Payroll & Compensation

Pay Transparency Laws Go into Effect Across the Country

New legislation makes it mandatory for businesses in these states to disclose pay information.

By Zee Johnson

The topic of pay transparency has been picking up steam. Earlier this month, New York City passed legislation mandating salary ranges be posted on city job ads, affecting millions of workers and other states are planning to follow suit.

California’s S.B. 1162 law which is also requiring nearly 200,000 companies with 15 or more employees to disclose pay ranges on job ads that are in state, is slated to go into effect January 2023. Maryland, Colorado, Connecticut, and Rhode Island are some of the states that have already had similar laws go into effect.

These laws are being passed with the intention of making pay equitable for all workers in hopes of closing the race and gender pay gaps. Wilson Tower Watson’s 2022 Pay Clarity Survey found that while only 17% of North American companies currently post salary ranges for U.S. locations, even if not mandated, 62% are either planning or considering doing so in the future.

Tanya Jensen, co-founder of beqom, a cloud-based provider of total compensation and continuous performance management solutions, says that pay transparency can help instill a culture of honesty and trust. “Transparency creates a strong sense of fair pay, which many workplaces lack. In fact, [we] found that over half (55%) of Americans say they’ve been pressured by their bosses to keep their earnings private from their co-workers, creating a culture of mistrust and secrecy.”

And those companies who opt out of compliance will have to pay up. In New York City, any workplace who fails to comply with the new laws are subjecting their businesses to a civil penalty of up to $250,000 per unresolved violation.

Ultimately, Jensen see the laws as being a way to attract quality talent. “Pay transparency can be used as a tool to attract and retain talent, helping organizations fill existing talent gaps,” she says. “Since six in 10 (61%) Americans are more likely to apply for a job that includes a salary in the job posting, organizations willing to share pay information with candidates from the start of the hiring process are more likely to fill open positions.”

Tags: Payroll & Compensation

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