Pay Transparency Is on the Horizon
On September 27, 2022, California Governor Gavin Newsom signed a game-changing pay transparency bill into law. The pay transparency law requires 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.
Last Updated on March 23, 2023
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.
81% of people are more likely to apply for a job that lists the salary range.
beqom’s 2022 Compensation and Culture Report
As the number of states 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.
How to Hire With Pay 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 (toward) 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.
How to Discuss Pay Transparency With Company Leaders
Offering pay transparency is not something many companies are used to, and starting a conversation around increasing pay transparency can be difficult. Use these tips to help start 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 an Audit
Audit local or regional competitors and their pay ranges to understand average salaries for each role and create benchmarks.
Look Inward
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 Regarding Pay Transparency
Here are some things your company can do to prepare, in case your company is required to be transparent with salary ranges:
- 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 Pay Transparency Action Steps for Your Company
Even if you aren’t in a state that has these laws, you may be hiring in those areas. Either way, it’s best to keep pay equity front of mind and to start working on it now before you’re forced to.
- Evaluate all positions to determine and document a pay range.
- Train all executives and managers on the implications of the new laws, and how to comply with them.
- Consider if you will hire from other states and countries.
- Create processes for posting the information internally and externally, and keeping them current.
- Consider doing an internal pay equity audit to uncover any inequities and fix them before it becomes an issue.
Preparing for pay transparency can help you with your recruiting efforts, however, once your employees are on board, creating good ongoing policies as outlined in a well-written handbook is a way to retain your talent and communicate clearly to your workers.