Is your company ready for the Pay Transparency Law?
An increasing number of states in the U.S. have started to require employers to disclose salary ranges for job openings. The goal is to narrow disparities and push for more equality and inclusivity in the workplace.
Just last week, the state of New York started to require all companies with a minimum of four employees to include salary ranges in all their job posts. Similar laws have also taken effect in other U.S. states, such as Colorado, California, and Washington.
As the Pay Transparency Law takes effect in some of America’s most labor-intensive states, the hope is that significant pay disparities for women and people of color will narrow.
A study made by the Pew Research Center just two years ago revealed that women only earn 84 percent of what men earn. The pay gap is even more massive among women of color. A related study showed that women of color make 58 percent of what non-Hispanic white men earn.
With the Pay Transparency Law going into full effect in many states, employers can no longer keep job candidates and existing employees in the dark regarding salaries.
What Does This Mean to You as Employers?
The Pay Transparency Law will surely change some of the most basic methods on how you do your hiring and determine the salaries of your employees. You may face a period of restiveness in the workplace as your employees learn how much their colleagues are making and demand a raise. Know that this kind of disruption is temporary.
Many companies that have already made their salary ranges public have been revising their corporate policies to accommodate these changes.
However, admittedly, there are other factors to consider. Along with the push to comply with this new law, many employers and C-suite executives’ struggle; to stay afloat amid rising prices and the challenges of recruiting top talent in the era of the Great Resignation.
As your company prepares for the temporary disruption that the Pay Transparency Law will surely bring, here are some handles that you can use to anchor your employees and your company in this rather significant transition:
1. Make a Comprehensive Review of Your Compensation System.
Since the Pay Transparency Law is ultimately a mandate for greater transparency and equality in the workplace, the first thing you need to do is to perform a comprehensive review of your company’s salary system. This will help you identify possible areas of inequities or potential inconsistencies.
After this, you have to ask whether your company’s wage ranges for roles make sense based on the scope of work and the location where your employees will perform these tasks.
The review must include analyzing your present employees’ compensation levels and how they align with their salary ranges and one another. You may then discover that you must adjust based on performance and market conditions.
Finding out that the salary range in your new job posts is higher than their current salary may demotivate some of your employees. Some may also be disappointed that their wages are in the lower range.
The task may be daunting but is completely necessary, especially if you want to keep your best-performing employees. Remember that your company’s most important resource is your human resources. Hence, opening the HR books and doing the dirty work is necessary.
2. Prepare for a Dialogue with Your Employees.
The Pay Transparency Law also requires you to be completely honest with your employees. There may be some discomfort initially, but it is not impossible to overcome.
It would be best if you led in helping your employees understand how their salaries are determined. The goal here is to make them feel that they are adequately compensated. Enlist the help of your hiring managers as well in explaining to your employees why they were placed in a specific part of the salary range and mitigate the concerns from those claiming that they are being underpaid.
Note that having this kind of conversation with your employees is necessary as the law wants to make it intentional for managers and employees to have productive discussions regarding compensation. Other companies are doing it because they have to. Hence, it would help if you started the ball rolling.
3. Focus on the Intangibles.
The truth is that many companies still need to financially prepare to offer a pay raise to address the possible ramifications of the Pay Transparency Law on their workforce. Other factors include inflation, the company’s current state of profitability, its other investments and expenses, and so much more.
Suppose you are one of these companies that still need to be capable of increasing the salaries of your employees. In that case, the next best thing to do is focus on the intangibles your company offers or can offer to current employees and job candidates.
Strengthen the implementation of company-wide policies that support the following;
- quality of life,
- work-life balance,
- flexible working arrangements,
- the option to migrate to remote work fully,
- and other benefits or perks your company can offer instead of paying your employees more.
Remote work may be a viable option for many of your employees and could be enough to motivate them to stay in your company. A recent job study survey revealed that job candidates are searching for remote work opportunities skyrocketed by 300 percent from July 2021 to July 2022. Job candidates are looking for other things and are not just focusing on high-paying jobs.
This may be a very good counter-offer, especially if your company is a smaller one or a startup. More and more employees and job candidates are looking at work-life balance nowadays. Hence, as an employer, there is wisdom in strategically capitalizing on this.
4. Emphasize that Transparency Leads to Higher Learning
Despite the many potential challenges that companies may face with the full implementation of the Pay Transparency Law, employers can view this as an opportunity to uphold transparency and lifelong learning in the workplace.
According to the Harvard Business Review, transparency puts forth information on the surface, which in turn shines the spotlight on people’s actions. It makes them more accountable.
You may pivot this to your employees to focus not just on accountability or compliance but, more so – learning. Make your efforts on transparency anchored on perfect intentions to promote a more salient sense of commitment among your employees.
Provide your employees with opportunities to upskill and reskill, with the commitment of potentially more financial rewards once these upskilling and reskilling opportunities begin to translate into your employees becoming much better in performing their roles. Investing in your employees’ knowledge and skills benefits both employer and employee.
The Pay Transparency Law is a good thing. It opens the gates for more transparency, fairness, and inclusivity in the workplace. This can make your employees learn and can improve your organization’s performance in the long run.
This is why your role as an employer and decision-maker is crucial. The challenge is for you to ultimately use the Pay Transparency law as a catalyst to promote a healthy work culture, improve accountability and trust within your organization, and promote fairness and true meritocracy among your employees.
In the era of transparency, diversity, and inclusion, companies must work with staffing firms that promote the same values. Reach out to the Fox Search Group for your talent needs and collaborate with a cutting-edge staffing firm that understands how efforts on diversity and transparency can do wonders for your company. Contact us today!