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Salary Transparency Laws & How They Affect Your Business

Pay equity, which involves ensuring that employees performing similar tasks receive similar compensation, is widely assumed to be common practice for businesses. However, pay disparities still exist despite numerous federal laws instituted over the years to combat this issue. 


In the past, employers have used a new employee's compensation history to determine their salary. However, this practice inadvertently maintains pay inequality between different groups of employees. Numerous states and cities have begun to address this issue by legally prohibiting employers from inquiring about job candidates' previous salaries. Other locations mandate that companies disclose their salary information, which brings us to our discussion of salary transparency laws.


What are salary transparency laws?


Salary transparency laws require that all job postings disclose salary details and may additionally necessitate making such information available to existing employees within the company.


These mandates are increasingly being implemented nationwide in response to public pressure and the rising demand for equitable pay. Studies show that 98% of workers believe employers should include salary ranges within job postings and that 53% would refuse to apply for a position that does not disclose salary information.


Below are the salary transparency laws that are or will be in effect this year. Click on each state name for the full policy details.

  • California: On January 1, 2023, job postings must include a salary range and current employee salary ranges upon request.
  • New York: On September 17, 2023, all job postings, promotions, or transfers must feature a salary range and job description.
  • Rhode Island: On January 1, 2023, candidates and existing employees who request salary ranges must receive them.
  • Washington: On January 1, 2023, all job postings must include a salary range and accompanying benefits.


What are the implications of salary transparency laws on my business?


While it is easy to comprehend how salary transparency laws benefit job seekers, their effect on employers is a little more nuanced. 


There are obstacles certain businesses may encounter as a result of complying with salary transparency laws. On the one hand, being transparent with salaries could expose significant pay disparities that damage the morale and trust of your employees. They could also become motivated to seek employment elsewhere if they discover a higher salary offered at a different company. Further, adjusting wages and improving pay equity can be costly, especially for larger companies with significant salary imbalances.


However, there are also many advantages for businesses that practice salary transparency:

  1. Disclosing salary information on job postings improves hiring efficiency by filtering out candidates who would have applied but then been dissatisfied with the offered pay.
  2. Including salary ranges in job postings boosts company image, attracting more talent and demonstrating trustworthiness as an employer.
  3. Honest communication about pay increases employee satisfaction and job performance, creating a workplace environment that is highly motivating and empowering.


Salary transparency is an increasingly popular trend, evidenced by its positive reception. According to a recent survey of Gen Z workers, almost 90% would be comfortable discussing their earnings with coworkers, and employers have taken notice of this sentiment. In addition, 17% of companies have taken the initiative to share salary ranges voluntarily without any established transparency regulations, and another 62% of businesses in such regions have expressed plans to pursue this practice or are currently considering it. Although a complex undertaking, implementing these changes produces an abundance of benefits for both workers and their employers. 


Emerging laws, such as those for salary transparency, make it challenging for businesses and their recruitment and onboarding procedures to remain up-to-date and in compliance. That's why Authentica's team of screening experts is here to help organizations hire confidently and has been doing so for over 25 years. Learn more about Authentica's best-in-class screening services and how we can provide peace of mind today.