Introduction

Maryland is making significant strides toward workplace transparency and fairness by implementing two major laws: the Wage Range Law (effective October 1, 2024) and the Pay Statement Law (effective January 1, 2024). Here's what Maryland employers need to know about these important changes and how they can prepare to comply.

Maryland's Wage Range Law: Effective October 1, 2024

Maryland's Wage Range Law introduces a new level of transparency in the hiring process. Maryland employers must include salary and benefits information in internal and external job postings and keep records of compliance for a minimum of three years. The law applies to public and private employers in a business, industry, profession, trade, or other enterprise in the State. Under this law, there is no minimum employee requirement for coverage. 

Key Requirements:

Wage Range and Benefits Disclosure:
Employers must provide job candidates with the wage range, a general description of benefits, and any other compensation available for a position in internal and external job postings and by request by an applicant or employee. This applies to all stages of the hiring process, from the initial application to the job offer. 

The law prohibits employers from refusing to interview or hire a current employee who declines to provide their wage history or who requests the wage range for a position; these protections were already in place for non-employee job applicants. Employers are also prohibited from retaliating against job applicants and employees for exercising their rights under this law.

This law prohibits an employer from discriminating between employees by (1) paying a wage to employees of one sex or gender identity at a rate less than the rate paid to other employees under certain circumstances; and (2) providing less favorable employment opportunities as defined by the law, based on sex and gender identity.

Employers must retain records demonstrating compliance with the law for each position for at least three years after the position is filled or the position was initially posted, if not filled.

Benefits for Employers:

Attracting the Right Talent: By providing clear salary expectations upfront, employers can attract candidates aligned with the role's compensation level, reducing the risk of mismatched expectations.

Promoting Fair Pay: Wage transparency helps employers address pay disparities, supporting equal pay for equal work and reducing potential legal risks related to wage discrimination.

How Employers Can Prepare:

Set Clear Salary Ranges: Employers should establish clear, market-competitive wage ranges for every role within the company.

Train HR and Hiring Managers: Ensure hiring staff understand when and how to provide wage ranges during the recruitment process, whether upon request or as part of the job listing.

Penalties for Noncompliance

This law does not enable a private action by an employee or job applicant. Maryland's labor commissioner will enforce the new law. Penalties for violating the law include the following: 

- First violation: The commissioner may issue a compliance letter to the employer, demanding adherence to the law.

- Second violation: The employer may be assessed a civil penalty of up to $300 for each employee or applicant affected by the noncompliance.

- Subsequent violations: If further violations occur within three years of a previous violation, the employer may face a civil penalty of up to $600 for each employee or applicant affected.

When determining the penalty, the commission considers the gravity of the violation, the business' size, the employer's good faith, and prior violations.

Maryland's Pay Statement Law: Effective October 1, 2024

The Pay Statement Law focuses on providing employees with detailed and accurate pay information, ensuring they fully understand their earnings and benefits. As of January 1, 2024, employers in Maryland must offer more comprehensive pay statements, which benefit both employees and businesses by promoting transparency and avoiding payroll disputes.

Key Requirements:

Detailed Pay Statements
Employers must provide itemized pay statements that include:

- Gross wages

-Total hours worked (for non-exempt employees)

- Overtime pay (if applicable)

- All deductions, including taxes, insurance, and other withholdings

Paid Leave Information
Pay stubs must also include detailed information about an employee's accrued and used paid leave. This ensures that employees are aware of their available leave balances and prevents confusion over time-off entitlements.

Penalties for Noncompliance

Employers may be fined up to $500 for each employee not provided a pay statement or a compliant pay statement. Considerations for the penalty include the gravity of the violation and the employer's size, compliance history, and good faith. 

Benefits for Employers:

• Improved Transparency: By providing detailed pay statements, employers foster trust with their workforce and reduce the likelihood of payroll disputes or misunderstandings about wages or benefits.

• Compliance with Labor Laws: Properly itemized pay statements help employers stay compliant with labor regulations, minimizing the risk of penalties or legal actions from employees.

How Employers Can Prepare:

• Update Payroll Systems: Employers should work with payroll providers to ensure pay stubs include all required details, such as paid leave balances and itemized deductions.

• Conduct Regular Audits: Periodically reviewing payroll practices can help identify and fix errors before they result in compliance issues.

Conclusion 

Maryland's new Wage Range and Pay Statement Laws reflect a growing national focus on wage transparency and fairness in the workplace. Taking proactive steps to adapt to these changes will ensure a smoother transition and reduce the risk of legal challenges. Taylor Legal can help you set up processes to ensure compliance with these new requirements.