By: Stephanie Horn
Overview and Intro
Maryland’s revised pay transparency law went into effect on October 1, 2024. The law expanded to cover disclosure of pay ranges to existing employees. Maryland is among two dozen other states that have proposed or active pay transparency laws.
Which Employers and Positions are Covered
This law applies to employers that have employees in Maryland. There is no minimum employee requirement, either for an organization’s total number of employees or the number of employees in Maryland. The term “employer” includes a person or organization that acts directly or indirectly in the interest of another employer.
The revised version of Maryland’s pay transparency law has changed the type of positions that are covered. If work is at least partially physically performed in Maryland, the pay transparency law applies. If work is only occasionally performed in Maryland, the Maryland law will generally not apply. While the law covered positions which were located outside of Maryland if the employee in the position reported to someone in Maryland, this provision has been removed from the revised law.
What are the Posting Requirements?
Effective October 1, 2024, covered employers must disclose in all internal and external job postings the wage range for the position along with a “general description of benefits” and “any other compensation” offered for the position. “Wage range” is defined as “the minimum and maximum hourly rate or minimum and maximum salary for a position.” The wage range must be set in good faith in reference to one of the following:
- An applicable pay scale
- A previously determined minimum and maximum hourly rate or salary for the position
- The minimum and maximum hourly rate or salary of an individual holding a comparable position at the time of the position
- The budget amount for the position
A single fixed hourly or annual rate may be posted instead of a wage range, but an open-ended range such as “up to $100,000” or “$30+/hr” is not permitted.
Maryland’s revised pay transparency law does not define “other compensation.” However, the Maryland Department of Labor (MDOL) lists the following items as examples of other compensation in its FAQs on the revised law:
- Overtime
- Compensatory time
- Differentials
- Premium pay
- Tips
- Commissions
- Bonuses
- Stock or stock options
- Any portion of service charges
Like “other compensation,” the term “a general description of benefits” is not defined in the revised statute. An MDOL FAQ states that a general description of benefits may include, but is not limited to:
- Employer-provided health and life insurance
- Retirement plans
- Paid or unpaid time off
- The value of employer-provided meals
Other Requirements
The revised pay transparency law has a new requirement regarding record retention. Covered employers are required to maintain records that reflect compliance with the law for a minimum of three years after the position was filled, or if it is not filled, three years from the date the position was posted.
The revised law also has a new requirement for situations when there was no public or internal posting for a position. When there is no posting, information on wage range, benefits, and other compensation must be provided to an applicant before a discussion of compensation is held with the applicant. This information must also be provided “at any other time on request of the applicant.”
Maryland Provides Template for Pay Transparency Disclosure
The Maryland Department of Labor has created a template that employers may utilize to ensure compliance with the pay transparency law. The template is available on the MDOL FAQ site associated with the law. The use of the template is completely voluntary. In order to ensure compliance by using the template, an employer must take all of the following steps:
- Complete the template
- Include the completed template in “each public or internal posting for a position”
- Make the template available to applicants when there was no public or internal posting
Penalties for Failure to Comply
The penalties for failure to comply with the pay transparency requirements have not changed in the revised version of the law. If MDOL finds a violation of the pay transparency requirement, the agency “shall issue an order compelling compliance.” MDOL may also, at the discretion of the agency’s Commissioner, take the following actions:
- For a first violation, issue a letter to the employer compelling compliance
- For a second violation, assess a penalty of up to $300 for each employee or applicant for employment where the employer was not in compliance
- For each subsequent violation, assess a penalty of up to $600 for each employee or applicant where the employer was not in compliance
Unlike the previous version of the pay transparency law, any complaint regarding compliance must be filed with the MDOL. Individual applicants no longer have the ability to file an action directly against an employer.
Certain Provisions Continue from Previous Version of the Law
The revised version of Maryland’s pay transparency law left various provisions in place. Employers continue to be prohibited from retaliating against an applicant who uses any provision of the law. (This anti-retaliation provision was revised to explicitly include employees.) Employers also continue to be prohibited from:
- Making most employment decisions based on an applicant or employee’s wage history
- Making employment decisions based on an applicant or employee’s request for a position’s wage range
DCI will continue to monitor this situation and provide updates as they become available.
