Bloomberg News
Chris Marr, Jeff Green
Updated February 26, 2024
New York City’s accusations that job search websites like CareerBuilder LLC and Monster Worldwide violated its pay transparency law indicate how broadly regulators nationwide will enforce mandates for salary ranges in job ads.
The search sites, along with Indeed and ZipRecruiter Inc., were among more than 30 employers that faced complaints from the city’s Commission on Human Rights late last year. A commission spokesperson said the complaints haven’t resulted in fines, and the agency is focused on urging employers to comply with the law.
The New York City measure is part of a spate of laws passed over the last three years to mandate pay transparency in job postings, aimed at shrinking gender and racial wage gaps by giving job seekers and employees more information. The laws began in Colorado in 2021 and have spread to California, Hawaii, Illinois, New York state, Washington state, and most recently Washington, D.C.
Businesses and their lawyers have wrestled with how best to heed the mandates, particularly for companies that hire employees in multiple states or advertise remote positions to be performed anywhere.
Now they must add another compliance question to their list: When and where might third-party service providers such as job search sites and recruiters be liable for violations?
“It’s highly likely that there will be more enforcement actions against third parties because it’s such an effective way to get the enforcement message out,” in any place where the law is written to cover them, said Anne Sekel, a labor and employment lawyer at Foley & Lardner LLP in New York.
“By suing the third parties, the state/city enforcement agencies can effectively convert the third-party job search websites and recruiters into enforcement agents in the government’s behalf,” she said.
Indeed, which faced a now-closed complaint from New York City regulators, has adjusted its policies, according to a company statement. The job search site requires employers to include pay ranges for job ads wherever mandated by law or to certify that the local law doesn’t apply. In January, Indeed also stopped generating its own estimated pay range on jobs where the employer doesn’t include pay information and instead attaches a note to say the employer didn’t provide a pay range.
“Since most employers are now sharing pay in their open jobs, we believe this updated approach will continue to help job seekers, while encouraging more employers to include pay in their open jobs,” the company said.
Half of all US job ads on Indeed in August 2023 included employer-supplied pay information, up from 18% in February 2020, according to a company report. The rate of ads including pay ranges is higher in states with transparency laws, reaching as high as 81% in Colorado.
Few Fines So Far
As pay transparency laws spread, regulatory enforcement hasn’t been especially punitive. Only Colorado so far has publicly disclosed fines against employers for allegedly failing to provide a pay range in job ads, including Lockheed Martin Corp. and X Corp. (formerly Twitter Inc.).
In Washington state, a handful of employers including Adidas AG, Albertsons Cos. Inc., and Home Depot Inc. were hit last year with proposed class actions by job seekers alleging they applied to jobs advertised without the required pay information.
Qdoba settled perhaps the earliest of those lawsuits last month without disclosing any details. The job seekers voluntarily dismissed the lawsuits against Adidas and Home Depot, while others proceed toward a possible court decision on the question of whether the job applicants suffered a concrete injury to merit an award of damages.
CareerBuilder, Monster (a part of Randstad Holding NV), X, and ZipRecruiter didn’t respond to requests for comment. A Lockheed Martin spokesperson said the company is “committed to providing fair treatment and equal opportunity to employees and applicants,” and to “good faith measures” to comply with anti-bias and pay transparency laws.
Qdoba declined to comment. Albertsons didn’t respond. An Adidas spokesperson responded only to say the plaintiff dismissed the lawsuit against them.
The case against Home Depot “was voluntarily dismissed by the plaintiff soon after its filing, when we demonstrated to counsel that we were in compliance with the law,” Home Depot spokesperson Sara Gorman said by email.
“Washington’s pay transparency law went into effect more than a year ago, but many employers have ignored it. They are emboldened by Washington’s lack of enforcement,” said Timothy Emery of the Seattle law firm Emery Reddy PLLC, which is representing the job applicants suing employers over alleged violations.
“These companies need to understand that it’s just a matter of time before private or state enforcement results in them paying big fines and changing their outdated hiring practices,” he added.
Growing Pressure
Regulatory enforcement is likely to ramp up, employment lawyers say, given that the laws in California, New York City, and Washington state all took effect a little more than a year ago.
“It’s going to be a focus now that these laws have been in effect for a while and employers have had time to adjust,” said Cheryl Pinarchick, an employment lawyer at Fisher & Phillips LLP in Boston and cochair of the firm’s pay equity practice.
The mandates also are expected to spread further, with state legislatures considering similar measures in Maine, Massachusetts, and New Jersey. The White House announced plans last month for a pay transparency regulation on businesses advertising job openings connected with federal contracts.
Employers also face pressure from requirements to report aggregated pay data by race and gender in California and Illinois. The federal Equal Employment Opportunity Commission is widely expected to relaunch a similar requirement nationwide, although it would likely face a legal challenge.
Employers or ‘Agents’ Liable
The language of each state and local pay transparency law varies, in terms of potential liability for entities other than the employer such as job-search sites or recruiters.
New York City’s pay transparency law requires an “employment agency, employer, or employee or agent thereof” to include pay ranges in job postings. The New York state law that took effect in September uses nearly identical language.
As to the city’s enforcement strategy, the Commission on Human Rights is looking at every covered entity and will determine liability depending on the specific role of each business involved in advertising a job, a commission spokesperson said.
The D.C. law, set to take effect in June, only mentions an obligation for employers.
California’s law says employers must provide the pay information to a third party engaged to publish the job ad and “the third party shall include the pay scale in the job posting.”
The Illinois law, set to take effect Jan. 1, 2025, is more explicit. “The third party is liable for failure to include the pay scale and benefits in the job posting,” unless it can show the employer didn’t provide the information.
Section 230 of the 1996 Communications Decency Act could offer job-search sites a defense against regulatory citations, as the law shields website providers such as social media sites from liability for content generated by their users.
But “it may be difficult to make that argument,” Sekel said, since job-search companies arguably exercise more control over postings than social media sites do.
The job-search sites offer “a template for entering job information and advice on how to present that information in a way that allows candidates to find and apply for the open jobs,” she said.
Public Appetite for Transparency
California’s labor commissioner has received nearly 8,000 complaints from the public about non-compliant job ads. Most lacked necessary information, leaving only 19 under investigation on Jan. 29 and no citations issued, a spokesperson said.
The large complaint numbers “speak to the fact this is a law your average constituent is using, and they want further investigation,” said State Sen. Monique Limón (D), who authored the pay transparency law.
While public interest in pay transparency could boost regulatory enforcement, it also pressures companies to be open about salaries to attract job applicants.
“I do expect that we will see more Agency action this year, as the agencies shift from education to enforcement,” Christine Hendrickson, a vice president at Syndio, a software company focused on helping companies audit and monitor pay equity, said by email. “Frankly, though, for employers, I think the bigger concern is applicants and workers who ‘enforce’ these laws with their feet or with their engagement.”
Nonetheless, some companies are advertising pay ranges only where required, partly for fear of how current employees will react to seeing similar positions advertised with higher pay, said Alexandra Barnett, an employment lawyer with Alston & Bird LLP in Atlanta.
“That’s definitely a concern for some employers,” she said. “For business reasons they don’t want the current employees to have that salary information.”
—with assistance from Andrew Oxford in Sacramento
Read the original article here.
