California may join Colorado in requiring companies that post jobs to disclose hourly pay rates and salary ranges. Washington and New York states may soon follow. Fortune 1000 companies frequently follow the trends of large states like California and New York rather than have piecemeal policies. Such disclosures will uncover internal pay equity issues.
Are you ready for job posting pay transparency?
A bill passed by the California legislature mandates that all organizations with 15 or more employees include the hourly pay or salary range on job listings in the state. It now heads to the desk of Gov. Gavin Newsom, a Democrat.
The legislation also requires that companies provide California with the median and hourly pay rate by race, ethnicity, and sex of existing workers within various job categories, and to provide the pay scale to current employees upon request. Companies that hire 100 or more employees through labor contractors must also submit a pay-data report to the state.
States are moving to this regulation to provide more transparency to women and people of color who often trail the pay of white male coworkers in the same professions with similar levels of experience, performance and education.
Microsoft in June said it would disclose salary ranges for internal and external postings across the country starting no later than January 2023. Will other national employers follow Microsoft’s lead?
In leadership and technical recruiting, I find the lead question when reaching out to passive candidates is what does the job pay, and does it allow remote work? Before the pandemic, these questions did not come up until the end of the process (except in high tech).
Are you ready for the world of pay transparency?
It is worth planning now what your strategies will be, not just in the states mentioned above but nationally. For example, consider the following:
- What will you do when a job candidate shows you the salary ranges for positions at Microsoft above the pay levels you are negotiating with a candidate? Will you simply say, “Yes, Microsoft pays more, but we have these cultural advantages? Or will you say, we cannot compete with Microsoft pay (unless you are hiring technical talent in hot demand).
- What will you do when employees who have been in the role for two or three years call, saying they are low-paid when compared to the newly posted role on your career site? Will you handle these internal pay compression issues one-by-one or address internal pay equity issues in advance in the 2023 salary plan? (I suggest the latter.)
- Do your pay leveling guides and training provide detailed performance and competency expectations to guide leaders when employees confront them on why they are not paid at 115 percent to midpoint? My experience suggests that managers will struggle in these discussions with employees when such expectations are not made clear.
- Suppose you hire employees to work on remote jobs who could work anywhere in the US, even if the office is in California or Colorado. Will you go to a national pay level or stay with regional pay levels tied to the regional pay market? (I suggest the ladder.)
I don’t see this trend in pay transparency ending. Are you ready for job posting pay transparency? Will you take a wait and see attitude or plan now to be a talent leader? Join the discussion.
Victor Assad is the CEO of Victor Assad Strategic Human Resources Consulting and managing partner of InnovationOne. He works with companies to transform HR and recruiting, implement remote work, and develop extraordinary leaders, teams, and innovation cultures. He is the author of the highly acclaimed book, Hack Recruiting: the Best of Empirical Research, Method and Process, and Digitization. Subscribe to his weekly blogs at www.VictorHRConsultant.com.