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New pay transparency laws mean companies will have to account for disparities

Meghan McCarty Carino Oct 25, 2022
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Several states will soon enact pay transparency laws that require companies to publicly disclose salary ranges in jobs postings. Jeff Kowalsky/AFP via Getty Images

New pay transparency laws mean companies will have to account for disparities

Meghan McCarty Carino Oct 25, 2022
Heard on:
Several states will soon enact pay transparency laws that require companies to publicly disclose salary ranges in jobs postings. Jeff Kowalsky/AFP via Getty Images
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Starting Nov. 1, almost all of the more than 200,000 employers in New York City will be required to include salary ranges in job postings. Similar laws in the similarly large job markets of California and Washington state will take effect next year, meaning it’s getting harder for any company to avoid these requirements.

Less secrecy over salaries could reduce stubborn pay gaps for women and people of color, and not just when they apply for a new job.

Curator Michelle Millar Fisher at the Museum of Fine Arts, Boston has never been shy about sharing her pay. But when she was coming up in the museum world, details about salaries were hard to come by.

“It was just very obvious a lot of the time that people were not getting paid that well at all,” said Fisher. “People often had to have second and third jobs to exist in that field.”

So in 2019 she hatched a plan with several colleagues over drinks.

“Probably because we’d had very little to eat and two glasses of wine, we decided to put together a Google spreadsheet that would share our salaries,” she said.

The spreadsheet went viral, gathering thousands of entries. But the information in crowdsourced spreadsheets can be incomplete, out of date and hard to compare. And it can feel hazardous to share — which is why Fisher’s collaborators have remained anonymous.

“Gender and racial wage gaps really thrive in darkness and secrecy,” said Emily Martin, vice president for education and workplace justice at the National Women’s Law Center. Their data show those gaps have barely budged in recent years despite growing awareness.

Forcing more salary information into the public eye in the way these transparency laws are designed to do could be the biggest step yet in the fight to close pay gaps, said Martin.

Including salary data on job postings gives individual applicants more leverage to demand fair pay, but more broadly, she said, the practice creates a demand for employers to have rational pay setting processes that they can explain and defend. 

Because it’s not just job-seekers who can see this data — anyone can, including the company’s current workforce.

Roger Trim is an employment attorney and office managing shareholder at Ogletree Deakins in Denver. The state of Colorado has required salary ranges in job postings since 2021.

He said before these laws, most workers were in the dark about how much their employers were paying others.

“An employee who thought they were a victim of pay discrimination wouldn’t necessarily receive this information unless and until they filed the lawsuit and got into the discovery phase and requested the relevant data and documents,” said Trim.

Now all they have to do is look at their employer’s job listings. Which means all companies affected by these laws will need to prepare, said Joanna Kim-Brunetti with human resource data analysis firm Trusaic.

“Figuring out whether or not you have pay disparities, and if you do, [coming] up with a plan to to remediate that,” said Kim-Brunetti. “If you don’t you’re going to just basically wait until you get sued.”

The best way to avoid that, she said, is a pay equity audit — an in-depth analysis of pay distribution that takes into account types of work, qualifications and experience as well as characteristics like gender, race and age.

According to a survey from the Society for Human Resource Management, most of the largest companies already conduct regular pay audits. But less than half of the smallest companies do.

“I think companies wait till they’re 500, 1,000, 2,000 people in some cases, to have a proper pay structure. And you end up having issues down the line,” said Joseph Ifiegbu, co-founder and CEO of human resource data analysis firm eqtble.

Though small companies have fewer staff and salaries to keep track of, Ifiegbu said their compensation practices are often less formalized. Many startups he works with didn’t even have human resource departments in the beginning.

In those cases, pay is sometimes determined on an ad hoc basis, influenced by subjective criteria like whether an applicant is a friend of a founding employee.

He said that can lead to disparities — disparities that will now be easier to discover outside the usual hushed whisper networks or loquacious happy hours.

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