What is the issue?

Why do nonprofits care?

This issue is relevant for nonprofits in the same way it is relevant for all employers: it can avoid discriminatory pay practices and it can save time on recruitment and interviews.

Nonprofits could face an added pressure to make salaries transparent. Nonprofit organizations are often held to a higher standard for promoting equity. Being transparent with salaries might be a policy promoted by leadership, funders, clients, and/or staff. From Nonprofit Quarterly: “Supporters and leaders of nonprofits don’t want their organizations to contribute to or exemplify the problem of income inequality, wittingly or unwittingly.”

The challenges are also similar across various sectors. Employers might worry that salaries are too low to attract good candidates in a job posting (and especially for nonprofits who want the chance to wow candidates with their mission, benefits, or great colleagues, rather than just a salary). Employers also might have to address the issue with current staff if the salaries being offered new hires are out of alignment with current salaries.

Is there legislation about salary transparency?

The movement for pay transparency dates back to the 2010s, when states and localities began to ban employers from inquiring about a job candidate’s salary history. Such a prohibition is now law in at least 21 states, and aims to stop low-ball, below-market offers to the underpaid, particularly women and people of color whose pay has been hurt by discrimination. Unlike board diversity, legislation addressing salary transparency has been applied to both nonprofit and commercial entities.

New York City began to require salary ranges in job advertisements in November 2022. California, Rhode Island, and Washington State followed this past January 2023, and most recently on September 17, New York State’s new salary transparency law went into effect. The New York State law will include two important pay transparency provisions:

• It requires compensation or range of compensation and the job description for the position.
• The law prohibits employers from taking any adverse action against an applicant or current employee for “exercising any rights under the law,” such as asking for a pay range or job description.

Additionally, New York State’s new salary transparency law will also apply to remote work opportunities. The legislation, however, specifies that existing laws around salary disclosure exclude remote work performed entirely out of state.

In April, Maryland enacted legislation that will alter the requirement that an employer disclose wage information to an applicant for employment. An employer will now be required to disclose wage information in postings and to employees. A wage range disclosed by an employer will have to be set in good faith. The law also prohibits an employer from taking retaliatory action against employees and requires keeping a record of compliance for at least three years. The new law will take effect October 1, 2024.

In June, both Minnesota and Vermont enacted pay transparency requirements for new hires in their respective states in an effort to close the gender pay gap. Both laws require employers to disclose the starting salary range and hourly wage in all new job postings. The Minnesota law will require employers with 30 or more employees to provide salary ranges on job postings beginning January 1, 2025. The Vermont law requires employers with at least five employees to disclose the compensation or range of compensation for any advertised position beginning July 1, 2025.

The Montana legislature has considered legislation, which would require employers to disclose in each job posting the hourly or salary compensation, or the range of compensation and general description of all the benefits and other compensation to be offered to the hired applicant. The legislation has previously passed one of the state’s two legislative chambers and may come up again in the near future.

Similarly, the Virginia legislature has considering legislation to prohibit employers from:

• Seeking the wage or salary history of a prospective employee.
• Refusing to interview, hire, employ, or promote a prospective employee for not providing wage or salary history.
• Failing or refusing to provide a prospective employee the wage or salary range for a position for which the prospective employee is applying.

Also, in addition to New York City, a number of other localities have enacted salary transparency laws. Among them are several jurisdictions in:

• metropolitan New York City | Jersey City, New Jersey | Westchester County New York.

Additionally, the following have enacted salary transparency statutes:

• Cincinnati, Ohio | Toledo, OH | Ithaca, NY.

What to keep an eye on?

Salary transparency is getting a lot of buzz and there appears to be momentum for several more states to enact related laws in the coming years. Accordingly, TNPA will continue to track proposed legislation relating to salary transparency in both the states and Capitol Hill. It will be important for nonprofits to know and comply with these new laws.