Vermont Enacts Pay Transparency Act

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Maria V. Martin

September 24, 2024

On June 4, 2024, Vermont Governor Phil Scott approved a pay transparency act (HB 704), which will become effective on July 1, 2025.  The law, called “An act relating to disclosure of compensation in job advertisements,” is codified at 21 Vt. Stat. Ann. § 495o (the “Act”).  The Act requires employers to state the compensation or range of compensation for all jobs in written job advertisements.  Employers should use “good faith” – which is defined as honesty in fact – in setting these amounts.

Persons and Circumstances Covered by the Act
The Act applies to the following persons and circumstances:

• Employers who employ five or more employees
• Employees who either are physically located in Vermont or who work remotely in a position and will predominantly perform work for an office or work location that is physically located in Vermont
• Jobs that are open to internal candidates (whether by way of transfer or promotion), external candidates, or both. Employers must disclose the compensation or range of compensation to both current employees and the general public

Situations in Which the Disclosure Requirement Is Modified
The Act’s disclosure requirement is modified in the following situations:

• If a job is paid on a commission basis (either in whole or in part), employers need to disclose only that fact in the job advertisement.
• If a job is paid on a tipped basis, employers need to disclose only that fact and the base wage or range of base wages in the job advertisement.

Exclusions to the Disclosure Requirement
The Act does not apply to the following circumstances:

• A position that is physically located outside of Vermont and that performs work that is predominantly for one or more offices or work locations that are physically outside of Vermont
• General announcements that notify potential job applicants that employment opportunities may exist with the employer, but do not identify any specific job openings
• Verbal announcements of employment opportunities that are made in person or via radio, television, or other electronic media

Discretion to Change the Compensation Listed in the Job Advertisement
Despite the mandated disclosure requirement, the Act affords some discretion to employers to hire employees at an amount other than what is stated in the job advertisement.  Specifically, the Act provides that an employer may hire an employee for more or less than the range of compensation set forth in the job advertisement “based on circumstances outside of the employer’s control, such as an applicant’s qualifications or labor market factors.”

Violations of the Act
It is unlawful for employers to refuse to interview, hire, promote, or employ a current or prospective employee for asserting or exercising a right under the Act.  The Vermont Attorney General’s Office or a State’s Attorney may enforce violations of the Act.  Employers may be ordered to provide restitution of wages or other benefits.  Civil penalties and investigative costs also may be imposed upon employers.

Further Guidance Is Forthcoming
The Vermont Attorney General’s Office will publish guidance about the Act on its website.  In addition, the Vermont Attorney General’s Office will coordinate with the Vermont Commission on Women and other stakeholders to conduct outreach and education regarding the Act.

Employer Takeaways
Employers should assess their job positions to determine which ones will need the required disclosure in written job advertisements.  Employers also should take steps to train their employees or third-party vendors about the Act to ensure they are aware of its requirements.

The author of this article, Maria V. Martin, is a member of the Bars of New Jersey, New York, Ohio, and Pennsylvania.  This article is designed to provide one perspective regarding recent legal developments, and is not intended to serve as legal advice in New Jersey, New York, Ohio, Pennsylvania, Vermont, or any other jurisdiction, nor does it establish an attorney-client relationship with any reader of the article where one does not exist.  Always consult an attorney with specific legal issues.