Shift Toward Pay Transparency: Anticipated Norm in 2023

Sep 13, 2023

Despite apprehensions about revealing wage discrepancies and fielding inquiries from employees, pay transparency is poised to become the prevailing standard in 2023. At the year’s outset, one-fifth of all U.S. workers fell under pay transparency laws, with Colorado pioneering the concept in 2021. Since then, numerous states and localities, including California, Connecticut, Maryland, and Washington, have followed suit with their own pay transparency regulations.

Even for those currently unaffected by these mandates, devising strategies to address pay transparency is prudent. The impact of pay transparency likely extends, directly or indirectly, to employers, compelling a proactive approach. Employers should stay abreast of pertinent pay transparency obligations and consistently review job postings. Notably, these regulations diverge among jurisdictions, leading to distinct compliance challenges, particularly for organizations hiring across state lines.

Complications arising from remote work arrangements further complicate matters. Hiring remote workers may trigger legal obligations even in states without a physical employer presence. While avoiding remote hires from states with pay transparency laws might seem a solution, it’s often an unsustainable strategy that limits the talent pool. Contrastingly, employers can align with strict pay transparency requisites by revising hiring practices, standardizing job postings with salary ranges and benefits, and crafting tailored postings for specific jurisdictions.

The upsurge in pay transparency laws aligns with its growing significance to employees. Workers value pay transparency for its role in informed job application decisions, salary negotiation, fostering trust, and ensuring equitable compensation. Recent data from Monster underscores this sentiment, with 98% of employees advocating for pay range disclosure in job postings. More than half would decline to apply for roles omitting pay ranges, even in regions where it’s not legally mandated.

The adoption of pay transparency yields benefits beyond compliance. Employers offering such transparency receive a larger applicant pool and optimize recruitment by averting candidate rejection due to inadequate compensation. As this trend continues, the momentum towards pay transparency highlights its strategic importance for organizations seeking to attract, engage, and retain a skilled workforce.

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