New pay transparency laws went into effect in November 2022 and January 2023 in New York and California, respectively, but their reach goes far beyond these states and may help millions of workers across the nation earn more money.
A big step for compensation visibility in NY and CA may be a giant leap forward for all salary negotiations in the US.
As of November 1, 2022, employers in New York City must list a salary range for all job postings, ads, transfer opportunities, etc. that are listed as located entirely or partially in any of the Five Boroughs. This applies whether the role is designed to work in the field, in-office, from home or any combination of these (i.e., hybrid workers). And as of January 1, 2023, employers in California with more than 15 employees must meet the same requirements.
The NY & CA Pay Transparency Laws
NY and CA joined a handful of other states in requiring businesses to disclose salary ranges for job openings. The goal? Narrow pay disparities. For too long, any talk of pay gaps was relegated to hushed conversations while huddled in stairwells and clandestine spreadsheets that somebody secretly circulated. But new pay transparency laws are bringing submerged compensation details into the light, helping workers understand their value without relying on the courage of colleagues to speak up.
While this new pay transparency law applies specifically to workers in NY & CA, its impact is rippling across the country, with employers beginning to list salary ranges for jobs nationwide. Here’s why: if a company plans to allow work to be done remotely, they need to comply with this new law because NYC’s pay transparency statute applies to non-NYC businesses that post jobs that could be done remotely from anywhere, including the Big Apple.
Salary Transparency Across the US
Colorado helped lead the pay transparency charge. They have had a similar law to the one recently passed in NY since January 2021, requiring companies to post salary ranges for any job that someone could do from Colorado, which includes people working remotely from the state for companies based elsewhere in the country. Some businesses have tried to skirt compliance with this law by barring Colorado residents from applying—but economists agree that this is far less likely for the New York City talent pool, which has some 4 million private-sector workers. Colorado, in comparison, has a labor force of just 3.2 million in the entire state.
60% of job listings in NYC have posted salary ranges as of November 2022. By now, many more businesses will comply because those that do not will be reported to city agencies, with 30 days to fix their job postings. If they fail to do so, they can be fined up to $250,000 per violation.
Pay transparency: An essential tool for closing gender, racial, and other minority pay gaps
Historically underpaid groups, like women and people of color, benefit the most from pay transparency laws as these can help alleviate pay gaps by highlighting these disparities in the first place and shedding light on exactly how disproportionate they are.
Over the last several decades, growing evidence points to pay transparency as an essential tool in closing gender and racial pay gaps. Women who work full-time in the United States still only earn $0.83 to every dollar a man makes—a figure that plummets when factoring in the steeper pay disparity for black and Latina women, who earn substantially less than white women on average.
According to the U.S. Census Bureau, black women are paid $0.58 for every dollar a white man makes. “In 2021, Latinas working full time were paid approximately $0.57 for every dollar earned by white, non-Hispanic men, the National Women’s Law Center reports—when part-time workers are included in the comparison, Latinas only made 54 cents for every dollar paid to white, non-Hispanic men,” reported CNBC.
A lack of compensation visibility helped to create these disparities, but the passage of the NY and other pay transparency laws are aiming to rectify this issue. Research indicates that salary opacity has helped contribute to women and people asking for lower pay on average, but with compensation visibility now required for every NY job posting it will hopefully establish a more even playing field.
The impact of pay opacity
Not only is pay opacity increasingly coming under legislative scrutiny, it can cause a company to shoot itself in the foot when it comes to attracting qualified talent in a post-Great Resignation world. Trends like Quiet Quitting show that many employees are becoming more cynical about trusting managers and company leadership, which inevitably leads to an adversarial relationship when anything is done to lose what trust remains.
Younger generations of employees are simultaneously seeking more ways to be productive as well as achieving better rewards. Employers that contribute to a culture of pay opacity not only run the risk of being seen as unethical – which should be bad enough a label by itself – but also as short-sighted, inefficient and not willing to invest in the future of their employees. With the open marketplace of information available today, it is a given that if a current employee or job seeker wants to find a benchmark for a job’s salary, they will find it somewhere.
At Betts we want to ensure clear communication and that everyone has all of the resources they need to make the best decision when hiring. Our Connect platform always contains salary along with other key information points to help companies and candidates find each other without obstacles, and preserve transparency throughout the process.
- Pay transparency helps eliminate information asymmetries
In cases where a prospective employee’s expectations for pay differ vastly from an employer’s, salary visibility helps make hiring more efficient for job hunters and employers alike. If salary expectations are too far apart, it’s now easy to disengage from opportunities that are not in alignment.
- Pay transparency helps make hiring and applying for jobs more efficient
In the short-term, increased pay transparency may lead to higher turnover as workers see that their skills are worth more than what they are currently paid, emboldening those who discover they are underpaid to head toward greener pastures. But in the long run, a less-opaque job market will lead to greater stability because retention rates will rise, benefitting workers and companies alike.
- Pay transparency is fast becoming the norm in the United States
Laws similar to the one recently passed in New York and California are sweeping the nation and will likely continue gaining ground. In January 2023, Washington, Rhode Island and other states began requiring companies to list salary ranges in their job postings. While not all workers in the United States are (yet) covered, these new laws are putting pressure on other states—and smart businesses are getting ahead by posting salary ranges before it becomes a legal requirement.
List of US States & Cities with Pay Transparency Laws in 2023
Here is the full list of different US states and individual cities (and one county) that have passed some form of pay transparency law for salary – as well as benefits for some – as of early 2023:
- Rhode Island
- Cincinnati, Ohio
- Toledo, Ohio
- Jersey City, New Jersey
- Ithaca, New York
- New York City, New York
- Westchester County, New York
Soon, almost 25% of Americans will live in a state with some pay transparency legislation. Companies need to provide salary band information to potential and current employees who will come to expect this data, or else they will wonder what these organizations are trying to hide. Pay transparency has started a compensation revolution.
Gain Better Salary Visibility
Visibility into salary trends is a deciding factor for hiring negotiations today, and to compete for top talent companies need to be able to keep up with the latest benchmark rates in the market. We’ve collected data from across our network and compiled it for our updated Compensation Guide for 2023 – download the Guide and see how the market has changed for sales, marketing and customer success roles.
Get the Compensation Guide here and catch up on the latest salary trends for 2023.