States and other jurisdictions across the country are implementing pay transparency regulations to encourage employers to self-assess pay disparities along gender, racial, and ethnic line in their workforce and to promote voluntary compliance with equal pay and anti-discrimination laws. These laws serve to ensure that employers efficiently identify wage patterns and allow for effective enforcement of equal pay or anti-discrimination laws, when appropriate.
Additionally, many of these state regulations seek to provide a way to reasonably disclose salary ranges that allow job applicants to make a truly informed decision about their professional future. Further, pay transparency can lead to greater compliance with pay equity legislation, such as the 1963 Equal Pay Act and the 1964 Civil Rights Act, to provide equal pay for equal work.
There are an ever-increasing number of pay transparency laws working in favor of job seekers. The government mandates gaining ground across the U.S. continue to lead to more employers providing this vital piece of information that helps job seekers make decisions in their best interests.
"Pay transparency in the United States is headed for a banner year in 2023," says Forbes contributor Lisa Wallace. There has been a wave of pay transparency legislation over the past few years across some of the country's most populous states, including California, Washington, and New York, and many more states are in the process of drafting similar legislation.
The specific requirements may vary depending on the state or other jurisdiction, but their purpose is to ensure greater pay transparency to promote increased fairness and reduce pay disparities based on factors such as race, gender, and ethnicity.
Here are a few examples of what employers might be required to do to comply with pay transparency laws, depending on their specific jurisdiction:
Such laws are intended to help employees and employers find each other and connect on a more transparent level while prohibiting any retaliation against current employees who discuss their pay with co-workers.
The California Civil Rights Department has shared some basic requirements of the California Pay Transparency Law to serve as an example:
You may be wondering which states have pay transparency laws. Several states are leading the charge in passing this type of legislation. Each state has its own nuances, such as the required disclosure of wage ranges or when and how that range must be provided to job applicants or employees. These states include:
Nearly 25% of U.S. workers now live in a jurisdiction where employers are legally required to share pay ranges. Those numbers will continue to rise since several additional states have recognized the value of pay transparency and are preparing salary range transparency legislation. The following states are working on legislation that could create similar requirements in their respective jurisdictions.
Several of the states with legislation in the works have some of the largest civilian labor forces outside of New York and California. Georgia, New Jersey, and Virginia are prime examples of states that will experience a tremendous sea change in pay transparency over the next several years.
Additionally, the U.S. House of Representatives recently introduced H.R. 1599 “Salary Transparency Act, whose purpose is: "To amend the Fair Labor Standards Act to require an employer providing an employment opportunity to disclose the wage range for such employment opportunity to employees and applicants for employment, and for other purposes." If passed, the bill could be an important step toward nationwide pay transparency.
Pay transparency is important because it not only allows employees to make informed decisions—it also sets a standard for employers to comply with pay equity regulations. The goal of these regulations is to help employees better understand the salary or wage range before accepting a position. When employees know that they are receiving a fair salary or wage, they will feel greater loyalty, which can help reduce employee turnover.
To ensure your organization is offering competitive compensation, request your copy of the Nelson Connects Salary Guide and Workplace Trends Report, which provides benchmarked salary ranges for major metro markets in California and beyond.
As more states enact vital laws regarding pay transparency to support equal pay, it is more important than ever to ensure that your organization is compliant. Depending on the jurisdiction, there are steep penalties and fines that range from $100 to $250,000 per violation.
Nelson Connects is committed to the goals of these various pay transparency acts. Contact us for information on how our team addresses pay transparency with our contingent workforce.