Wage transparency laws aim to combat pay disparities

New York Starting Nov. 1, employers will be required to disclose “a bona fide salary range for every advertised job, promotion and transfer opportunity,” according to the city Human Rights Commission.

Similar wage transparency laws are being passed by a small but growing number of cities and states across the country to address pay disparities for women and people of color.

Seher Khawaja, senior attorney for economic empowerment at Legal Momentum, whose organization helped draft the New York law, said salary transparency “gives existing employees and workers information to better assess how their workplace positions are valued and whether they are being fairly are paid »

It also gives employers an opportunity to avoid liability.

“It forces them to think about how they set wages and avoid the discriminatory practices that have made their way in the past,” Khawaja said.

Harris Silic, vice president of Artisan Talent, a staffing agency that hires hundreds of creative professionals in New York and across the country, said the law can be tough for an employer at first, but he believes “everyone sees the value.”

“Every employer was once an employee,” he said.

Business groups, including five New York City chambers of commerce, say the law could cause “labor dissatisfaction and demands to adjust existing pay scales that the employer may not be able to afford.”

“During labor shortages or in the context of achieving diversity goals, the published maximum may be significantly higher than historical salary ranges,” – the groups wrote in the letter to the New York City Council.

Colorado was the first to pass a wage transparency law in 2019, followed by California, Maryland, Nevada, Rhode Island, Connecticut and Washington, as well as cities like Cincinnati and Toledo, Ohio.

Salary disclosure rules vary. In some cases, they require employers to share information upon request or after an interview, with an exception for small businesses. In other cases, employers must post salary ranges.

In Colorado, for example, a recent job posting on job site Indeed for an executive assistant in Denver listed a salary range of $57,131 to $88,516 a year. The Human Resources Data Analyst role listed a range of $67,488 to $111,355 per year. The retail position at Target advertised an hourly wage of $23.75 to $40.40.

New York’s law is similar to Colorado’s, but it only applies to employers with four or more employees, not all businesses. That’s one-third of the city’s employers, but about 90% of the workers, according to state Labor Department statistics.

The new wave of legislation marks a shift in who is responsible for pay transparency, with more employers now being held accountable for creating an open work environment, rather than employees deciding for themselves how their pay compares to that of their peers and whether to ask for fair compensation, according to according to Andrea Johnson, director of public policy at the National Women’s Law Center.

Mary Ramsey, 55, a health educator from Syracuse, N.Y., who is looking for a higher-paying job, said she hopes New York’s salary transparency law will soon apply statewide, something lawmakers are currently considering.

“Hiring people should be seen as a two-way contract,” she said. “You’re looking for a good partnership.”

In September, California Gov. Gavin Newsom signed a law requiring any employer with at least 15 employees to publish pay scales with their job listings. The law also went further than Colorado and New York by requiring large employers to submit an annual report to the California Department of Civil Rights with a breakdown of wages by race, ethnicity and gender.

According to federal data, in 2021 the median pay for full-time women was about 83% of that for men, and women earn less than their male counterparts in nearly every field. For women of color, the numbers are even worse. Report of Art National Partnership for Women and Families found that black women earned 64 cents for every dollar paid to non-Hispanic white men. For Hispanic women, it’s 54 cents, and for Native American women, it’s just 51 cents.

Khawaja said the demographic disclosure is a welcome addition to the California law, noting that one of the most significant causes of persistent pay inequality is occupational segregation by gender and race. As long as women and people of color are disproportionately employed in low-wage industries, pay gaps will persist, she added.

“Women are disproportionately employed in low-wage jobs,” Khawaja said. “Therefore, legislation to increase the minimum wage and eliminate exemptions such as tipping for certain categories of workers, such as restaurant workers, is critical to closing this gap.”

Here are some other things to know about salary transparency:

DISCUSSING WORK WITH COLLEAGUES IS LEGAL

Johnson points out that it’s perfectly legal to talk about pay, even if employers refuse to do so.

“The National Labor Relations Act protects employees who negotiate pay because it protects employees who negotiate terms of employment, and pay is a condition of employment,” she said.

A lack of pay transparency typically disadvantages women and people of color — the very groups that are already statistically less likely to succeed in negotiations, Johnson added.

YOUR EARNINGS HISTORY IS GOOD

Don’t feel compelled to disclose your salary history to a potential employer. In fact, some cities and states have passed laws that prohibit employers from even asking, which could lower wages and lead to inequality.

“There is a fundamental information asymmetry in wage negotiations,” said Kate Bunn, chief economist at the Washington-based Center for Equitable Growth. “Employers inherently have better information about wages, so they have an advantage. The side with more information will do better.”

The SAME goes for salary expectations

Some employers are getting around legal restrictions on salary history by asking applicants to share their salary expectations, but Ban said that can have the same effect of reducing offers.

That’s why Laura Adler, associate professor of organizational behavior at the Yale School of Management, said it’s better to have salary transparency laws that require employers to disclose salary ranges — as in New York, Colorado and California. Such laws are more difficult for employers to circumvent.

“The more policymakers can base themselves on how companies actually do business, the more effective these interventions will be,” she said.

When negotiating a new job, know that you have the right to refuse to share salary expectations in order for the employer to open up an offer, advocates advise.

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