Pay Transparency Creates New Challenges for Employers Sponsoring Foreign Workers

Employers that sponsor foreign nationals for green cards using the PERM labor certification process have a critical new step to be aware of as a growing number of states and localities pass salary transparency laws.

New York City's law requiring minimum and maximum salary in job advertisements goes into effect Nov. 1, joining those of Colorado (enacted Jan. 1, 2021), Washington state (effective Jan. 1, 2023) and California (also effective on Jan. 1, 2023). New York Gov. Kathy Hochul is reviewing another similar law for New York state.

Other states have pay transparency laws that require salary disclosure at later points in the hiring process. Some, like Connecticut, Nevada and Rhode Island, require employers to proactively disclose salary ranges to candidates during the hiring process but not in job listings, while other jurisdictions, such as Maryland and Cincinnati, require employers to provide pay ranges to candidates upon request. It is likely that additional states and cities will consider similar pay transparency laws in the future.

What do these disclosures have to do with PERM, the process overseen by the Department of Labor (DOL) whereby employers sponsor foreign workers for permanent residence, also known as green cards?

The PERM regulations include a series of steps that employers must follow, including advertising the job opening and establishing that the employer will pay the prevailing wage for the location in that occupational field.

"This process is designed in part to protect the U.S. worker by ensuring that employers demonstrate that they are unable to find a qualified, willing, able and available U.S. worker to fill the position before permanent residency is granted," said John Medeiros, an attorney and head of corporate immigration in the Minneapolis office of Nilan Johnson Lewis. "In other words, the employer must conduct an extensive recruitment campaign."

Part of that campaign is advertising the position through newspapers, employer career sites and job posting websites.

Federal PERM regulations do not require salary disclosures in any job postings, explained Andrew Wilson, a partner at Lippes Mathias Wexler Friedman and co-leader of the firm's immigration practice in Buffalo, N.Y. "But salary disclosure is required in a notice of filing," he said. "That's an internal notice posted at the worksite. It lets current workers know that a PERM worker is being pursued for the role and includes the salary range for that role."

Unfortunately for employers, complying simultaneously with the PERM process and state and local pay transparency requirements could be problematic, Medeiros said. "Employers that sponsor workers for permanent residency should carefully consider the interaction between their pay transparency compliance and PERM postings and recruitment obligations."

He explained that one potentially thorny issue is that because the DOL's prevailing wage can be higher than employer salary ranges, "an employer may be faced with the unappetizing prospect of having PERM advertisements that have a far higher salary range than non-PERM postings in similar positions. Further, the PERM posting may force the employer to increase the compensation range on non-PERM postings if the employer plans to hire a worker and pay that worker above the prevailing wage. This could create challenges throughout the employer's compensation structure."

Wilson agreed that employers are usually uncomfortable publicizing pay ranges, and in this case, depending on the size of the organization, people could figure out which of their colleagues is being sponsored for a green card and then compare that person's salary to their own. In almost all cases, foreign workers being sponsored for green cards by their employer are already onsite, working under a temporary immigration status.

Wilson said that aside from the discomfort felt from sharing the pay ranges for open roles, the bigger issue is likely to be that the people who typically manage the PERM process have a brand-new step to think about. They may not even know that step exists.   

"Immigration attorneys or the internal staff that initiate PERM proceedings may not have external job postings with salary ranges on their mind or their checklist because they have never done that before," he said. "It's not necessarily a huge hurdle to overcome, but it's new and not part of the routine yet. There are different pay transparency rules in different jurisdictions, and it will catch someone off guard if they're not careful. Those preparing PERM cases can't move forward with PERM advertising without checking what the local laws are to see whether a salary range is required."

Wilson added that the Colorado Department of Labor and Employment has acknowledged that the state's wage disclosure requirement would not be enforced for PERM advertisements because this law conflicts with federal labor certification regulations. It is not yet clear what New York City, Washington state, California or other states and localities with pay transparency laws will decide on this issue.

And employers should not expect federal guidance to be forthcoming. "The federal DOL is not likely to comment on any of this, as it's a state and local issue," Wilson said.