11.23.24 – The BayNet
WASHINGTON — As of Oct. 1, 2024, Maryland employers are navigating two new payroll laws aimed at improving pay transparency and fairness across the state. The Wage Range Transparency Law and the Pay Stub and Pay Statement Law introduce regulations affecting job postings, payroll records, and employee pay statements. While the goal is to close pay gaps and foster transparency, businesses face new compliance challenges as they adjust their hiring practices and payroll systems.
What Are the New Payroll Laws?
The Wage Range Transparency Law requires employers to disclose pay ranges for all job postings, whether internal or external. This includes listing the minimum and maximum salary or hourly wage for open positions. The law is designed to address pay disparities, particularly for women and minority workers, by giving job seekers clear insights into compensation expectations upfront.
The Pay Stub and Pay Statement Law, on the other hand, mandates that employers provide employees with detailed pay statements. These statements must include key information such as:
- Total hours worked (for nonexempt employees)
- Pay rate(s), including overtime rates if applicable
- Total earnings, deductions, and net pay
This law aims to ensure employees can clearly understand how their wages are calculated and identify discrepancies in their pay.
How Are Maryland Businesses Affected?
The introduction of these laws has created a shift in the payroll and hiring practices of Maryland businesses. According to Amy Glorioso, vice president of client engagement at Kelly Benefits, the laws are a step forward for workforce transparency, but they also require employers to take a close look at their current systems. “Businesses that were not already providing detailed pay stubs or salary ranges in job postings may need to update their software, record-keeping processes, and HR training to ensure compliance,” Glorioso explains.
Key Adjustments Employers Must Make:
- Job Postings: Employers must now include pay ranges in job advertisements. Failing to do so could result in penalties or legal disputes, especially as employees become more aware of their rights under the new laws.
- Payroll Practices: Detailed record-keeping and transparent pay statements are now essential. Employers must ensure their payroll systems can provide itemized deductions, clear calculations, and a breakdown of hours worked and wages earned.
- Training HR and Management Teams: Staff responsible for hiring and payroll must be educated about the new requirements. This includes learning how to properly disclose pay ranges and understanding what information must be included in pay statements.
Challenges Businesses Face
For many small businesses, the administrative burden of compliance may pose challenges. Updating payroll systems, tracking hours more rigorously, and implementing pay transparency in job postings could strain resources, especially for companies with limited HR staff. Additionally, businesses that fail to comply risk fines, reputational damage, and employee dissatisfaction.
Glorioso notes that the laws also impact employee relations. “For some businesses, publishing pay ranges has raised concerns about internal pay equity, as current employees may compare their wages to advertised salaries for new hires.”
The Path Forward
While compliance with these laws may initially seem daunting, Glorioso emphasizes that businesses can turn the challenge into an opportunity. “Transparent pay practices not only protect businesses from legal risks but also improve trust and engagement among employees,” she says.
Here are some actionable steps for Maryland employers:
- Conduct Pay Audits: Review current pay structures to identify and address any inequities before disclosing salary ranges publicly.
- Upgrade Payroll Software: Invest in payroll systems that automate compliance with pay stub requirements.
- Communicate with Employees: Proactively explain changes in pay statements and ensure employees know how to read and interpret the new information.
- Seek Professional Guidance: HR and payroll consultants, like those at Kelly Benefits, can provide valuable support in navigating the laws and implementing efficient systems.
Looking Ahead
The Wage Range Transparency Law and the Pay Stub and Pay Statement Law reflect a broader push toward pay equity and accountability in the workplace. As businesses adapt, the focus should not only be on compliance but also on fostering a culture of fairness and transparency that benefits both employers and employees.
For Maryland employers, these laws represent a chance to lead by example in promoting fair pay practices. While the transition may be challenging, the long-term benefits of a transparent and equitable workplace are well worth the effort.