Challenges surrounding the fight against pay inequity – as well as the current, changing economy itself -have resulted in an intense war for talent. Leading to pay transparency becoming an important subject. In fact, as mentioned in our “Pay Transparency Primer” article, 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.” To further this trend, lawmakers have stepped in to develop regulations that require employers to disclose pay information.
On September 17, 2023, the state of New York will be enacting its own pay transparency law. In this Astronology®, we will discuss how New York employers and others can prepare for compliance with this legal trend.
What is Pay Transparency and Are There Any Advantages?
As mentioned in our “Pay Transparency: What It Is & How to Navigate New Laws” article, Pay transparency is the practice of openly sharing information about how you compensate employees with both current staff and job seekers. Depending on the laws in your area, your organization’s approach to pay transparency, and the culture you have surrounding compensation, you might share any of the following information internally or in public job postings:
- Exact salaries for specific roles or at least salary ranges/bands
- Salary structures (including base pay, incentives, bonuses, and more)
- Performance criteria and how they affect compensation
- Market data or benchmarks
- Information about pay equity assessments, gender or diversity pay gaps (and what you’re doing to close them)
- Your organization’s guiding compensation philosophy
If handled correctly, pay transparency can be asset in your recruiting and retention goals. According to a SHRM March 2023 survey, there are advantages to sharing pay information. 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.
A Closer Look at New York’s Forthcoming Pay Transparency Law
Since Astron Solutions is headquartered in New York, we’ve been busy supporting our New York-based clients with the upcoming NYS pay transparency law going into effect on September 17, 2023.
In November 2022 New York City’s Pay Transparency Law was enacted. The law required employers to include “good faith” estimates of salary ranges for positions posted in job advertisements, promotions, and/or transfers for all jobs performed in New York City, in office or remote. In September 2023, New York State is slated to enact its own pay transparency law. The New York State law extends the New York City law by requiring employers with four or more employees to include the minimum and maximum hourly or annual salary range when advertising a job, promotion, or transfer opportunity. The law also extends to positions that are remote outside of New York, and it requires employers to keep records of the history of compensation ranges and job descriptions. Employers that were posting the hiring salary range for positions in good faith under the New York City law will now have to adjust to provide the salary range of the job position as it fits in the organization’s compensation structure.
Currently, there are 14 locations (eight states and six jurisdictions) in the United States that have some form of pay transparency regulation. Here at Astron, we see Pay Transparency as a continuing trend. We encourage organizations and companies to consider embracing the trend and prepare for it.
How Your Organization Can Prepare to Embrace Pay Transparency
Whether you are preparing for your own impending pay transparency law, or simply seeking to become more equitable and to encourage a culture of transparency, you need to have the right approach in place for implementing pay transparency. Here are six strategies to help you get started:
- Identify your guiding philosophies: We have to start with the “why.” Identifying and developing the principles used for making compensation sets a tone that should align with the organization’s overall mission statement and goals.
- Take a critical look at how compensation is working at your organization: Take a pulse on what the current pay ‘says’ to your employees. Audit your compensation structure, including a review of internal and external equity. Seek feedback from employees as to whether they feel their pay is fair. Such a review will help you identify any inconsistencies.
- Decide on the level of transparency: Some questions to ask when determining the level of transparency include:
- What specific compensation details will we share?
- When will we share compensation information?
- What will remain confidential?
- Train Managers and HR Leaders: Your employees will speak first with their manager and any HR leadership when any changes occur within the workplace. Since these individuals play a crucial role in communicating and leading changes, it is imperative that they have a full understanding of any pay transparency policies and can adequately respond to employee questions. Instill confidence in your staff by training your managers and HR Leaders in the new policy.
- Roll out your policy and foster a Culture of Open Communication: Communication should be the center of your strategy in rolling out any new pay policies. Providing context about the reasons changes are being made, informing employees what they have a right to know, and answering any questions will pave the way for enthusiasm for new changes. Continuing to communicate openly about compensation during performance review seasons, including the financial, economic, and performance aspects of it, will help reinforce the transparency and fairness of the policy.
- Adjust your approach as needed: As changes occur, adjust your approach as needed. Stay informed on any local and federal laws that could impact the policy.
Astron Solutions – Your Partner in Pay Transparency
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 can also 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.
With Forbes predicting that at least three additional states will soon institute changes, it’s clear New York will not be the only state with new pay transparency legislation in the near future. In response, HR professionals should begin to develop their plan to comply with potential 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.