Pay Transparency (or salary transparency/wage transparency) is the practice of openly sharing compensation information with employees and job candidates. This often includes disclosing salary ranges for job postings and providing this information to current employees upon request, creating an open and equal environment.
A dozen states currently require or will soon require pay transparency, and the list continues to grow. Some of these laws mandate that employers list their intended pay range for a role in any publicized job description. This applies to workers in California, Colorado, Hawaii, Illinois, Minnesota, New York (with specific laws in New York City, Ithaca, and Westchester County), Jersey City (New Jersey), Vermont, Washington, and Washington, D.C.
Other laws specify that job seekers are entitled to the pay range at certain stages of the hiring process, such as during the first interview or when receiving an offer. In some cases, candidates can request this information, while in others, the hiring manager must provide it proactively. These laws are enforced in Connecticut, Maryland, Nevada, Cincinnati, and Toledo (Ohio), and Rhode Island.
What This Means for You
Pay transparency is likely to impact your business if it hasn’t already. It is estimated that 1 in 3 workers will be impacted by pay transparency laws by 2025. This practice tends to promote greater pay equity by holding companies accountable for fair pay practices. It can also attract more talent and reduce inefficiencies in the hiring process, as candidates who are aware of salary ranges upfront are more likely to be satisfied with the offered compensation.
Additional benefits include increased employee trust, retention, and engagement. However, pay transparency may also require employers to quickly reformulate pay practices and could expose your company to the risk of competitors poaching employees.
What You Can Do
Regardless of whether your state currently mandates pay transparency, it is advisable to review and ensure that salaries are equitable and aligned with your company’s pay strategy. Developing a comprehensive pay strategy and updating pay ranges is recommended. Conducting a salary analysis and creating a structured salary framework, either internally or with the help of a third party, can be highly beneficial. Additionally, having a thorough communication plan to introduce the new salary ranges once the project is completed is essential.
Note: For informational purposes only. This is not legal advice.
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