Navigating Pay Transparency Laws and PERM: Walking a Tightrope Between Compliance and Contradiction
In recent years, several U.S. states and localities have begun to introduce pay transparency laws with the aim of reducing pay inequities and closing the gender wage gap. There are notable differences among these laws, as some require only disclosure upon request by a candidate while others require disclosure of wage ranges on all job postings themselves. These laws introduce an entirely new set of risks to be evaluated and decisions to be made by internal and external counsel for any employer using the PERM recruitment process to extend permanent job offers to foreign nationals.
With a few exceptions, a company wishing to permanently employ a foreign worker in the United States must proceed through the PERM process. This process works first to identify whether a minimally qualified U.S. worker may be available and willing to accept a given role. A company may proceed in offering that role to a foreign worker only if a minimally qualified, willing and available U.S. worker is not found. PERM regulations require employers to post recruitment through various channels mandated by the Department of Labor, but they do not require employers to post wage ranges or disclose benefits in public job postings.
However, an employer going through the PERM process is required to seek a prevailing wage request for each sponsored job from the DOL. At times, the prevailing wage issued by the DOL may be higher than the lower end of the company’s actual wage range. In these situations, a company may proceed with their PERM process but cannot offer a rate lower than the prevailing wage for that particular role.
This situation introduces an interesting conundrum for employers seeking to simultaneously comply with PERM regulations and state- or locality-driven laws on pay transparency. For instance:
- Washington state and California require any employer with 15 or more employees, with at least one employee in their respective state, to disclose the salary range within the job posting for any position that can be performed in that state. Washington state further requires a description of all benefits and other compensation offered.
- Colorado similarly requires employers to include salary ranges and provide a general description of benefits for any job to be performed or that can be performed remotely from Colorado; however, this requirement applies to any employer that has at least one employee within the state.
- Ithaca, Jersey City, New York City, and Westchester County have all enacted variations of a similar wage transparency law, requiring employers with four or more employees to post salary ranges for any job posting where the position can be performed, in whole or in part, by an individual within their respective jurisdictions.
First, it is vital for employers to engage their employment counsel to determine whether a particular wage transparency law applies to them as an employer or to a particular position for which they are recruiting. In many cases, employers must now consider the chosen home addresses of their current employees as well as the candidate pool for the position for which they are hiring. This means that a particular job posting may be subject to wage transparency laws for multiple jurisdictions. In addition, the employer must also work with their employment counsel to determine what constitutes a “good faith” range of the minimum and maximum pay for the position. While some employers provide a very broad range, encompassing actual minimums and the maximum conceivable amount they might be willing to pay, others have provided a scale along the bell curve, or any variation between.
After the wage ranges are vetted and approved by employment counsel, employers are then faced with the challenge of complying with federal PERM regulations, which can sometimes run in direct opposition. For example, while wage transparency laws require employers to post good faith wage ranges, PERM regulations do not permit the lower end of that range to fall short of the prevailing wage determination.
Colorado was the first state to mandate pay transparency in public job postings and quickly recognized the inherent contradiction between their wage transparency law and federal PERM regulations. This led to an informal conclusion that state wage transparency laws would not be enforced in the context of PERM recruitment. However, even this introduces risks for employers, as major employers have been charged recently with conducting PERM recruitment in a manner that is completely at odds with normal recruitment practices. Advertising for PERM roles with different wage content than a company’s normal postings may open it up to additional scrutiny by the state or by the DOL or even the Department of Justice.
As more states and localities enact varied pay transparency laws, the complications will continue to increase. Companies’ in-house counsel, immigration and global mobility teams must take care to partner closely with both their employment counsel and their immigration counsel to ensure that they are implementing practices that comply with both state and federal laws in this space.
Stephanie S. Pimentel is a BAL Partner in BAL’s Dallas headquarters and Asha George is a Senior Associate in BAL’s New York City office.