Companies must disclose starting salary in job posting under proposal in Minnesota Legislature

ST. PAUL, Minn. —  Minnesota businesses would need to post starting salary ranges when posting job openings under a proposal that advanced at the state capitol Tuesday — an effort aimed at boosting pay equity as the gender wage gap persists.

The requirement applies to companies with 30 or more employees, which would also need to include general information about benefits and other compensation if the bill becomes law. A Senate committee advanced the measure so it may be included in a larger labor policy bill toward the end of the legislative session. 

The pay transparency push comes as a recent report found that on average, women in Minnesota make $0.81 for every $1.00 a white man makes, decades after the Equal Pay Act was passed by Congress and signed into law in 1963. The gender pay gap widens for women of color, according to that data.

Supporters say mandating disclosure of salary in the first stage of the hiring process could help fix the discrepancy.

"One important reason for these persistent wage gaps is that employers often keep their pay decisions secret. That pay secrecy makes it easier for employers to get away with paying different salaries for the same work," said Jill Hasday, a professor at the University of Minnesota Law School that teaches about sex discrimination and constitutional law. "How is the job applicant supposed to know that the employer is offering her a lower salary if the employer can keep the wage or wage range secret?"

Sen. Alice Mann, DFL-Edina, the bill's author, said not only does it benefit workers, but also employers. Research shows pay transparency is linked to higher job satisfaction, meaning people are less likely to leave where they work for another job. 

"Employers are telling us that they are saving time and money," she explained. "They spend less time interviewing potential employees who drop out of consideration when their compensation expectations don't align with what is offered, and so they are saving time and resources on recruiting and hiring. They also see greater employee retention."

Colorado was the first to pass a law like this and nine other states have taken similar steps to increase transparency, though not all of them require salary disclosure in the job posting, according to an analysis by Rippling, a payroll software company.  More states are considering bills of their own. 

An amendment adopted in the Senate committee Tuesday — which is the same day as Equal Pay Day recognizing the gender wage gap nationwide — requires the salary ranges be the employer's "good faith estimate." That mirrors revised language in Colorado's law in order to prevent employers from posting such wide ranges that the information isn't actually helpful to determine prospective pay. 

The proposal follows a law passed last year prohibiting employers from asking someone applying to work for them about their previous pay history.