Pay Transparency Comes to Washington, DC

This springtime, Washington, D.C. employers may want to spruce up their compliance checklists to stay ahead of new pay transparency obligations. On January 12, 2024, Mayor Bowser signed the Wage Transparency Omnibus Amendment Act of 2023 (the “Act”), which modifies the Wage Transparency Act of 2014. The Act imposes new pay disclosure requirements for job postings, prohibits employer inquiries into an applicant’s wage history, and directs employers to post a new notice in their workplaces. Like most legislation in D.C., the Act was subject to review for a period of 30 Congressional working days, during which Congress has the authority to reject the measure. That period expired on March 5, 2024, without intervention by federal legislators, so the Act will take effect on June 30, 2024.

Who is Covered?

 The Act will apply to all private employers with at least one employee working in D.C. Unlike some other D.C. employment laws, the Act does not specify a minimum number of hours or percentage of work time that an employee must spend in D.C. to qualify as “working in D.C.” Therefore, employers in states bordering D.C. that permit remote or hybrid work should pay careful attention to this law.

Disclosure of Pay Range and Healthcare Benefits

 The Act requires employers to post the minimum and maximum projected salary or hourly pay on job postings, promotions, or transfer opportunities. Like the pay disclosure requirements in New York and Colorado, the specified pay range must reflect the employer’s good faith estimate for the advertised position at the time of posting. However, in a shift from many other states, D.C. will also require employers to disclose the healthcare benefits that an employee may receive prior to the first interview. Notably, the Amendment does not define “healthcare benefits,” so employers should await further guidance. However, the language of the statute, combined with the legislative history, suggests that employers will only need to disclose the existence of healthcare benefits, not specific coverage details.

Extension of the Salary History Ban

 As a reminder, D.C. government agencies are already prohibited from asking applicants about their wage history. The Act will soon create a similar obligation for private employers, prohibiting them from asking applicants or applicants’ prior employers about a potential candidate’s wage history. The Act defines “wage history” as “compensation that an employee has received from other or previous employment,” and “compensation” to include all forms of “monetary and nonmonetary benefits” provided or promised to provide in exchange for the employee’s services. This would appear to include fringe benefits and all other “benefits” such as stock options.

Under the Act, employers cannot require an applicant’s wage history to satisfy a certain threshold, or request disclosure of prior wages as a condition of being interviewed or advancing in the hiring process. Unlike salary history bans in some other jurisdictions, the Act does not include any explicit exceptions that would permit discussion of unvested equity or deferred compensation that an applicant may forfeit if they were to exit their current job.

The Act leaves several other common questions unaddressed. For example, it does not state whether the salary history ban restrictions apply to an agent of the employer (e.g., a headhunter) or whether an employer may rely on compensation history information that an applicant voluntarily discloses without prompting during an interview. We expect this will be covered by further guidance and that an employer’s agents will also be barred from doing what an employer may not do directly.

Workplace Notice

The Act also imposes a new notice obligation on employers, requiring employers to notify employees of their rights under this law in at least one conspicuous place where employees gather. Although the Act does not expressly direct any agency to do so, it is likely that the D.C. Office of Human Rights will publish a poster closer to the Act’s June 30th effective date.

Enforcement

There is no private right of action set forth by the Act, which permits the D.C. Attorney General to investigate alleged violations of disclosure requirements or bring a civil action “for restitution, or for injunctive, compensatory, or other authorized relief for any individual or for the public at large.” The Attorney General is entitled to reasonable attorneys’ fees and costs, as well as statutory penalties. These enforcement provisions are in addition to those under the Wage Transparency Act of 2014, which authorizes the Mayor to impose civil fines of $1,000 for the first violation, $5,000 for a second violation, and $20,000 for each subsequent violation.

How to Prepare

 All employers with at least one D.C. employee should prepare to update job advertisements for new positions, promotions, and transfer opportunities to include the required salary or hourly wage information and the existence of healthcare benefits. Employers should also keep an eye out for the new required workplace notice and post it once published by the D.C. Office of Human Rights. Further, personnel who are responsible for a D.C. employer’s hiring process should become familiar with the coming prohibition on inquiries into salary histories and adjust their practices accordingly.

Additionally, while pay disclosure requirements are trending across the country, employers should be mindful of how those requirements not only affect recruitment efforts, but also retention of current employees. Conducting a thorough pay audit of current employees’ wages and benefits may allow employers to remedy any potential pay differentials ahead of the D.C. disclosure requirements and improve retention by ensuring current employees are compensated within a newly posted position’s marketed range. In order to maximize attorney-client privilege claims as to any such pay audit, companies should consider conducting the audit under the guidance of counsel to provide advice on whether an employer’s compensation practices meet the various regulatory requirements, e.g., wage hour and equal pay, in addition to wage transparency.

We will continue to monitor D.C. Council, the Department of Employment Services, and the Office of Human Rights for further guidance as to employers’ new disclosure obligations for job postings and the salary history ban ahead of June 30, 2024, so that you can be ready when the law goes into full force.

Jessica Hajdukiewicz, a Law Clerk – Admission Pending (not admitted to the practice of law) in the firm’s New York office, and Staff Attorney Elizabeth A. Ledkovsky contributed to the preparation of this post.