The state of Washington is developing legislative rules to further clarify its pay transparency law. The Washington Department of Labor and Industries (LNI) is doing so in response to complaints from employers about “bad faith” efforts from job applicants bringing forth class-action lawsuits for non-compliance.
Washington’s pay transparency law, which took effect Jan. 1, 2023, requires employers with 15 or more employees in the state to provide a minimum and maximum salary range on all job postings. In the time since, many employers have been hit with class-action lawsuits from repeat plaintiffs alleging non-compliant postings and seeking damages for all applicants.
The result has been employers claiming the lawsuits involve plaintiffs that are not bona fide job applicants. Thus, LNI has drafted rules hoping to contextualize the law and clear up gray areas for employers. They are expected to be adopted into law in the summer of 2025.
Washington LNI Guidance
LNI said its draft rule will help employers better understand how to comply with the law and help employees understand what protections the law provides. LNI is currently soliciting public comment on the new law and the draft rules.
LNI’s draft rules propose adopting stricter definitions for who an employee and applicant are and what actual damages must be shown for any purported violation:
- Employee: An employee who is employed in the business of the employee’s employer whether by way of manual labor or otherwise. For purposes of this chapter, the term employee does not include independent contractors or business partners.
- Applicant: An individual, including existing employees, who submits in good faith an application for a job posting with the intent of gaining employment.
- Actual Damages: Compensation — including but not limited to, wages, salary, or other employment benefit — denied or lost to an employee or applicant, and many include other monetary losses suffered, as a result of the violation.
Employers may attend one of several public meetings on the draft rules either virtually or in person to learn more or provide feedback. Alternatively, employers may submit public comment online.
In the class action lawsuits that have been brought, many employers have sought to dismiss, arguing the plaintiffs lacked standing. Specifically, the employers alleged that the plaintiffs in these cases were not “bona fide” applicants for the specific posted position because they did not in good faith intend to seek the job, were not seeking to represent a class of bona fide applicants, and did not in fact suffer a cognizable injury other than time spent applying.
Prevent Pay Inequity By Ensuring Fair and Competitive Pay at the Time of Hire
Some courts have agreed, holding that failing to disclose within a job posting salary, wage, and benefits information may be just a mere technical violation absent any actual tangible detriment to an applicant.
Washington’s pay transparency law differs from other states in that it is incumbent upon the job applicant to seek damages. Employers are not subject to any financial penalties to the state if they fail to provide salary ranges on job postings.
This is an example where the risks of non-compliance could lend itself to a matter of interpretation of the law.
The Pay Transparency Landscape
Pay transparency laws continue to be prevalent in the U.S. and Europe. Minnesota, Vermont, Massachusetts, and New Jersey all recently passed pay transparency laws that will take effect in 2025.
Maine and Michigan have pending bills. Virginia Gov. Glenn Youngkin vetoed a pay transparency bill that state lawmakers sent to his desk on March 14.
Additionally, pay transparency measures have also been proposed for federal employers by the Biden Administration. And in Europe, members of the EU are preparing for the EU Pay Transparency Directive that will take effect in 2026.
This puts the onus on employers to prepare for a new landscape where pay transparency is both a requirement and an expectation.
Employers that operate in the state of Washington or are looking to hire talent from the state can ensure compliance with a few simple steps. Action items include:
- Conducting a pay equity analysis. A pay equity analysis will help you understand income disparities and gender pay gaps in your organization. This is made easier by using pay equity analysis software to identify pay inequities.
- Establishing a compensation philosophy. What are the Wage Influencing Factors (WIF) in your organization? Determine what you value and what you pay for, and stick to those principles.
- Evaluate job architecture. Having a well-structured job architecture helps ensure you’re placing employees in the correct job codes. When this is done correctly it informs pay eligibility and drives compensation consistency.
- Determine pay ranges. Doing the preliminary work above will help you establish pay ranges that are equitable internally and externally. Pay equity software tools assist greatly to determine competitive and fair salary ranges by overlaying internal pay equity data with external labor market data.
Pay Equity at the Center
Pay transparency legislation remains prominent, and it’s feasible that nearly 50% of employees in the U.S. will be covered under pay transparency laws by 2026.
Employers that aren’t moving toward more transparency with their compensation are at risk of being at a competitive disadvantage. Pay transparency is an expectation for Millennial and Gen Z job candidates, with research indicating this group will avoid applying for jobs that don’t include a salary range on the job posting.
Achieve Authentic Pay Equity With Software
Additionally, absent a pay transparency strategy, you limit your available talent pool. With most organizations deploying some version of a dispersed workforce model, you are required to comply with salary range requirements in other states for jobs that can be performed remotely.
The goal of pay transparency laws is to promote practices that lead to a more equitable compensation environment. Similar to salary history ban laws, requiring pay ranges on job postings promotes fair pay practices and holds organizations accountable.
If implemented thoughtfully and strategically by an organization, pay transparency can promote a better work environment where employees believe they are paid fairly. Providing salary ranges on job postings can also positively narrow the applicant pool and improve the hiring experience.
Absent salary range information, a job candidate could go through a multi-week interview process only to discover the job offer is far below their salary expectation. This wastes the candidate’s time and causes financial and reputational damage to the employer.
The task of moving toward full pay transparency can feel overwhelming for an organization. Pay equity software tools alleviate this concern by identifying the root cause of pay disparities and remedying them. Additionally, it supports the creation of equitable, compliant job postings and enables a consistent approach to pay range disclosure.
This empowers your organization to execute compensation plans with complete confidence that pay equity is at the center. And it ensures that you will be prepared to comply and thrive amid evolving pay transparency legislation.