A handful of states and some cities (including New York City) have enacted pay transparency laws.  This type of legislation varies, but it will generally require employers to include a salary range with their job postings.  While this may not seem relevant to many employers, it will impact organizations all over the US for two reasons.  Firstly, employers with a remote workforce will need to comply with all state-specific pay transparency law.  This is because employers seeking remote candidates will need to comply.  (Note that some employers have tried to denote they’re only seeking candidates from certain states.  However, this tactic has been proven an unacceptable way to avoid noncompliance with some challenging state labor laws.)  Secondly, every state may not have a pay transparency law, but it’s a growing trend among many states and cities.  Currently, eight states (and some cities) have a pay transparency law effective as of January 1, 2023.  At least six other states are considering creating their own in the future.  MP’s HR and recruiting experts share steps every employer should take to prepare for and comply with pay transparency law in 2023. 

4 Steps Employers Should Take to Prepare for and Comply with Pay Transparency Law  

1. Work with HR experts to review current internal compensation rates.   

Once organizations begin listing the salary ranges on new job postings, they may face challenges with their current staff. If employees look at job postings and notice inequities in pay ranges, they’ll become frustrated, disengaged, and either request raises or leave.  Employees will also be more likely to discuss their own salaries with each other.  Again, this may lead to negative impacts if some employees aren’t fairly compensated for their work.  Per a recent survey, 63% of employees would demand equal pay if they found out their coworkers in a similar role made more. Employers may avoid these issues by working with HR experts, like the ones at MP, to review everyone’s job description and identify the optimal compensation for all job duties performed.  Updating employees’ compensation and identifying and addressing any discrepancies will help avoid future issues.  MP’s HR experts have compensation benchmarking tools to help determine ideal salaries based on job duties being performed, industry, company size, location, etc. Organizations must note that it’s unlawful to discipline employees for discussing their salaries with coworkers, posting about it on social media, etc.  Knowing this and training managers may also help reduce risk of legal action or complaints.    

2. Review relevant pay transparency law and update job descriptions accordingly.   

Employers may work with an HR consulting service or an employment lawyer to review all applicable pay transparency law requirements.  They should develop best practices for every new job description—or old one if the law was already in effect.  It’s critical to note that these laws differ state by state, and some have many specific details. (As per usual labor law trends, California’s law is more demanding for employers.)  As noted above, employers will need to comply not only with pay transparency laws in the state where they’re headquartered, but any states where employees and applicants may work.  

3. Optimize job postings.  

Many organizations may be worried about becoming less competitive in job postings once they add salary range.  Attracting top talent doesn’t always require the highest salary, though.  Companies that can’t compete with their salary range will benefit from creating job postings that highlight other assets: 

• Company culture 
• Benefits packages 
• Untraditional benefits, such as discounts on company products or services, etc. 
• Health benefits, such as gym memberships, discounts on a Peloton or other exercise equipment and subscriptions 
• Mental Health benefits, such as  
• Flexible scheduling or autonomy in structuring the workday 
• Best places to work awards 
• And more 

Employers should work with recruiting services, which can also help companies write their optimal job postings.  These services will also help determine the most competitive salary offering the employer can afford, including considerations for the industry, locations, and competitors.   

4. Implement payroll and benefits administration software to help employees understand and maximize usage of their compensation packages. 

These systems won’t just reduce administrative burdens for employers.  They also benefit employees.  Payroll software helps employees see their total paycheck, then easily update and change their deductions, 401(k) contributions, etc.  The software empowers employees to maximize the value of their compensation, even as their life circumstances and financial obligations change.  It also helps employees see exactly how much they’re making and how much is being taken up by taxes.  Sometimes this information alone helps quell concerns or questions about salaries being too low.  Benefits software, like payroll software, allows staff to see the total value of their benefits packages and easily make changes to maximize its value for their individual needs.  They’ll easily access benefits information that lets them utilize their elected offerings as frequently as possible.  Too often, employees don’t understand or forget what their benefits include.  This may result in lower usage and frustration for the employee. They may have an incomplete understanding of the value of their benefits packages, which could be a significant part of their compensation.