Pay Transparency
New laws require greater pay transparency disclosure
The beginning of 2023 saw Washington and California enact legislation that requires companies to outline salary ranges on job postings. New York, Rhode Island, and Colorado have also passed similar measures that address this issue.
General guidelines for each state have yet to be fully burnished, but there are base standards that we may examine:
• California
– Employers with 15 or more employees will be required to post pay ranges on all open position advertisements. Determining how this threshold is met has been structured by prompting companies to utilize the new parameters if they have 15 or more individuals on their rosters in any given pay period – at least one of whom resides in the state. If said company maintains more than one location workers will be part of the count, even if in another state.
– Companies with 100+ employees will be required to submit detailed reports and data to state agencies.
– Fines for non-compliance will range from $100 – $10,000. 1st violations won’t be penalized unless the activity continues.
– Employees will have the option to seek pay ranges for their current position.
– Employees may request full disclosure of the salary range for their current position, no matter what size the company is.
• Colorado
– Applies to any organization employing at least one individual.
– Compensation ranges and general benefits must be listed on all job postings.
– Colorado-based and remote positions must be taken equally into account.
– Violations range between $500 and $10,000.
• New York
– Includes companies with 4 or more employees
– Penalties range from $1000 – $3000.
– Remote listings are included thus organizations who may not have a physical presence in the state still must carefully determine if they are obligated to adhere to the new law.
Update – The New York pay transparency law went into effect in September of 2023 making it the fourth state to implement this type of legislation. It applies to all employers in the state who maintain four or more employees and encompasses job advertisements posted internally or externally. Government agencies and temporary employment firms are exempt.
• Washington
– The 15 employee or more boundary implemented in California has also been chosen in this state.
– Salary, benefits, and other compensation that may be pertinent must be fully outlined in position postings as of January 2023.
– Includes employers who do not have a physical location in the state but does not apply to positions that will be performed entirely outside of Washington.
– Fines and damages can range from $500 to $5000.
• Connecticut, Maryland, Nevada, and Rhode Island – These states have various qualifications in place that require employers to disclose pertinent information to potential candidates during the interview and hiring processes but don’t demand that job postings contain this information.
• Additional states including Alaska, Massachusetts, Michigan, South Carolina, and Vermont have placed proposals in the hopper for future consideration while various municipalities across the country have put in place fully actionable statutes.
Difficulties, hedging, salary band considerations, and other items of note
To no surprise at all, the initiation and full implementation of these new pay transparency laws has been (and will certainly remain) a less than ideal proposition from a number of perspectives. Power balances may be in play for companies who have long taken a keep it in the shadows tack at all costs approach and now may have to drastically revamp their policies regarding this area of management and corporate function. There are going to be a whole subsection of individuals who realize that they are being underpaid by various factors and will rightfully seek remedies. Retaliation on both sides will take on new and unique forms.
Or perhaps all will simply comply with these requirements and the overarching tenor of the situation will be characterized by a preponderance of unforeseen goodwill and acceptance of the spirit of the new mandates…
Many companies are holding back and taking a wait and see approach regarding published salary scales. A number of them are worried that they will understate or overstate selected pay parameters and either be viewed as second-tier players or provide a band that may be unrealistic or untruthful in the hope of attracting well-qualified candidates. There certainly will also be a number of organizations that choose to provide a wide range of pay scales that are ambiguous at best in an attempt to circumvent these new laws and their associated requirements. We’ve also seen a number of entities make it clear that they will not consider remote candidates who are working in states that have put these enacted demands into effect and, by doing so, hope to dodge and perhaps quash potential legislation in their own state.
There are also time and effort factors to take into account regarding the alteration of what may be hundreds of listings and associated documents. Human resources departments are going to have to rapidly adapt and balance the cultural and practical demands of their leadership (however that may be structured) while figuring out how best to stay in proper compliance with these new directives.
Movement in the right direction
These new pay transparency laws are without question a step in the right direction to help provide greater openness in the hiring process and provide a means by which those seeking to ensure greater levels of pay equality may be given an additional platform from which to guide leveling actions and requirements. Having this knowledge in place will allow job searchers to seek more equitable levels of salaries and benefits and, at the same time, have more realistic guidelines to assess their career plans and avenues. Many companies will undoubtedly seek to utilize and maximize loopholes that may arise at any and all points along the continuum. Others will jump ahead, fully comply across the board, and devise a corporate structure that provides a workplace where people want to stay and thrive.
