Vermont Becomes Latest State to Enact Pay Transparency Law
Vermont has joined the growing list of jurisdictions with pay transparency laws.
On June 4, 2024, Vermont Governor Phil Scott signed “An Act Relating to Disclosure of Compensation in Job Advertisements” (the “Act”). Pursuant to the Act, which will take effect on July 1, 2025, many employers will soon be required to ensure that any advertisement of a Vermont job opening includes a disclosure regarding the compensation, or range of compensation, available for the job opening. Proponents of the bill cite advancement of pay equity and reduction of gender and racial pay gaps as among the expected outcomes of implementation.
Applicability
The Act is applicable to employers with five or more employees and to job openings that are either physically located in Vermont or performed remotely for an office or work location that is physically located in Vermont.
Compensation information must be provided regardless of whether the position is being advertised to internal or external candidates and/or if the position is one to which a current employee could be promoted or transferred.
Key Terms
The Act defines the term “advertisement” to mean any form of written notice for a specific job opening made available to potential applicants.
“Range of compensation” is defined as the minimum and maximum annual salary or hourly wage for a job opening that the employer expects in good faith to pay for the advertised job at the time the employer creates the advertisement.
Importantly, employers are not rigidly bound by the advertised compensation range. An employer may hire an employee for more or less than the range of compensation listed in a job advertisement based on circumstances outside the employer’s control. Examples include the applicant’s qualifications and labor market factors.
Exceptions
General announcements that notify potential applicants of the existence of employment opportunities — but do not identify specific job openings — need not include compensation information. Verbal announcements (e.g., those made in person, on the radio, or on television) are also excluded from disclosure requirements.
The Act further provides that job openings that are to be compensated on a commission basis are excluded from specific disclosure requirements. For those positions, employers need only state that the job opening is compensated on a commission basis.
With respect to positions that are paid on a tipped basis, an advertisement must disclose only: (i) the fact that the job opening is paid on a tipped basis; and (ii) the hourly wage (or wage range) to be paid the employee, exclusive of tips.
What Steps Should Employers Take?
Though the law will not take effect for another year, employers with personnel or operations in Vermont should begin planning for timely compliance by:
- Determining how disclosure requirements will be implemented in job postings and advertisements;
- Considering implementation of an internal pay audit, which will allow employers to better understand potential pay discrepancies (and alert them to any suggestion of disparate impact);
- Training those responsible for drafting and/or posting job advertisements, including third party vendors; and
Reviewing forthcoming guidance from the Vermont Attorney General, who is required to publish additional information for employers and employees by no later than January 1, 2025.
