- Washington State issued guidance on pay transparency law taking effect on January 1, 2023.
- Equal Pay and Opportunities Act requires disclosure of wage scale/salary range and description of benefits and other compensation for the position.
- Law applies if the employer has one Washington-based employee, engages in business in the state, or recruits for jobs that could be filled remotely by Washington-based employee.
- Guidance indicates Washington’s pay transparency law is in many ways more expansive than those in other jurisdictions.
Earlier this month, Washington issued its final Administrative Policy providing the state’s interpretation of the Equal Pay and Opportunities Act, which takes effect on January 1, 2023. The law provides that employers must disclose in each posting for each job opening: (1) the wage scale or salary range, and (2) a general description of all benefits and other compensation to be offered. The guidance takes an expansive view of which employers are covered by the law and requires job postings to contain pay and benefits information beyond what is required by any other state or locality that has enacted pay transparency legislation.
To whom does the law apply?
The law applies to all employers “engaging in any business, industry, profession, or activity in Washington” for any job postings “that recruit Washington based employees.” This includes employers that do not have a physical presence in Washington if they have one or more Washington-based employees or if they engage in business in Washington or recruit for jobs that could be filled by a Washington-based employee, including remote jobs. This is a broader interpretation of jurisdiction than Colorado or New York City, for example, where employers must have at least one employee physically working from that location before an employer is covered.
The law does not apply to jobs to be performed entirely outside Washington or to printed hard-copy postings made and distributed entirely outside Washington.
According to the guidance, an employer cannot avoid the duty to comply with Washington’s wage and salary disclosure requirements by indicating within a posting that the employer will not accept Washington applicants.
What is a job posting?
To qualify as a “job posting,” an advertisement must list the specific position and qualifications. A social media post that reads “Manufacturing jobs available, apply now online. Weekend shifts required” is not a job posting because it does not include qualifications or reference a specific position for a desired applicant. On the other hand, an electronic reader board outside a business that reads, “Help Wanted- Server. Food Handler’s Certification Needed. Offering: $24.00-$26.00 per hour, medical benefits, 70 vacation hours per year, and $500 sign-on bonus” is considered a job posting.
What wage information must be included?
The requirement to provide a “wage scale or salary range” means the employer must provide applicants with its “most reasonable and generally expected range of compensation for the job.” A wage scale must not be open-ended, must be determined before the job is posted, the job posting must be updated if the scale changes, and, if there is a starting range, both the starting range and general range must be included in the posting. For example, the post should not say “$60,000/per year and up,” as this range is open-ended. The posting should be updated if the range changes after publication.
If a person is offered a position different from the position applied for, the employer may offer a wage specific to the position offered, rather than the position posted, but should provide a copy of a compliant posting for the position offered.
What benefits information must be included?
Washington joins Colorado in requiring employers to provide a general description of benefits for the position. This must include health care benefits, retirement benefits, any benefits permitting paid days off (including paid sick leave accruals that are more generous than required by Washington state/local law, parental leave, and paid time off or vacation benefits), and any other benefits that must be reported for federal tax purposes. But while Colorado employers may comply by providing a laundry list of benefits without further description, Washington will require more detail:
Retirement Plans: If an employer includes various retirement options as part of the benefits package, the employer should list the retirement options in the job posting, such as 401k, employer-funded retirement plans, deferred compensation, and other defined-benefit or defined-contribution plans.
Paid Time Off or Vacation: If the employer includes paid time off or paid vacation time as part of the benefits package, the employer should list the number of days or hours the hired applicant would expect to receive, such as 8 hours per month or 12 days per year.
Paid Holidays: If the employer includes paid holidays as part of the benefits package, the employer should list in the job posting the number of paid holidays the hired applicant would expect to receive, such as 10 paid holidays per year. The employer does not have to identify each paid holiday.
More Generous Paid Sick Leave: If the employer includes a paid sick leave policy that is more generous than that required by Washington State law or any local ordinance that applies to the benefits package, the employer should list the number of hours per month or days per year the hired applicant would expect to receive in the job posting that is greater than Washington State law or any local ordinance, such as 3 hours of paid sick leave for every 40 hours worked or 8 hours of paid sick leave per month.
The Administrative Policy contains the following example of a compliant posting: “Employees (and their families) are covered by medical, dental, vision, and basic life insurance. Employees are able to enroll in our company’s 401k plan, as well as a deferred compensation plan. Employees will also receive eight hours of vacation leave every month and twelve paid holidays throughout the calendar year.”
As with wage ranges, the posting should be updated if this information changes after posting.
What information about “other compensation” must be included?
Per the Administrative Policy, “other compensation” includes, but is not limited to, bonuses, commissions, profit-sharing, stock options, or other forms of compensation that would be offered to the hired applicant in addition to their established salary range or wage scale.
Washington will require employers to provide more information than other jurisdictions do about two types of “other compensation”: commissions and piece-rate pay.
If a job is compensated by commission rates, the Administrative Policy states that the employer should include the rate or range of rates (percentage or otherwise) that will be offered to the hired applicant, i.e., “Commission-based salesperson – 5-8% of net sale price per unit.” While many companies’ commission plans are far more complicated than this, Washington has not provided any additional guidance about what would constitute sufficient detail in those cases.
If a job is compensated by piece-rate, the employer should include the agreed piece rate, e.g., “$0.55 – $0.75 per pound of strawberries picked.”
For other non-base compensation, it appears additional detail is not required, based on the following example of a compliant description included in the Policy: “Hired applicant will be able to purchase company stock, receive annual bonuses, and can participate in profit sharing.”
Although Washington will allow the use of a hyperlink on remote postings to include more detailed descriptions of benefits and other compensation, the posting itself must include a general description of benefits and other compensation (unlike Colorado, where all of this information may be provided only by hyperlink).
What are the next steps?
With January 1 fast approaching, employers should prepare pay range, compensation, and other benefits information for jobs that can be performed in Washington that they anticipate posting in early 2023, including specifics on commission-based and piece-rate pay as well as the types of paid time off offered. Employers should add the required information to existing postings on or before January 1, 2023 or take them down, including any postings made at their direction by a third party.
Source: Littler Mendelson PC – Jennifer S. Harpole and Lukasz Gilewski