Why Employer's Should Embrace Pay Transparency Laws

A recent article by YahooFinance Senior Columnist, Kerry Hannon, notes that "[t]he biggest shortcoming so far of new state salary transparency laws is preposterously wide pay ranges, often covering more than a six-figure span." She cited Apple's job post for a database engineer listed between $130,000 and $242,000; Tesla's business analyst position listed between $68,000 and $234,000; and Netflix's software engineer position listed between $90,000 and $900,000. Notably, all three postings were for California positions. The pay scale transparency law in California defines "pay scale" as the salary or hourly wage the employer reasonably expects to pay for the position. The idea that Netflix "reasonably expects" to pay anything within a $810,000 range for the same position is laughable. Indeed, as Hannon points out, this may be employers' way of "winking at the law, or even making a joke of it." While that approach may work for a Netflix, Tesla, or Apple - which often receive thousands of applications for positions - smaller companies may want to take a different approach.

Why?

Well, in a growing number of states, it's what the law requires. Employers should be aware of the pay disclosure laws that apply to their business, especially if seeking applicants who may perform work from California, Colorado, Connecticut, Maryland, Nevada, New Jersey, New York, Ohio, Rhode Island, or Washington. Pay disclosure requirements are state-specific and may apply to internal and external postings, remote positions, and out-of-state employers. 

Beyond the legal obligation, employers may gain a competitive advantage by posting accurate pay scales. Salary is top of mind for most jobseekers. Posting accurate pay ranges helps encourage interested applicants to take the time to go through the application process while allowing those with pay expectations well out of range to self-select out. This results in a more tailored applicant pool of individuals interested not only in the job, but in the job within that salary range. It also helps establish trust early on in the employment relationship which is an important factor in employee retention.