Remote Work and Pay Transparency Laws Can Cause Compliance Issues for CPA Firms

Faced with talent shortages, many employers — including CPA firms — have embraced full-time remote work arrangements as a means to retain and attract talent. These arrangements can create multistate workforces and significant legal compliance obligations for employers, who must ensure compliance with federal employment laws and, generally, the employment laws of each of the states in which their employees work. State employment laws are not always aligned and can complicate compliance. Pay transparency laws are an illustrative example of the types of compliance issues presented by varying state employment laws.

Pay Transparency Laws

Pay transparency is the practice of disclosing information about employee compensation to others, including internal and external job candidates and current employees. A growing number of states and cities have enacted pay transparency laws requiring employers to disclose salary ranges and other compensation information in job postings or during the interview process. The requirements of each of these laws differ from jurisdiction to jurisdiction.

For example:

• The California Transparency Act of 2023 requires employers with 15 or more employees to include pay range data in job postings. This requirement extends to remote work positions if the employer has at least one employee based in California.
• Colorado’s Equal Pay for Equal Work Act also applies to employers with at least one in-state employee and covers remote positions but includes additional employer disclosures, including disclosure of benefits and incentives.
• Connecticut’s pay transparency law, Public Act 21-30, requires disclosure of salary ranges to job applicants and employees and extends to remote positions, but the law does not mandate publication of salary ranges in job advertisements and postings.
• New York’s pay transparency law, effective Sept. 17, 2023, requires employers to disclose the salary and/or salary ranges in any internal or external advertisement for a job, promotion or transfer opportunity. Employers must also disclose the position description, if one exists, and maintain records of the description and historical compensation ranges for each position/job opportunity. There are also notice and posting requirements.

Failure to comply with the various pay transparency laws can expose employers to state agency actions, fines and penalties, and lawsuits for compensatory and punitive damages as well as attorneys’ fees and costs. Several jurisdictions, including California, Colorado and New York, permit individuals alleging a violation of pay transparency laws to file a complaint with the state labor agencies. Agency filings may lead to a state agency investigation and the imposition of fines and penalties as well as requiring employers to amend job postings and conduct trainings, among other things. Fines and penalties can range from $100 to $10,000 for each violation and may include fees, interest and costs, depending on the jurisdiction. Connecticut’s pay transparency law goes further and permits employees and job candidates to bring a civil action for alleged violations and entitles them to seek compensatory damages, punitive damages and attorneys’ fees and costs.

Remote Work Implications

The continuation of remote work as a means of employee recruitment and retention coupled with the proliferation of pay transparency laws presents significant compliance issues for employers. Understanding the reach and requirements of the employment laws of each jurisdiction within the scope of the job posting and where each individual working remotely resides and works is imperative to ensure compliance and limit potential liability. The simple act of advertising a remote position may trigger obligations under the various state and city pay transparency laws if the advertised position could be filled by an individual working remotely in those specific jurisdictions. Hiring that individual and permitting the position to be fully remote and performed out of state could create new multistate legal obligations for the employer.