April 13, 2023

No matter how great a job and a company sound, there is one thing all smart and talented professionals want to know:

What does it pay?!

The days of employers hiding pay rates and employees simply accepting it are gone. Pay transparency—the practice of openly sharing information about your compensation practices with employees and applicants—is becoming the standard at companies of all shapes and sizes.

So, what exactly does pay transparency cover, and how can you embrace it in your workplace? Let’s dive in below.

What Does Pay Transparency Include?

Legislation driving pay transparency covers several areas and continues to shift and evolve in an effort to achieve pay equity:

  • Prohibiting Pay Secrecy Policies: Federal and state laws have made compensation discussions a protected concerted activity for many years, meaning employers can’t ban them.
  • Banning Salary History: A growing number of states and cities have instituted salary history bans so employers can’t ask about or consider a candidate’s previous pay.
  • Requiring Pay Ranges: Most recently, state and local laws have started requiring employers to share a wage or wage range with applicants and current staff members.
  • Reporting Compensation Data: The federal government doesn’t currently require organizations to report pay data, but they are considering new methods—so employers should stay wary.

Every pay transparency law varies by jurisdiction and many more are in the works. Always check with your local Department of Labor and legal counsel to ensure compliance.

Why Pay Transparency is a Must

Close the Wage Gap

Pay transparency holds companies accountable and ensures all employees—regardless of their gender, race, ethnicity, sexuality, religion, age, and other characteristics and forms of identification—are paid fairly. 

You can help close the wage gap for protected groups, fighting inequities in the workplace. Instead, show employees, customers, partners, and your community that you focus on the skills and abilities necessary for the job and you’re committed to building a diverse workplace with the best person for the job

Grow Your Team

As businesses continue to face the Great Resignation, they must adapt to attract and retain top talent. When you promote pay transparency, you’ll show both candidates and current employees that you are dedicated to diversity, equity, and inclusion

This will resonate with younger talent who align with your company’s values and want an employer that cares about building a diverse, equitable culture. And you’ll build trust with your existing team, who will know that their wages are fair.

Stay Ahead of Legislation

As mentioned earlier, we’ve already seen many states and local governments cracking down with salary history bans. With an increased focus on fighting the wage gap, it’s likely that legislation around pay transparency is not far off. Establish practices and policies today to ensure you’re compliant in the future—and mitigate the amount of work and risk.

5 Steps to Commit to Pay Transparency

1. Embrace It!

Don’t just wait to discuss pay with employees at review time—especially if they ask you about it now. Be receptive to these conversations by encouraging open communication between managers and their teams about pay, including regular discussions about performance and compensation. This will make employees feel valued and know they are compensated fairly for their work.

Encourage employees to negotiate for better pay and provide them with resources and support to do so! 

2. Establish Clear Pay Policies

Develop well-defined policies around pay practices and communicate them effectively to managers and staff. These typically include:

  • How pay is determined
  • Pay range for each position
  • Opportunities for bonuses or other incentives
  • A clear process for employees to raise concerns or ask questions about pay

Again, always check with your state’s Department of Labor regarding pay transparency laws before you establish pay policies and practices.

3. Conduct a Compensation Audit

By conducting a thorough analysis of your company’s compensation structure and practices, you’ll identify any pay gaps. This allows you to make adjustments to ensure all employees are paid fairly and eliminate disparities. Your pay structure should be standardized and based on objective criteria such as job responsibilities, qualifications, and performance.

4. Provide Access to Salary Information

Share access to salary information with employees and candidates, including salary ranges for various positions and information on how pay is determined. When employees understand their pay, they are empowered to make informed decisions about their career paths. This could encourage them to take initiative in certain areas and further their professional development with specific courses and training.

5. Review & Update Pay Practices Regularly

Finally, review and update your pay policies and practices at least annually to ensure they are compliant and aligned with industry standards. This yearly review is a critical time to verify that team members are being compensated appropriately for their work.

Final Thoughts on Pay Transparency

Overall, embracing pay transparency requires a commitment from employers to be open and honest about their pay practices, as well as a willingness to regularly review and update those practices to ensure that they are fair and equitable for all employees.

This practice can take many forms, from providing salary ranges for various positions to making individual pay information available to employees. Ultimately, the level of transparency will depend on the organization’s culture and values, as well as its legal and regulatory requirements.

Do you need guidance in developing your pay policies and practices? Contact BlueLion today at info@bluelionllc.com or 603-818-4131 to learn how our HR consultants can help you build a more equitable workplace!

The information on this website, including its newsletters, is not, nor is it intended to be legal advice. You should contact an attorney or HR specialist for advice on your individual situation.