Several states have passed pay transparency laws, which require employers to publish salary ranges for job openings. Generally, employers who operate or hire within these jurisdictions are required to include salary range data in the job posting. The pay range should reflect fluctuations in salary based on the person’s qualifications and experience but must have both a bottom end and a cap.

Even if your organization doesn’t operate within a jurisdiction that requires pay transparency, your human resources department needs to stay apprised of this trend. With that in mind, here’s everything you need to know.

Benefits of Pay Transparency

There are two main advantages linked to pay transparency. Supporters of these laws believe that being open and honest about earning opportunities can help reduce gender and ethnicity pay gaps. If an applicant knows what the official wage range is for a given position, they can negotiate from an informed position based on their qualifications and experience.

Additionally, pay transparency laws can promote trust and engagement between your organization and its staff. Voluntarily adopting practices that increase wage transparency can be a huge step toward improving employee relations. It demonstrates that your organization does business with integrity and is passionate about taking care of its workforce.

Using Pay Transparency to Attract Talent

Generic phrasing in a job posting, like “pay based on experience,” can discourage some people from applying altogether. After all, no one wants to waste their time applying for a job that falls well below their income expectations.

Integrating salary ranges into your job postings can encourage more people to apply and even increase retention among existing workers. Applicants will have a clear view of their earning potential from the outset, which means you’ll lose fewer candidates due to concerns about wages.

However, implementing a pay transparency program can be quite challenging. It’s important to be honest and truthful without violating the privacy of your existing staff members. That’s why many businesses publish a salary range rather than releasing specific data for their team members.

Avoiding Internal Conflicts Among Employees

If your organization has a disparate and inconsistent compensation process, it’s important to address those underlying issues before implementing a company-wide pay transparency policy. Senior members of the business may become frustrated if they find out that new hires with the same role make as much or more than they do.

Therefore, it’s important to develop a formalized pay structure and benefits package. Everyone should know what’s required to reach the top end of a wage scale and how their benefits will improve over time.

How You Can Gradually Introduce Pay Transparency

Once you’ve addressed any deficiencies in your benefits package, it’s time to roll out pay transparency policies. However, it’s usually a good idea to do so gradually. There are a few ways to go about it.

One option involves beginning with entry-level positions. Before you publish salary data, review how much each line-level worker is currently earning. No one should be making more or less than the salary range. If they are, you’ve got to make some adjustments to the scale.

Alternatively, you can start at the top of the organizational hierarchy. Being honest about your own earnings can encourage other team members to support the new policy. Either way, it’s vital that you address any outliers that fall beyond the stated wage scale.

The Future of Pay Transparency

Only a handful of jurisdictions have passed pay transparency laws. Even if your business operates outside of those states, you may have to comply with new regulations. For example, if you post a remote position that anyone in the U.S. can apply for, it must comply with transparency laws.

Proactively adopting policies regarding wage transparency can help you access the entire talent pool and avoid regulatory penalties. Moreover, it demonstrates that your business is committed to treating workers fairly.

Modernizing Your Employee Benefits Framework

Is it time to rethink how you post jobs, attract talent, and retain workers? If so, connect with Benefits Advisory Group, and let’s chat about how we can modernize your employee benefits framework.