Last Updated on March 8, 2023 by G. T. HR

Employers Continue to Prepare for Pay Transparency

As the number of places that require pay transparency rises, it’s clear that the trend of pay transparency is not going away. Just because the state you’re operating in doesn’t yet require disclosing salary or pay equity information, it’s advised that you don’t wait until it does. It’s likely to happen sooner rather than later.

Recently, on September 27, California Governor Gavin Newsom signed a game-changing pay transparency bill into law in his state. 

The pay transparency law will require pay ranges in job ads for employers with 15 employees or more who are based or hiring in California. In addition, the law is the first to require employers with 100 employees or more to report pay scales by gender, race and ethnicity, which California will make public. 

The recent legislation is another push in a string of pay transparency efforts. California has joined places such as NYC, Colorado and Washington in requiring salary ranges in job applications. 

Hiring Employees With Transparency

Adding pay transparency to your job ads isn’t just for compliance purposes—it’s a great hiring tool. With the Great Resignation, inflation, and everything else throwing a wrench in a “normal” workforce, employees are looking towards more than just pay—they want a company that aligns with their values, offers impressive benefits, and doesn’t underestimate the value they can bring to a company. 

Eighty-one percent of people are more likely to apply for a job that lists the salary range, according to beqom’s 2022 Compensation and Culture Report. States that have already passed legislation are seeing positive results. In Colorado, Indeed job openings were filled 8.2% faster than Utah, which doesn’t have laws around pay transparency.

Starting Conversations Around Pay Transparency

Offering pay transparency is not something many companies are used to. Therefore, starting a conversation around increasing pay transparency may be difficult. Use these tips to help start those tough conversations. 

Come Prepared

Leaders can’t begin to discuss potential pay transparency without understanding and identifying areas they may need to improve upon.

Conduct a Competitor Pay Range Audit

Audit local or regional competitors and their pay ranges to understand average salaries for each role and create benchmarks.

Identify Pay Gaps

One of the biggest reasons for the recent push for pay transparency is to expose pay gaps. Look internally to see if there are pay gaps in your own organization.

HR Considerations For Pay Transparency

If your company is required to be transparent with salary ranges, here are some things you can do to prepare:

• Create a protocol to approve and review job ads to ensure they contain accurate salary ranges
• Collect and retain records of job ads, and
• Document pay ranges for employees throughout their time at the company and three years after employment ends.

While hiring pay transparency laws may not be the answer to ending the pay gaps that currently exist, they, appear to be the first step in figuring out how to fix them.

5 Action Steps For Your Company

Even if you aren’t in a state that has these laws, you may be hiring in locations that do have them. Either way, it’s best to keep pay equity front of mind and to start working on it now before you’re forced to.

Steps you can take:

1. Evaluate all positions to determine and document a pay range.
2. Train all executives and managers on the implications of the new laws and how to comply with them.
3. Consider if you will hire from other states and countries.
4. Create processes for posting the information internally and externally as well as keep it current.
5. Consider doing an internal pay equity audit to uncover any inequities and fix them before it becomes an issue.

When it comes to recruiting talent, pay transparency can be a positive thing for your company. To retain employees, however, it is critical to continue to prioritize employee policies. Having good ongoing policies as outlined in a proper handbook is the best way to retain employees, create peace-of-mind, and assure that you communicate these policies consistently.