Maryland Department of Labor Issues Highly-Anticipated Guidance on New Wage Transparency and Paystub Notice Obligations

By Fiona W. Ong and Jamie Salazer - Shawe Rosenthal LLP

September 11, 2024

As most employers with Maryland employees (hopefully) know, starting October 1, 2024, they are subject to new wage range posting and paystub notice obligations. The Maryland Department of Labor promised to release guidance to help employers in complying with these new obligations, for which employers have been waiting with bated breath. And it is finally here! The MDOL has included this information, along with other information on existing wage laws, on a new Wage and Hour webpage.

Background on Wage Transparency Requirement. Maryland’s Equal Pay for Equal Work Act currently requires employers to provide the wage range for the position in question only upon an applicant’s request. The new law now imposes more expansive obligations, including the following:

  • Posting Requirement: Employers must include the following in any internal or external job posting:
     • the wage range,
     • a general description of benefits, and
     • any other applicable compensation.

If the posting is not available to the applicant, it must be provided to the applicant before any discussion of compensation is held with the applicant and at any other time on request of the applicant.

  • Record Retention Requirement: Employers must retain records of compliance for at least three (3) years.

“Wage range” is defined as the minimum and maximum hourly rate or salary, set in good faith by reference to one of the following:

  • any applicable pay scale;
  • any previously determined minimum and maximum hourly rate or salary for the position;
  • the minimum and maximum hourly rate or salary for an individual holding a comparable position at the time of the posting; or
  • the budgeted amount for the position.

In addition, employers may not refuse to promote or transfer an employee, or refuse to interview, hire or employ an applicant, because the employee/applicant refused to provide their prior wage history (in accordance with the existing salary history ban), asked for the wage range, or exercised any other rights under the law.

Fortunately for employers, the law does not allow individuals to bring their own lawsuit against the company. Employees and applicants may only file a complaint with the Commissioner of Labor and Industry, who may order compliance and impose a civil penalty.

The Wage Transparency Guidance: As to the wage transparency requirement, the MDOL has provided the following resources:

  • Wage Range Transparency FAQs
  • Narrative Examples
  • Compensation Disclosure Form (PDF)
  • Compensation Disclosure Form Instructions (PDF)

Notably, if the employer uses the MDOL’s form, it will be deemed to be in compliance with its posting obligation under the law. However, an employer is not required to use the form and the MDOL also provides other narrative examples of postings that are also compliant under the law.

The FAQs also provide further clarity and examples regarding which postings would be covered. Below are some notable things specified in the FAQs:

  • A posting for a position that would only occasionally perform work in Maryland is not covered under the law. Specifically, the MDOL provides examples of occasional work as attending meetings and conferences or communicating with Maryland employees.

  • A separate range of pay must be provided for each location or opportunity, if the posting involves multiple locations or multiple opportunities at different levels of seniority.

  • The following benefits are required to be listed: employer provided insurance such as health or life or other employer-provided insurance; paid or unpaid time off work such as paid sick or vacation days, or leaves of absence; retirement or savings funds such as 401(k) plans or employer-funded pension plans; or other forms of compensation such as the value of employer-provided meals or lodging.

  • Employers are required to include any “any other compensation offered.” Some examples of any other compensation offered include: overtime, compensatory time, differentials, premium pay, tips, commissions, bonuses, stock or stock options, and any portion of service charges.

  • Employers are required to provide the required disclosure when reposting a position; however, the employer may change the terms, if in good faith. For example, a change of the terms may be needed to attract more applicants to the position.

Background on the Paystub Notice Requirement. Currently, at the time of hiring, employers must give notice regarding the rate of pay, the regular paydays, and leave benefits. They must also provide for each pay period a statement of the employee’s gross earnings and any deductions.

The new law makes clear that these notices must be in writing. In the case of the pay period statements, the required information must be on the physical pay stub or the online pay statement. The new law also greatly expands the information that must be provided each pay period to specifically include the following:

  • The employer’s name as registered with the State, address and telephone number;
  • The date of payment and the beginning and ending dates of the pay period for which the payment is made;
  • For non-exempt employees, the number of hours worked in the pay period;
  • The rates of pay;
  • The gross and net pay earned during the pay period;
  • A list of additional bases of pay, including bonuses, sales commissions, or anything else; and
  • For piece-rate employees, the applicable piece rates of pay and number of pieces completed at each rate.

Similar to the wage transparency law, there is no ability for an employee to sue for violations. But if an employer fails to comply, the Commissioner of Labor and Industry may order the employer to provide the required information and impose an administrative penalty of up to $500 for each employee who did not receive the required notice. Employers may appeal an order by requesting an administrative hearing. If an employer fails to comply with the order, the Commissioner can bring suit against the employer for enforcement.

The Paystub Notice Guidance: As to the paystub notice requirement, the MDOL has provided the following resources:

  • Pay Statement FAQs
  • Pay Stub Template
  • Pay Statement Template Instructions

Similar to the Wage Transparency Guidance, if the employer uses the MDOL’s template for the paystub notice, that will be considered compliance with the law.

The FAQs also clarify several things:

  • Workers cannot waive the written notice requirements.
  • If an employee receives different rates of pay or multiple bases, all must be reported on the employee’s pay statement.
  • If an employee’s rate of pay is changed, the employer must provide at least one pay period of advance notice prior to any decrease. However, advance notice is not needed by an employer for an increase.
  • The Tip Credit Wage Statement, which is required for restaurant employers, is not sufficient to meet the requirements of this law. However, the elements required in the Tip Credit Wage Statement can be included in the pay stub.

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