Does federal immigration law preempt state pay transparency laws? (UPDATED 8/14/24)
EDITOR’S NOTE: This replaces a legal bulletin that was published on July 31, 2024. After that bulletin was published, we were informed by the Colorado Department of Labor & Employment Division of Labor Standards and Statistics that it is not taking the position that its state pay transparency law and regulations are preempted by federal law as they relate to the PERM certification process. Rather, the CDLE has stated that it will not find a violation of the Colorado Equal Pay Transparency Rules for job postings that are required by and are compliant with the PERM certification process. This bulletin has been updated accordingly, and has also added information about the current status of the Massachusetts pay transparency legislation.
Massachusetts has recently enacted its own pay transparency statute. These statutes vary from state to state, but they generally require that employers disclose the actual salary or salary range that the applicant or internal candidate will be paid for a particular job.
But pay transparency laws may be preempted by U.S. immigration laws.
The Colorado Department of Labor & Employment has informed the American Immigration Lawyers Association that it will not find a violation of the Colorado pay transparency rules for job postings that are required by and are compliant with the PERM certification process. The AILA notification regarding the CDLE position states as follows:
The AILA-DOL Liaison Committee has been informed that the CDLE recognizes the difficulty in reconciling [the Colorado pay transparency law and regulations] requirements and PERM recruitment obligations. Under the theory of conflict preemption, the agency will not be enforcing [pay transparency] rules in PERM recruitment. Further, since there is no active, justiciable matter, CDLE does not intend to issue any written guidance confirming this position at this time. However, as previously stated, it will not seek to enforce [pay transparency] Rules in PERM recruitment.
Will the federal courts rule that pay transparency laws are preempted in the PERM certification context? They might.
Background
“PERM” stands for “Program Electronic Review Management.” PERM certification is the first step in the green card application process.
Before an applicant can further pursue a green card application, the employer is required to test the labor market to determine (1) whether there are sufficient U.S. workers able, willing, qualified, and available to accept the job opportunity in the area of intended employment, and (2) whether employment of the foreign worker will adversely affect the wages and working conditions of similarly employed U.S. workers.
The Massachusetts pay transparency legislation does not address preemption. However, the U.S. Supreme Court has identified two subcategories of implied preemption: field preemption and conflict preemption.
Field preemption exists where there is a pervasive system of federal regulation that implicitly precludes state regulation, or where states seek to regulate a field where there is a sufficiently dominant federal interest. In 2012, the U.S. Supreme Court held that an Arizona state law regarding immigration was preempted because it addressed conduct that was already addressed by federal law. Thus, the Court said, the Arizona law infringed on the federal system that regulates the field of immigration.
Conflict preemption occurs when it is impossible to comply with the federal and state laws at the same time, or where state law makes achieving federal goals difficult. In 1992, the Supreme Court struck down Illinois state licensing requirements for hazardous waste workers because they potentially conflicted with the federal Occupational Safety and Health Act regulations in this area. More directly relevant to the issue of immigration, in 1941, the Supreme Court invalidated a Pennsylvania law that required aliens to register with the state, an area that was already regulated by the federal government.
Conclusion
At this time, a number of states have enacted pay transparency laws. These states include California, Colorado, Connecticut, Hawaii, Illinois (effective January 1, 2025), Maryland, Massachusetts (effective August 1, 2025), Minnesota (effective January 1, 2025), Nevada, New York, Rhode Island, and Washington state, and various municipalities (including New York City).
Federal preemption could serve as the basis for a legal challenge of pay transparency statutes in the context of PERM certification.
