Pay Transparency – Quick FAQs
Pay Transparency & Wage / Salary Posting Requirements:
The Essentials
SALARY RANGE POSTING – The states of Colorado, Washington, New York, California, and Rhode Island all have similar requirements regarding posting salary ranges. That is, employers should post the minimum and maximum that they genuinely believe will be paid for the position. There are also several requirements based on the size of an organization. New York requires salary posting for companies with four or more employees. California’s pay transparency requirement applies to companies with at least 15 employees.
RECORD MAINTENANCE – Companies are asked to maintain pay transparency records, including a history of their salary ranges. For example, New York state law requires employers to maintain a “history of compensation” for posted positions and job descriptions (to the extent they exist). Employers should consider assessing how they store, aggregate, and categorize compensation records for each advertised job opportunity or position. Washington, California, and Colorado have enacted similar requirements.
BEYOND COMPENSATION: BENEFITS, BONUSES & EQUITY – Some states, including Washington and Colorado, require posting compensation information beyond salary ranges. Employers of these states must post the benefits offered with the position, including bonuses, equity, and any additional employee compensation. California, however, does not currently require this.
PAY COMPARABILITY PROTECTION – Most states to enact pay transparency legislation have done so in part to protect employees from gender discrimination. These protections forbid employers from the following: “Paying an employee of one sex a wage rate less than the rate paid to an employee of a different sex for substantially similar work, regardless of job title, based on a composite of skill; effort, which may include consideration of shift work; and responsibility.” In addition to gender, in 2017, California Senate Bill 1063 added extensions to Fair Pay Act protections to prevent race- and ethnicity-based disparities in pay.
Contact us for additional information on navigating your plan with pay transparency and job posting requirements!
CA, NY, CO: Dealing with Pay Transparency in 2023
How to comply with Pay Disclosure Rules
The First Month & Key Takeaways
Posting of Ranges – Most Companies Publish Subsets
- A review of ranges posted in January 2023 indicates that most companies have opted to post a subset of the range, not the full range. Most advertised ranges present gaps between 20% and 30%. Generally, the difference between the minimum and maximum range is between 40 and 60%.
Why Post the Full Range?
Companies mainly post the full range to avoid potential liability from only posting a subset. It must also be stated that companies who only post a subset may also have to develop a plan to provide the applicant with the full range to avoid a negative hiring experience. Additionally, it is still too early to determine how companies handle hiring requests for the full salary range. Suppose companies are providing the full salary range. In that case, they must ensure a cohesive policy for responding to employee inquiries aligned with the ranges posted in their job ads.
Using Posted Data to Market Priced Jobs
- Companies are reviewing posted ranges and using them to adjust their pay ranges; in some cases, they are making these adjustments to be more competitive, but in other cases, they are adjusting their job requirements to align with other postings.
CA’s Labor Commissioner Provides Guidance on Pay Ranges
- CA Labor commissioner added interpretations and additional guidelines for pay range. A pay range is what the employer expects to pay an individual. This could be the actual pay or a range. Since the definition does not distinguish between a hiring range and a full compensation range, companies have interpreted that they will be within the new posting requirements if they only post the hiring range.
CA’s Labor Commissioner Releases FAQs.
- The California Labor Commissioner’s office released the much-anticipated FAQs on the state’s new pay scale disclosure requirements under the Equal Pay Act, which became effective on 1/1/2023. These FAQs have been added to the DLSE’s guidance for the California Equal Pay Act (Labor Code section 1197.5) and Labor Code section 432.3. There are now 40 FAQs, which are important for all employers operating in CA. Among them:
- Salary Scale, Definition
- Employer size threshold
- Remote Workers
- Posting in other states
- Displaying the Range
- The full article can be found here: CA’s Labor Commissioner’s FAQs, Release, Dec. 2022
Compliance, CO
- Concerning compliance, Colorado -one of the first states to pass pay transparency legislation- has seen few compliance issues. Since the legislation took effect in 2019, only a handful of Colorado companies have been fined. In fact, according to a survey conducted by Pay Clarity, about two-thirds of US employers are either planning to or considering disclosing pay rate information in future job listings, even in states and municipalities where they are not required to do so.
Job Descriptions and Compliance
- The most difficult obstacle employers will likely face is updating their job descriptions. Given that the New York State law requires disclosure of existing job descriptions, employers should consider updating job descriptions to ensure that the description identifies the position, where it can be—or must be—performed, along with any other information required by this law and relevant to the compensation range or listed salary. As employers review other postings, including ranges posted by other companies, they should compare their descriptions’ requirements and salary ranges and update the job information accordingly.
In summary, pay transparency is emerging as one of HR’s best practices for the near future due to its numerous benefits. In fact, pay transparency is one of the top considerations for Gen Zs when considering where to apply. Firstly, it promotes fairness and equality by eliminating wage gaps and disparities, ensuring employees receive equitable compensation for their work. This transparency fosters trust and engagement, as employees have a clearer understanding of their value within the organization. Moreover, pay transparency enhances internal communication and reduces the likelihood of wage discrimination, contributing to a more inclusive work culture. Additionally, it enables organizations to attract and retain top talent by showcasing their commitment to fairness and providing a competitive edge in the job market. Overall, pay transparency aligns with the principles of social justice and yields positive outcomes for both employees and organizations, making it a crucial HR practice for the future.
2/5/2023