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What Employers Need To Know In 2024

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On October 1, 2024, Maryland will begin enforcing two key laws impacting employers statewide: the Pay Transparency Law and the Pay Stub and Pay Statement Law. These regulations introduce significant new requirements around disclosing wages and providing detailed pay statements. Maryland employers must ensure compliance by the deadline to avoid penalties and promote workplace transparency.

Pay Transparency Law

Maryland’s Equal Pay for Equal Work – Wage Range Transparency law mandates employers provide detailed wage and benefits information in all job postings. The law is designed to enhance pay equity and applies to jobs physically performed, at least in part, within the state. To comply, employers must take several critical steps.

Wage Range Disclosure

Employers are required to include the minimum and maximum pay range in all job postings. This range must be set in good faith, based on existing pay scales, prior wage determinations for the position, or the budget allocated for the role.

Benefits and Other Compensation

In addition to wages, employers must disclose a general description of benefits and other compensation offered for the position. This includes bonuses, stock options, overtime, and paid time off. This transparency ensures that candidates fully understand the total compensation package being offered.

Applicability to Job Postings

The law applies to all job postings, whether internal or external and includes those posted by third parties, such as recruitment agencies. It also covers remote positions where the employee performs any portion of their work in Maryland. However, positions where work is only occasionally performed in Maryland, such as attending meetings, are not subject to the law’s requirements. Employers must disclose separate wage ranges for roles with multiple locations to ensure accuracy for each posting.

Retaliation Prohibited

The law protects employees and applicants who exercise their rights under the law, such as requesting wage information or refusing to provide wage history. Employers are prohibited from retaliating against individuals who engage in these protected activities.

Recordkeeping Requirements

Employers must maintain records of wage range disclosures for at least three years after a position is filled or from the date the job was posted if it remains unfilled. Proper recordkeeping is essential for demonstrating compliance in case of an audit or investigation.

Impact on Background Checks

Compliance with Maryland’s Pay Transparency Law is vital for employers conducting background checks. The background check process often overlaps with compensation discussions, and employers must ensure that wage range disclosures are provided before any discussions on compensation begin. If no job posting is available to an applicant, the employer must disclose the wage range, benefits, and other compensation information upon the applicant’s request and before any compensation discussions.

Pay Stub and Pay Statement Law

The Pay Stub and Pay Statement law, effective October 1, 2024, expands on Maryland’s wage payment requirements. Under Chapter 305 (Senate Bill 38), employers are required to provide written or online pay statements to employees each payday, ensuring transparency in the payment process.

Written Notice at Hiring

Employers must give new hires a written notice detailing their pay rate, regular paydays, and leave benefits. This requirement ensures that employees clearly understand their compensation from the outset of employment.

Pay Statement Requirements

For each payday, employers must issue a written or online pay statement that includes:

  • The employer’s registered name, address, and contact information.
  • Payment date and pay period dates.
  • Number of hours worked (for non-exempt employees).
  • All pay rates and forms of compensation, including bonuses and commissions.
  • Gross and net pay for the pay period, along with detailed deductions.
  • For piece-rate employees, the number of pieces completed and the applicable rates.

The Maryland Department of Labor has provided a pay stub template that employers may use to meet these requirements, though the template’s use is not mandatory.

Advance Notice of Changes

Employers are required to provide employees with at least one pay period’s notice for any changes to paydays or wages. Wage increases do not require advance notice, but any reductions in pay must be communicated in advance.

Enforcement and Penalties

Non-compliance with the pay statement requirements can result in penalties of up to $500 per affected employee. The severity of penalties will be determined based on factors such as the employer’s size, the gravity of the violation, and the company’s compliance history.

Maryland Department of Labor Guidance

To assist employers in meeting these new compliance requirements, the Maryland Department of Labor has published guidance on its website, including instructions, FAQs, and templates for both the Pay Transparency and Pay Stub laws. Employers are encouraged to use these resources to ensure their processes meet the law’s requirements.

Compliance Strategies for Employers

To avoid penalties and help ensure compliance with these new laws by October 1, 2024, employers should consider the following:

  1. Job Postings: Review all public and internal job postings to ensure that they include the required wage range, benefits, and other compensation details. Employers hiring for remote positions should be particularly mindful of roles involving work performed in Maryland.
  2. Payroll and Pay Stub Processes: Ensure your payroll system is updated to generate pay statements that comply with the new requirements. Consider using the template the Maryland Department of Labor provided to simplify compliance and avoid penalties.
  3. Recordkeeping: Establish processes to retain records of all wage disclosures and pay statements for at least three years. These records will be critical for demonstrating compliance in the event of an audit or employee complaint.
  4. Employee Training: Train HR and payroll staff to ensure they are familiar with the new laws and prepared to implement the necessary changes. This includes understanding the requirements for written notices, job postings, and pay stubs.
  5. Leverage State Resources: Utilize the resources on the Maryland Department of Labor’s website, including the FAQs and templates, to ensure your team fully understands the compliance obligations.

Parting Thoughts

Maryland’s Pay Transparency and Pay Stub and Pay Statement laws reflect a growing trend toward transparency and fairness in the workplace. By acting now to update job postings, payroll systems, and employee communications, employers can ensure compliance with the October 1, 2024, deadline. Leveraging resources from the Maryland Department of Labor will help streamline the process, reducing the risk of penalties and fostering an environment of equity and openness in employee compensation practices.

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