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
Comp Plan Review: How’s your Comp Plan? Schedule a plan review. Let’s start the Conversation. Contact us
Pay Transparency Requirements in WA and CA
Resources to Comply with California and Washington Pay Transparency Requirements
Starting January 1st, 2023, CA and WA employers must comply with a series of measures designed to address pay comparability in the workplace. Blue Whale has prepared the following articles and guidelines to help employers better understand their obligations. For additional support, contact us today for a free, 30-minute consultation.
ACCESS: Blue Whale’s Guide for CA Employers
Our 2022 guide contains tips, regulations, and the latest information on Pay Transparency and the Fair Pay Act.
Covered Topics:
- Fair Pay Act – Background
- Proving Unfair Pay; Justification for Pay Gap Differences
- Pay Transparency For Pay Equity Act, Senate Bill 1162
- Posting Requirements
- Data Reporting
- Employer Resources
- and more . . .
ACCESS: Washington Guide for Employers
Guide on the latest information on Pay Transparency Job Posting Requirements, WA
Covered Topics:
- Employee Job Applicant Rights
- Equal Pay, Definition and Guidelines
- Career Advancement Opportunities
- Open Wage Discussions
- Pay Transparency Requirements
- Employer Resources
- and more . . .
CA Pay Transparency 2023 Legislation: The First 30 Days
After reviewing the first 30 days since 2023 pay transparency laws have gone into effect for California, Washington, and Rhode Island, we have put together an article to provide an overview of requirements for new pay transparency legislation and key findings for how companies have been interpreting and adapting to this legislation in the new year.
CA Transparency Requirements – Senate Bill 1162
Beginning on January 1st, 2023, if your organization has 15 or more employees, you must include the salary range within your job postings and provide the pay scale to your current employees upon request. In addition, your organization must record your employees’ job titles and wage history during employment and for three years post-termination.
Beginning on May 10th, 2023, if your organization has 100 or more employees, you will be required to report to the Civil Rights Department annually the median and mean hourly rate for each of your organization’s job categories broken down by race, ethnicity, and sex.
Penalties
Your organization must comply with California’s Pay Transparency Requirements or risk civil penalties of up to $10,000 per violation. *No penalty will apply for a first violation of the job posting requirement if your organization can show that all job postings for open positions have been updated to include the pay scale.
Your organization will face up to a $100 fine per employee if your organization fails to file the required reports. For subsequent failures, your organization may face a civil penalty of up to $200 per employee.
Reporting Requirements, California
Blue Whale Compensation can help your organization update its compensation structure and policy to manage compliance obligations. In addition, we can help organizations with SB 1162’s reporting requirements.
Contact us today to schedule a free, 30-minute consultation.
Need a plan that satisfies Pay Transparency Requirements? Check Blue Whale’s Integrated Comp
Blue Whale’s Integrated Comp Plan includes the tools to best manage pay equity and compliance obligations under SB 1162 and SB 358, and Washinton’s new pay transparency requirements. It includes training, policy manuals, and implementation support. We recommend this to who are subject to Fair Pay and Transparency Requirements and to companies who wish to embrace their social responsibility towards equitable pay.
Want to learn more about our services? Let’s start the conversation
Compensation in California Crosses a New Frontier: California’s Pay Transparency
California’s Pay Transparency Law- SB 1162
A Guide For California Businesses
Employer Implications
California’s Pay Transparency Law-SB 1162 is making headway. The state legislature approved the bill on Monday, September 13, 2022. California’s Governor Gavin Newsom has until September 30, 2022, to enact the bill.
This new law would require all employers in California with fifteen or more employees to include the hourly rate or salary range on their job postings. In addition, upon request, employers would be required to provide the pay scale to their staff, and employers would be required to submit data payroll data to the state annually broken down by the demographics of their organization.
Groundbreaking State
The state of California is home to many groundbreaking changes in employment law. California’s Equal Pay Act requires employers in the state to disclose the pay range for positions they’re recruiting for to applicants upon request. In addition, employers within the state with at least one hundred employees are required to submit payroll data to the state annually.
California is now setting a groundbreaking precedent by adding an additional layer of transparency. California would be the first jurisdiction to require employers to distribute payroll data based on the demographics of the organization.
What are the implications of Law-SB 1162?
This new law would require all employers in the state of California with fifteen or more employees to include the hourly rate or salary range within their job postings
Upon request, employers would be required to provide information on what they’re paying their staff members
Employers with one hundred or more staff members would be required to report to the state annually the median and mean hourly rate for each job category broken down by race, ethnicity, and sex
In addition, employers with one hundred or more workers through labor contracts would also be required to submit similar data annually
All employers would be required to record their individual employees’ job title and wage history during employment and for three years post termination
California Fair Pay Act-SB358
The California Fair Pay Act-SB358, originally enacted in 1949, was amended on October 6, 2015, to address pay disparity among men and women within the workplace. The amendment requires employers only to rely on relevant factors to determine pay differences for their staff who perform substantially similar work. Such relevant factors include seniority, merit, quantity or quality of production, or a bona fide factor such as education or experience.
SB358 was also amended to protect employees who wish to discuss their pay with their coworkers openly, and it prohibits employers from retaliating against their staff for doing so.
Employer Liability
SB 1162-Failure to file the required reports or disclose the required information to the state of California would bring penalties to employers for non-compliance. In addition, employees would be eligible to file a complaint with the labor commission, which could lead to further fines and violations.
SB358-The division of labor standards enforcement enforces penalties for employers who violate SB358. Employers would be subject to back pay, interest, and liquidated damages.
To eliminate liability, employers are encouraged to document pay decisions within company policies and job descriptions based on relevant job factors, including job requirements, responsibilities, and working conditions.
Other Transparency Trends
Salary is an important factor for job seekers and, at times, can be a make-or-break decision whether to apply. Organizations are starting to recognize this, and the number of job listings with salary information has been increasing.
Some major companies like Microsoft plan to start disclosing pay on all their job listings more than mandated requirements to recruit qualified candidates.
In addition, to meet job seekers’ needs, popular job listing websites like Indeed recognize this trend and have acted. Indeed encourages employees to post their salary, and if not provided, they utilize an algorithm to atomically pull salary information based upon the job description and the characteristics.
Tools and Resources
Blue Whale has assembled articles and white papers to help companies best manage and guide their compensation program. In addition, at no cost, Blue Whale offers reviews that can help your organization best manage the challenges the pay transparency brings to the employer community.
Let’s Start the Conversation
Blue Whale offers a full range of compensation services to help you achieve your business goals. Whether you’re looking to design a new compensation plan, analyze your current program, or stay up-to-date with the latest trends, we have the expertise and resources to meet your needs. Contact us to learn more about our compensation services and how we can help you take your program to the next level. Let’s start the conversation!