Pay Transparency Trends (Legal and Social)
New Rules on How Employers Manage Their Compensation Program
As employees begin questioning their pay, while pay transparency continues to grow in popularity, employers are scrambling to defend their pay practices.
Salary information is becoming more available formally, through legislation, and informally, through social media posts. Employees now have the valuable information to leverage conversations with their managers and challenge current compensation.
States are beginning to require the publication of salary ranges for all classifications. Some examples of the trends in the legislation include:
- CA Equal Pay Act – Employers cannot ask about the previous salary and must disclose pay ranges if asked during an interview
- CO Equal Pay for Equal Work – Employers must include salary ranges and benefits information in every job posting as well as disclose promotion opportunities and keep track of job descriptions
- NY – Employers must post maximums and minimums on all job postings or promotions by November 2022 (extended from May 15th)
More casually, there is a societal shift to make salary information less taboo. Coworkers are no longer ashamed of sharing how much they make in the company. A poll conducted in 2022 by YouGov Plc found that of their sample of 2,500 adults, 42% of Gen Z workers, ages 18-25, and 40% of millennial employees, ages 26-41, have shared their salary information with a coworker or other professional contact.
Many companies are not prepared to discuss the warrants for current salary ranges and are left with unhappy employees who still have pay concerns. Payscale has reported that employees are 50% more likely to leave if they think they are being paid below market, even if they aren’t. Some 57% of people paid at the standard market level believe they are underpaid, and 42% of those paid above the market think they are underpaid. This highlights the value of a compensation study where you can provide employees the ease of mind that they are being compensated based on their talent and skills in a competitive organization.