applicant and at any other time the applicant requests it.

HB 649 also defines several key terms.

• Wage Range: Employers would have to disclose the “wage range” that covers “the minimum and maximum hourly rate or minimum or maximum salary for a position.” According to HB 649, an employer must also set the wage range in “good faith” by reference to: (i) any applicable pay scale; (ii) any previously determined minimum and maximum hourly rate or minimum and maximum salary for the position; (iii) the minimum hourly rate or minimum and maximum salary of an individual holding a comparable position at the time of the posting; or (iv) the budgeted amount for the position.
• Job Postings: The pay transparency requirements would apply to any job posting or solicitation intended to recruit applicants for a specific available position, including indirect recruitment through a third party.

HB 649 also states that an employer “may” comply with the pay transparency requirements by: (i) completing a form developed by the Commissioner of Labor and Industry; (ii) including the completed form in each public or internal positing for a position; and (iii) otherwise making the completed form available to applicants as required by the pay transparency requirements.

Recordkeeping

Employers will be required to maintain a record of compliance with the pay transparency requirements for each position for at least three years after the date that: (i) the position is filled; or (ii) the position was initially posted, if the position is not filled.

Enforcement

HB 649 keeps the same enforcement mechanisms under Maryland’s current pay transparency law. This means employers who fail to comply with HB 649 will be subject to an order by the Maryland Division of Labor and Industry compelling compliance and the following enforcement penalties at the Commissioner of Labor and Industry’s discretion:

• First violation – Letter compelling compliance;
• Second violation – Civil penalties of up to $300 for each employee or applicant for employment for whom the employer is not in compliance; or
• Third and subsequent violations – Civil penalties of up to $600 for each employee or applicant for employment for whom the employer is not in compliance if the violation occurred within three years after a previous determination that a violation had occurred.

Penalty amounts, if assessed, will be determined by the Commissioner based on consideration of the gravity of the violation, size of the employer’s business, employer’s good faith, and the employer’s history of violations under this subtitle.

Next Steps

The growing patchwork of pay transparency laws is becoming increasingly cumbersome for companies to navigate and create coordinated strategies for compliance. Employers should consider reviewing their pay equity and transparency practices in preparation to implement policies and procedures to comply with HB 649 requirements by October 1, 2024.