In the old days, Hiring Managers could ask how much your previous job paid, employees who shared salary information could be fired, and job postings rarely included the salary range unless it was a government or union job. But those days are gone, and the growing employment trend is toward laws that require more salary transparency and sooner in the hiring process. In today’s market for top talent, adjusting your hiring process to address these laws is not simply a matter of compliance; it’s a matter of survival.
The Covid-19 pandemic caused a major disruption in the workforce that continues today. According to the U.S. Chamber of Commerce, although it varies by industry, there are twice as many jobs as workers. There is also a sea change in employee attitudes about work, such as expectations around compensation and being able to work from home, shifting focus from full-time to part-time hours, as well as priority on flexibility. Regardless of industry or attitude, employers still need to attract and retain skilled talent for their businesses to thrive, and that means being positioned to address new pay transparency laws.
Since 1963, when the Equal Pay Act (EPA) attempted to reduce salary discrimination, there have been multiple efforts to address the wage gap with varying degrees of success. While most employers are covered by the EPA, which makes it illegal to pay different wages to people doing equal work in the same workplace, disparities in compensation continues.
According to the National Women’s Law Center, lower wages for women and people of color have been long-standing issues exacerbated by some hiring practices, such as negotiations that do not disclose salary ranges. (Without knowing pay range, women and people of color tend to ask for less than white, male counterparts.)
Laws that prohibit employers from asking about an applicant’s salary history aim to address these discrepancies: Don’t-Ask requirements, which started with Massachusetts and California in 2018, are now implemented in 21 states and many localities throughout the U.S.
In addition, the latest wave in salary legislation centers around laws that require employers to include compensation ranges in job postings or disclose it during specific stages in the hiring process, such as when requested, upon making an offer, or after an interview. As recently as January 2023, California, Rhode Island and Washington were added to the list of 17 states that have such laws on the books, and more states are expected to join.
Like so much that has changed since the pandemic, these new transparency laws require adjustments in hiring and compensation processes. For employers, it means knowing your industry’s talent market and the value of your roles, among other things.
Fortunately, employers don’t need to go it alone. Mj3 is an experienced partner who understands your market and talent needs amid the changing employment landscape. Contact us for professional assistance in adapting to pay transparency laws to find the best hires for your team.
Stay tuned—the benefits and impact of pay transparency.