Is your company unintentionally breaking labor laws? Failure to comply with the new salary transparency laws could cost your organization thousands in fines.
For decades, HR managers and job candidates have spent time dancing around one basic yet critical question: How much does the job pay?
Now, pay disclosure laws are bringing job salary details into the open — and it’s snowballed into a growing trend. Following new legislation in New York, Washington and California, employers nationwide are becoming more transparent about salary to remain competitive in the job market.
In fact, the number of U.S. job postings that include salary details rose from 14.7% in 2020 to a staggering 43.7% in 2023, according to industry reports.
Whether your company is in a jurisdiction that requires you to publish salary details or not, the trend is growing. But what exactly is pay transparency, and what does it mean for you as an employer? Here’s everything you need to know about pay transparency.
What is pay transparency?
Pay transparency, also known as salary transparency, is the practice of disclosing worker compensation information such as wages, salaries and benefits either to the individual worker or the public. At its core, pay transparency is about how open an organization is about sharing its compensation for current and prospective employees.
Pay transparency policies can be implemented by either the company or the government and include:
- Disclosing pay ranges in job postings
- Disclosing how the compensation is calculated
- Proactive discussions between managers and employees about pay
- Payroll audits to determine whether employees are fairly compensated
Recently, pay transparency has gained more traction among lawmakers. California, for instance, passed its own Equal Pay Act in 2018. Since then, over 20 states have enacted or are in the process of enacting salary transparency laws.
How do employees feel about these changes? Visier, a leading HR analytics platform, surveyed a thousand U.S. employees, and 79% of them said they want salary transparency.
Laws regarding pay transparency
Pay transparency isn’t just the right thing to do. For some organizations, it’s a legal requirement (or soon will be). Of late, pay transparency laws have become more prevalent. In the U.S., 17 states have some form of pay transparency law, and more states are considering enacting similar laws. For example:
- California’s new salary transparency law became effective on Jan. 1, 2023. It requires all employers within the state to include pay ranges on every job posting.
- New York’s pay transparency law will go into effect in September 2023. It requires all employers to disclose the pay range for all jobs, transfers and promotion opportunities that can be performed in the state.
- Connecticut, Illinois, Rhode Island, Nevada and Maryland already have laws in place or in the works that require employers to disclose pay ranges in job postings, during the interview or upon an applicant’s request.
Though pay transparency hasn’t been made law everywhere, companies have started implementing it. Microsoft, for instance, disclosed salary ranges for its internal and external job postings for the first time in January 2023. Headquartered in Redmond, Wash., Microsoft’s move coincided with the state’s Equal Pay and Opportunities Act amendments.
Penalties for noncompliance
Penalties for noncompliance vary from state to state. In California, for example, workers can file a complaint with the Labor Commissioner’s office, which may result in a fine ranging from $100 to $10,000 per violation.
To avoid getting on the wrong side of the law, employers who haven’t created pay ranges for their current positions should establish them, ensure the compensation is fair, and determine there’s no discrimination based on characteristics such as age, gender or race.
How Fingercheck can help you
Salary transparency laws are designed to reduce gender and racial gaps in pay.
These laws require employers to disclose current and prospective employees’ compensation. Compliance can easily be achieved using a trusted and proven HR platform for the hiring process, and that’s where we come in.
With Hiring by Fingercheck, you’ll never miss or forget to include salary details in your job postings. The pay range details are built into the platform and are automatically applied to new job postings. Better still, our hiring platform simplifies the screening process, making it easier to filter, compare, evaluate and shortlist candidates.
Want to manage your hiring with Fingercheck? Get in touch with us today or visit our website to learn how Hiring by Fingercheck can help transform your HR processes. Or sign up now and see how quickly you can save yourself time and money.