The combination of a challenging economy, the ongoing war for talent, and the fight against pay inequity has made pay transparency a critical topic in Human Resources. In fact, Monster.com noted that 53% of job seekers would “refuse to even apply for a job that does not disclose the salary range, even in states where salary transparency isn’t a law.” A separate study by Adzuna noted that 33% of job seekers “would not go to a job interview without first knowing the salary the employer is willing to offer.”
In response to this growing trend, lawmakers in a variety of states and jurisdictions have developed regulations that require employers to disclose pay information. In this Astronology® we will discuss how you can prepare yourself to be compliant with this legal trend.
Current Pay Transparency Laws
Currently there are 13 locations that have some form of pay range disclosure regulation. These disclosures vary in specifics, but often these pay transparency laws require employers to:
- Report pay data to government agencies.
- Provide applicants with the salary range for a posted position at a specific point during the hiring process.
- Provide employees with a salary range upon request, when changing jobs or upon hire.
- Include the position’s salary range in job postings.
For instance, in both California and Illinois, employers with 100 employees must report employee and salary data to specific government departments. Additionally, in Illinois, employers must enroll with the Illinois Department of Labor and apply for an Equal Pay Registration Certificate (EPRC). Maryland requires that employers provide applicants with the salary range for the position. Washington requires employers to (upon request) provide employees who have been offered a promotion or internal transfer the wage scale / salary range for the offered position. New York state and New York City require employers with four or more employees to share the salary range (minimum and maximum) on “advertised” jobs, promotions, and transfer opportunities.
Considering the unique requirements for some pay transparency laws, the very first step in compliance is to know the laws for all the locations of your business operations and your current employees. This is especially important if you employ remote employees. Be aware of all current and incoming requirements for these locations. In addition, audit your internal policies and consult with an employment attorney to strategize updating internal policies, procedures, and training guidelines in order to maintain compliance.
Advantages to Pay Transparency – Sharing Pay on Job Postings
According to a SHRM March 2023 survey, there are advantages to sharing pay information on job postings. Their research found the following:
- 70% of organizations that list pay ranges on job postings say that doing so has led to more people applying to their postings.
- 66% (nearly two-thirds) of organizations that list pay ranges on job postings say that doing so has increased the quality of applicants they’re seeing.
- 65% of organizations that list pay ranges on job postings say that doing so makes them more competitive in attracting top talent.
Another interesting point SHRM found is that 36% of organizations mentioned sharing pay ranges in job postings has resulted in current employees asking about pay raises. This could present a challenge to some organizations that are not prepared to handle reactions from current employees.
Keeping the Balance: Internal and External Pay
As the recent SHRM research indicates, HR professionals are tasked not only with complying with new pay transparency laws, but also with making sure current employees are happy with their pay in comparison to the salary ranges shared publicly. An excellent way to mitigate this challenge is to conduct a pay equity audit and a review of your organization’s compensation structure.
Completing both a pay equity audit and a review of the compensation structure allows organizations to assess the overall health of their pay program and fix any inconsistencies before they snowball into larger issues. In addition to reviewing and updating the current pay structure, incorporating total rewards statements in the communications mix will allow employees to see the overall value of their compensation package. Such regular communication can alleviate any potential tension surrounding pay.
Through our Total Rewards Consulting Services, Astron Solutions has helped thousands of small and midsize businesses / organizations rise to the challenge of pay transparency. Send in a request through our contact page to learn more on how we can assist your organization with a pay equity and / or compensation review. You also can contact us to learn more about our Flare® Total Rewards Statement module. It is an easy–to–use tool to help you communicate your employees’ current total rewards regularly.
Pay Transparency and the Future
With Forbes predicting that at least three additional states could possibly have their own pay transparency legislation in the near future, it is clear that pay transparency regulations are not a passing trend. In response, HR professionals should begin to develop their plan to comply with possible regulations now.
How does your organization plan to address any pay transparency laws in your area? Are you sharing salary information on job postings? Please share your thoughts and opinions in the comment box below.
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