Could salary transparency be the key to closing the
“We should look at laws like pay transparency as a tool in the toolbox to get to pay equity,” says Rocki Howard, chief people and equity officer at
Yet as more cities and states push for salary transparency laws, employers may soon be held to task as they put these policies in place. New York City, for example, is joining Colorado and Washington in requiring employers to disclose pay in a job posting. Other states, including Nevada, California and Connecticut, must provide this information upon request from a candidate or current employee.
The New York City legislation — set to go into effect on November 1, 2022, following an initial delay — would mandate that employers with four or more employees post a minimum and maximum annual salary in job postings, according to the New York City Commission on Human Rights. The salary ranges cannot be open-ended, and must include only the base pay and not other
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The legislation has faced pushback from businesses concerned about the burden of implementing this policy. Some small businesses have worried they would be more open to litigation from employees if they do not follow the law — currently, a business will be fined a $0 civil penalty if they do not comply after a 30-day warning.
Other critics of the law believe it could potentially cause strife within an organization, as current employees would see they may be making less than what the posting lists. Employers should be prepared to explain how and why they list the salaries they include, says Matt Cohen, an employment lawyer and partner at KDV Law.
“I actually haven’t had any clients give any pushback on this yet, but there is a concern that if you’re willing to pay a new applicant $50,000 and your current employee is only getting paid $40,000, it might cause some animus with employees,” Cohen says. “I think pay parity in general has the ability to lessen the amount of discrimination towards employees, as long as enough notice goes out to employers on how to [implement it].”
While salary transparency laws are “the right thing to do,” says Howard, they often neglect to notice the true value a job can offer. A black-and-white number may not take into account things like experience or a workplace culture that could add value beyond a dollar amount.
“If someone’s looking at a job description or posting and they only see the dollars and they don’t see total compensation or total rewards, then it can impact an employer’s ability to be able to attract the best talent,” Howard says. “Pay transparency laws are well-intended to create equity, but I don’t believe it takes in all of the nuances.”
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But these laws are taking a big step toward closing a wage gap that has continuously punished women financially. Currently, women make 82 cents for every dollar men earn — the gap widens further to just 79 Hispanic women, according to Payscale’s 2022 State of the Gender Pay Gap Report.
That can create devastating impacts for families as well as the economy. Even with full-time employment, white women will lose out on more than $406,000 over a 40-year career; Black women shoulder a $946,000 discrepancy, and Hispanic women employees lose over $1.1 million, according to 2019 analysis by the National Women’s Law Center.
“If [women] were paid what their male counterparts were being paid, then there would be more women in the workplace because it would be financially feasible to have a family and work,” says New York State Senator Jeremey Cooney. “Pay transparency is a step in the right direction — the concept of work is changing, so it’s even more important to have transparency when applying for jobs.”
When the NYC law is enacted, it would set the tone for other cities and states to roll out similar legislation, Senator Cooney says. He supports the NYC law and is a co-sponsor for New York State’s pay transparency bill, currently in the state senate committee. For him, improving pay parity is personal.
“I was raised by a single mother, and my mom was a teacher and she was getting less than her male counterparts over the course of a 35-year career,” he says. “Flash forward to 2022, and that still exists. So we’ve got to do something to break the process and expose the challenges, and this is a concrete policy that will help change the direction.”
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While 67% of organizations believe pay transparency is important, just 14% are taking concrete steps to implement a policy, if not already required by law, according to a report by Mercer. But employers shouldn’t wait for legislation to make the decision for them, Howard says. The Mom Project has been going through the process of making their pay and salary structure transparent, and a constant dialogue among employees is critical to retain and attract talent, Howard says.
“Not everyone is going to understand or be happy when they see, and it makes employees feel vulnerable that now someone knows the range of compensation I’m making,” Howard says. “Employees tie their work and compensation to their personal worth — so the work that you do shows that we understand that compensation is one component and not a reflection of how we value the person. Show employees: these are the steps we have taken, this is the research we’ve done to make a reasonable assessment of what a job pays.”
Howard recommends employers pull data and do a competitive analysis between other organizations so that these numbers aren’t “pulled out of the air.” Employers should also review each job description to ensure the work is accurately reflected in the role.
Beyond presenting these numbers to current employees, a fair analysis can attract candidates who aren’t just looking for fair pay, but a work environment that respects and supports them.
“These laws are helping to move the needle forward for employees and employers about how we come together and make sure that we have the right conversations,” Howard says. “The perception for companies who aren’t immediately transparent is that there’s a malicious intent behind it, but it’s really just the opposite. Companies are trying to do it in the right way, and that takes time and thoughtfulness.”
