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June 17, 2022

Pay Transparency Can Be Good for Business

by Sharon DeLay, GO-HR

The National Labor Relations Act covers most employers and guarantees that employees have a right to talk with others in the workplace about their wages. A recent study by Visier indicated that 79% of respondents want pay transparency. Like it or not, employees are going to talk about wages.

Cities and states around the country are passing “pay transparency” laws that require companies to disclose salary ranges. NYC requires posted positions to include the minimum and maximum salary offered, and failure to do so is an unlawful discriminatory practice. Colorado took it one step further and noted that an employer is required to announce all job openings and advancement opportunities along with their pay ranges; failure to do so can result in fines up to $10,000 per violation.

Employers may be resistant to posting pay ranges. They may feel that compensation is their biggest bargaining tool when it comes to their recruiting. Why should employers embrace pay transparency?

  • Researching and developing competitive pay ranges provides insight into the labor market and ensures employees are provided with livable wages.
  • Transparent pay ranges keep employees focused on their jobs, not on speculation.
  • Equally applied pay ranges can provide protection to the employer against potential discriminatory claims.
  • Posted pay ranges means that employers and candidates can avoid wasting time and eliminate surprises when it comes to recruiting.
  • Pay ranges are one part of an overall career path. Once an employee hits the top of a pay range, it drives discussion of expanded or new roles.
  • Posted pay ranges can actually attract candidates and subsequently focus the interview on skills, not distractions.
  • Pay ranges that may not be viewed as competitive force the employer to focus on the rest of its total compensation and benefits package, which may ultimately be more attractive to candidates than only money.
  • Pay transparency can create a loyal and engaged workforce from the top down. Employees do not begrudge executive pay, but pay transparency can generate healthy and educational discussions on the “why” behind defined ranges.
  • Refusing to disclose pay ranges may make employees wonder why, and question what else the employer might be hiding.

Pay transparency can also reduce the impact of the Great Resignation. A PayScale study found that 50% of respondents said they would leave in the next six months if employers are not transparent about pay. When 57% of employees believe they are paid below market, pay transparency can go a long way toward reducing that belief.

Posted pay ranges means that employers and candidates can avoid wasting time and eliminate surprises when it comes to recruiting.